Russia Now Has 'A $12 Billion Reminder' Of Its Money Problems
Moscow's answer to Wall Street and London is...
Wed, Nov 26, 2014, 12:21 PM EST - U.S. Markets close in 3 hrs 39 mins
Russia Now Has 'A $12 Billion Reminder' Of Its Money Problems
By Elena Holodny
2 hours ago
Not to be confused with the capital in which it is located, Moscow City is the skyscraper-filled financial center of Moscow.
Originally called the Moscow
International Business Center, Moscow City was envisioned as an
international center for business, entertainment, and living.
The center was built incredibly
quickly during the 2000's : eight skyscrapers are complete, eight more
are under construction, and two more are planned. The entire project is
expected to be complete by 2018.
However, the center has two problems: it's emptying out, and it's not quite a financial center.
"Vacancy rates in the newly built
financial district have become acute," The Times reports. "The entire
site, some 148 acres that now includes the tallest building in Europe,
Mercury City Tower, had a vacancy rate of 32 percent at the end of
October, according to Cushman & Wakefield, the real estate
consultancy."
There's some discrepancy over the exact vacancy rate, however. The
development management company for the financial sector, City, estimates
that the vacancy rate is more like 20%.In any case, financial services companies aren't the primary occupants of Moscow City anymore, according to City.
The Times notes that 58% of the companies who signed leases were "nonfinancial companies as well as local small and midsize businesses, like High Level Hostel."
Wikimedia A look at the Moscow City skyline from September 2006 to July 2014.
Although the center is facing troubles, several years ago the project made sense.
Russia was growing at 7% per year from 2000 to 2007;
the Russian Trading System opened in 1995 (now called the Moscow
Exchange), and the country was waving good-bye to its Soviet past.
Everyone was expecting the Russian economy is flourish into a major international power worthy of an international finance hub.
But today, things are looking a little different: Russia's political agenda has taken center stage.
Following the sanctions imposed by the EU and the US, the Russian economy has taken a serious hit. The ruble is in free fall, inflation is way above target, and falling oil prices have put immense pressure
on the economy. Two of Russia's largest state financial institutions
being sanctions, Sberbank and VTB, both own real estate in Moscow City.
Google Finance "Russia's tanks are now getting more international attention than its banks, leaving Moscow City as $12 billion reminder of the nation's economic woes," The Times writes. Check out the full report at The Times >
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