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18 Feb, 2009 07:05

Financial crisis shakes Moscow City

World renowned british architect, Lord Norman Foster, is laying off staff around the world. Russia’s ambitious Moscow Tower project is one of his problems, as developers hold on construction.

A skyscraper designed by Norman Foster – At a cost of $2.5 Billion it was to have been the tallest building in Europe, touching the skies at 600 meters above ground. The credit crunch cut the project down to a third of its original size – a blow to the ambitious Moscow City business district. Ekaterina Thain, Partner at Knight Frank, says despite all the financial troubles Moscow’s Manhattan will be constructed in about 3 years time.

“In city it’s the whole complex should function, so therefore they already have supervision from the government, and all the developers will basically have one aim – to make this project successful. Because it cant just be one person successful, it’s the whole team.”

State support and bank loans are not the only sources of cash developers are looking at. One of the project builders- Capital Group – says foreign investors will not miss the opportunity to snap up discounted assets, according to CEO Andrey Nesterenko.

“Here it was very hard to get a share in the project, because, first of all, each one is a landmark and everybody wanted it for themselves, plus, considering the scale and the sizes, it was pretty much profitable. This year a lot of the project has been discounted because various owners have various issues, financial issues. Not directly related to the development – they could be in any other industry, oil and gas, it could be steel, anywhere. ”

For now, Moscow Tower is the only project within Moscow City officially to have been frozen. However analysts say many developers are in severe financial difficulty. This was supposed to the be beating heart of Moscow’s business district. When these unfinished sites welcome thousands of office workers – depends on how soon the construction industry can raise the life-blood of funding.