Tottering Mirax reflects Russia’s property development malaise

The country's biggest developer - Mirax Group - is fighting to keep its cranes running after legal proceedings have seized its assets.

Moscow City, a project to develop the capital's dedicated financial center, was the most impressive symbol of the construction boom in the Russian capital.

But the incomplete skyscrapers on its skyline are now testament to the crash that's bought work on it to a virtual standstill over the last year.

Prices for commercial real estate in Moscow today are down 60% on a year ago according to Denis Sokolov, Head of Research Department, Cushman & Wakefield, Moscow and he doesn’t see any rebound in activity too soon.

“In 2010 we will see the balancing between demand and supply. But the active construction that was seen in 2008 I don't think we will ever see in Moscow.”

Earlier this month a court froze the assets of Mirax Group – one of the biggest developers in the Moscow City financial complex – after the company failed to repay a $242 million dollar loan to Alfa-Bank.

Credit is now next to impossible for building companies to obtain.

Maksim Mokeyev, Executive Director, Evans, Moscow says that suspended and postponed developments are shifting interest in the sector away from new projects.

“A lot of people have switched to the secondary market. People view it as a much safer bet now. Primary market was always pretty much of a gamble and that's why you got a discount, but now I think it's more so.”

Ultimately, recovery on the real estate and construction markets is related to how quickly the wider economy picks up. But some of the biggest names in real estate development in Russia may not survive to see that upturn.