EPH Swiss investment Fund under management of Valartis sold Korean cultural center two floor office in the mansion on the Old Arbat. The company claims that the deal was worth $25 million. If so, in the current economic situation it is extremely expensive, say market participants. Moreover, this is a rare deal and from the point of view of its participants, investment in Russian real estate by foreign structures almost stopped after 2014.Swiss investment company European Property Holdings (EPH) has agreed the sale of 2.7 thousand sq m of offices on the first floor in the multifunctional complex on the Arbat, 24 in the center of Moscow. About this “Kommersant” said the representatives of the Valartis Group, under the management of which is EPH.Rooms on the second and fourth floors of the mansion on the Arbat is a Korean cultural center, now located on Chistoprudny Boulevard. The sum of transaction has made $25 million it is Expected that the cultural centre will be exhibitions, film screenings, language courses and other activities. One of the arguments for the choice of location was the location of the complex close to the Embassy of the Republic of Korea, claim the parties: it is located on ulitsa Plyushchikha, about 2 km from Arbat. From additional comments at the cultural center refused.EPH was founded in 1999, its headquarter is located in Switzerland. In 2003, the company raised in the IPO of 50 million Swiss francs (about 1.2 billion rubles at the exchange rate at the time) and became one of the first foreign investors in Russian real estate. The group then started buying the offices that market participants associated with the company Lenhart Global and family Arkady Rotenberg, although the parties to these relationships are denied. Now EPH also owns offices “Berlin house” (leasable area of 5.8 thousand sq m vacancy — 24%) and “Geneva house” (8.4 thousand sq. m, 3%) on the Petrovka, “Hermitage Plaza” (30,9 sq. m, 3%) to Krasnoproletarskaya street, “Severnoe Siyanie” (28.4 million sq. m, 1%) on the street of Truth and complex on the 1st Magistralnaya street (2 thousand sq m 0%).Rental rates are ranging from 15 thousand rbl. for 1 sq. m (offices class B on the Trunk) to 65 thousand rubles. per 1 sq m (the “Geneva house”). EPH also may be relevant to the business centre “Kvadrat” (15.5 thousand sq m) on Vereiskaya street in the West of Moscow, reported the newspaper “Vedomosti” in 2019.In the Valartis Group have concluded that the sale of offices on the Arbat became one of the largest transactions in the Moscow market, “especially in the current economic environment”. Interlocutors “” in the real estate market believe that the deal was too expensive: it turns out that the Korean cultural center acquired the premises for more than $9 thousand for 1 sq. m (or 670 thousand rubles at the current exchange rate), although in the current environment, the transaction value could be two times smaller. According to estimates partner Colliers International Stanislav Bibik, the market price of the object was not to exceed 350-400 thousand rubles. per 1 sq. m. on the other hand, notes practice Director transaction real estate at PwC Russia Sayan Tsyrenov, the complex on the Arbat — premium product and similar offerings for sale in the market is now effectively dead.According to Mr. Bibik, although the Arbat and is known as one of the most touristic areas in Moscow, the offices are there too popular at different times in the area were represented including Aeroflot, TNK BP, Russian agricultural Bank. We have lots more than 2 thousand sq m in the area remained only in mansions.Unusual was not only the amount of the transaction, but also its participants. According to CBRE, in the second quarter of 2020, the share of foreign investments in Russian real estate in the second quarter decreased from 6% to 1%. In April—June, the peak of the spread of coronavirus, the volume of investments amounted to RUB 47 billion, it is 19% less than it was in the second quarter of 2019.Elizaveta Makarova, Khalil Amine*the Transaction took place in 2016.**The transaction took place in 2017.Source: Colliers International.
