CDL Makes First Venture Into Russia

Source : The Straits Times, Oct 18, 2007


PROPERTY developer City Developments (CDL) is using a joint venture to make its entry into Russia.

It will pay US$62.5 million (S$91.7 million) for a 50 per cent stake in Soft Proekt, a company that owns land and properties in Moscow, CDL said in a statement yesterday.

The Amtel Group, which has diverse businesses within the Commonwealth of Independent States, is the other owner of Soft Proekt.

Soft Proekt owns a nine-storey service apartment building and the Iris Congress Hotel in Moscow. There are plans for CDL's London-listed hotel arm, Millennium & Copthorne, to manage the 200-room hotel and rebrand it as a Copthorne property.

The CDL-Amtel venture also plans to build a complex on an empty plot next to the hotel. It will house conference and business facilities, food and beverage areas, and a carpark, CDL said.

The land owned by the venture occupies about 287,550 sq ft at a site on Korovinskoye Chaussee, 15km north of Moscow's city centre.

'Russia is fast becoming an important East European market and Moscow is the perfect place to establish our first footprint,' said Mr Kwek Leng Beng, CDL's executive chairman.

'There is strong interest in the tourism and business sectors, so it is a good time to invest in hospitality and real estate.'

An acute shortage of hotels in Moscow has led to soaring rates and 'greater demand than supply' for rooms, CDL said. Revenue per room for Moscow hotels is among the highest in Europe, it added.

'CDL strongly believes that there is a ready market of hotel guests who are willing and able to spend on upscale accommodation.'

CDL is Singapore's second-largest developer after CapitaLand. The latter also recently entered Russia, to develop logistics parks.

CDL yesterday said it is also interested in building homes in Moscow and other key Russian cities, including St Petersburg. It is likely to focus on mid-tier and luxury residences, which are already its strengths in Singapore.

The joint venture is not the first time CDL and Amtel have been linked. Amtel's founder and chairman, Dr Sudhir Gupta, bought three floors and a penthouse at CDL's Sail @ Marina Bay in 2005.

Dr Gupta, an Indian-born businessman, has also bought other luxury homes in Singapore, including a Marina Bay Residences penthouse and a Binjai Park bungalow.

He was ranked by Forbes magazine as Singapore's 13th-richest man last year, but he dropped off the list this year.