Kopernik hands over Moscow properties to creditor bank

Russian property developer Kopernik Group has signed over the 37,800-m² Severnoe Sianie business centre and the Na Krasnoy Presne office complex in Moscow to the privately-held Alfa-Bank as credit redemption. The Russian bank is now planning to sell the properties by public tender, according to a new market report issued by research group GVA Sawyer.

Kopernik is the latest Russian builder forced to part with some of its assets after struggling to meet its debt payments. Peer development company Capital Group has also reportedly failed to repay the terms of a $400 mln (EUR 268 mln) credit facility to Russia's Sberbank. The company is said to have offered its 288,680 m² Moscow-City business centre project as mortgage security. The development consists of over 101,000 m² of apartments and 72,000 m² of office premises.

According to GVA Sawyer, the office property market in Moscow is expected to remain challenging next year, with the market starting to stabilise in the beginning of 2010. 'In the near term the current downtrend is expected to continue because of the complicated economic situation,' the real estate consultant said. Vacancy rates for office premises in Moscow currently exceed 20%, with new business centres delivered in the third quarter remaining 60-80% tenantless,' GVA Sawyer added.

Rental levels have dropped by as much as 40-50% over the past 12 months. GVA Sawyer expects property values to drop by another 5-10% in the fourth quarter of the year, after plunging 35-50% over the past 12 months.