REAL ESTATE
ENKA Group pursues its operations in the real estate sector by investing in and managing shopping malls, hotels and office buildings via companies established in Russia. The group’s operations in Russia are being managed by City Center Investment B.V., ENKA Invest, ENKA TC, Moskva Krasnye Holmy, Otel Moskva – Krasnye Holmy, Swissotel Krasnye Holmy and Mosenka.
As of the end of 2021, ENKA owned 370,000 m2 of rentable class A office space, a 235-room hotel and 357,000 m2 of rentable retail space.
City Center Investment B.V. (CCI) was established in 2003 for the development of the Naberezhnaya Tower complex. Naberezhnaya Tower is one of the most prestigious business centers in Moscow, with a Commercial Real Estate Award for the best Class-A business center. Located in Moscow’s international business center, it is a model of inspiring architecture and state-of-the-art innovative design. CCI has been able to build long term relationships with its tenants thanks to its competitive advantages in the commercial real estate market.
Naberezhnaya Tower complex consists of three blocks with a total leasable area of 163,000 m2. At present, 109 staff are employed in office leasing, the management and operation of the facilities and the supply of fit-out works.
During 2021, as the previous year, the global Covid-19 pandemic negatively affected the office market and forced the tenants to request for rental abatements, shrink their office size and also impaired their capabilities to fulfil payment obligations described in
the lease agreement. Notwithstanding, through the constructive and professional approach and the correct planning implemented since the beginning of the pandemic, the occupancy rate of the building has reached the historical level of 99%. With this strategic approach, CCI managed to extend contracts with existing tenants with a total rentable are of more than 29,000 m2, as well as to conclude new lease agreements with a total area of more than 28,000 m2.
In addition to the comprehensive regular maintenance of the complex, the CCI operations team continued to pay utmost attention and care for the conservation of health and safety in the complex through improved measures against the spread of Covid-19. Besides, 23,000 m2 of office fit-out works were carried by the team during 2021.
Existing CCI tenants include reputable corporations such as Alibaba, Arconic, Berlin Chemie, CMS Cameron McKenna, Dell, Eli Lilly,
Elanco, Fortinet, Fortum, General Electric, GlaxoSmithKline, IBM, Inditex, Juniper Networks, KPMG, Marie Tecnimont, Medtronic, Merz Pharma, Mitsui & Co, Mubadala, Ozon, Pfizer, Qualcomm, Renaissance Capital, Richemont, SMS Group, Universal Pictures, VTB Group, Unipro and Segezha.
ENKA Invest began operating in 1994 as a part of ENKA’s real estate investment division, which has been active in Moscow since the early 1990s. It has 4 complexes located in the centre of Moscow with a total leasable area of 76,000 m2. Paveletskaya Plaza, Tsvetnoy Palazzo, Sretenka Complex and Chaplygina House are all built, owned, developed and operated by ENKA Invest.
The company employs a staff of 64 in the areas of office and residential leasing, and building and facility management. It also provides construction services for tenants’ fit-out works. Its exceptional facilities and services have enabled it to build long-term relationships with its tenants.
ENKA Invest team keeps a close watch on effects of Covid-19 pandemic in the commercial real estate industry and adjusts its marketing strategy accordingly. Despite the negative effects of the pandemic on the market, a total of 8,000 m2 lease agreement was extended and by signing a new agreement of approximately 5,000 m2 (among them the new project within ENKA portfolio “Flexity” which propose tenants fitted out and furnished premises with full scope of service operation), it has managed to increase the occupancy rate to 84%.
The ENKA Invest team, which prioritizes the health and safety of its employees and tenants, has provided a safe working environment by taking comprehensive additional measures with the Covid-19 pandemic.
In 2021, approximately 3,000 m2 of renovation work was undertaken for new and existing tenants and delivered on time without compromising on quality.
ENKA Invest allocates resources for the common areas of the buildings in its portfolio and performs renovation works continuously in line with its sustainability projects.
As of the end of 2021, ENKA Invest’s tenants included major multinational firms such as Accenture, Bulgari, Cleary Gottlieb Steen & Hamilton, Equinor, Ernst & Young, Hays, HSBC, IATA, La Prairie, LG Electronics, Linklaters, Lundbeck A/S, National Oilwell Varco, Nestle, Nintendo, Plantronics, RN BVK, Setra Lubricants, UBS, Corteva, Club “Valdai” and Wheely.
ENKA TC, formery known as RamENKA, was established in Moscow in 1997 as an equal partnership between ENKA and Migros for the purpose of developing shopping centers and a supermarket chain in the Russian Federation.
In November the same year, the company launched its first Ramstore hypermarket and shopping center in the Kuntsevo District of Moscow. The complex was constructed by ENKA and covered a total area of 19,400 m2.
In spite of the economic crisis in the Russian Federation, the company continued its growth. In 1998, it opened its second hypermarket and shopping center in Maryina Roshcha.
ENKA had completed the construction of the 32,500 m2 Maryina Roshcha shopping center in a remarkably short time while simultaneously maintaining its highest quality standards.
ENKA TC went on to open 23 new stores between 1999 and 2003, increasing the number of its stores to 25 and the number of its shopping centers to six.
The company started to expand to regions outside of Moscow, with stores opened in Krasnoyarsk, Kazan and Nizhniy Novgorod the same year. Despite some closures between 2004 and 2007, the total number of stores increased to 53, and the number of shopping centers to 10.
For its investments, the company made use of International Finance Corporation (IFC) and commercial bank loans in addition to its own resources. A total of USD 170 million in loans was provided by the IFC between 1998 and 2006. All of these loans were repaid in 2008, ahead of their maturity dates.
In addition to retail space in shopping centers, the company started to rent out office space on a large scale with the Vernadskogo complex in 2007.
ENKA became the sole owner of the company in 2007 by having acquired the 50% share held by Migros and renamed the company “ENKA TC”.
In order to focus on real estate operations as its main line of business, ENKA TC transferred the hypermarket operations and the shopping centers to AUCHAN through rental agreements. Upon the completion of this operation, the leasable area of ENKA TC increased from 167,000 m2 to 227,000 m2.
The shopping malls owned by ENKA TC which operated under the “Ramstore” brand name were rebranded “Kapitoliy” in 2009. In January 2010, the supermarket brand name “Ramstore” was changed to “Citystore”.
In line with the company’s plan to exit the retail business and focus on real estate operations, the retail assets of ENKA TC were sold off to OOO “BILLA” and OOO “BILLA REALTY” in April 2012. Following that, ENKA TC had completely exited the retail sector by the end of 2012.
The rental revenues of the company continued to grow, reaching USD 104 million in 2021.
Meanwhile, in 2006 and 2007, two of ENKA TC’s most important shopping mall developments won “Best Shopping Centre” awards from the Commercial Real Estate Committee (CRE) of the Russian Federation. The Kapitoliy Shopping Mall in St. Petersburg was honored with the “St. Petersburg’s Best Shopping Centre” award in 2006, while the Kapitoliy Vernadskogo Shopping Mall in Moscow received the “Moscow’s Best Large-Scale Shopping Mall” award in 2007.
The Kapitoly Vernadskogo Shopping Mall was also selected among more than 60 nominated projects as “Best Project in the Sphere of Investment and Construction in Moscow in 2012” by the Moscow Local Administration. Later, it was chosen as the “Best Shopping Complex” at the “100 Best Office and Retail Centers in Russia” awards ceremonies held in St. Petersburg in both 2017 and 2018.
The Kapitoliy Sevastopolsky Shopping Mall in Moscow was named the “Most Convenient Shopping Centre in the South-West Administrative District of Moscow” by Moscow Municipality in 2009.
In line with investments made for redevelopment of existing assets, ENKA TC finished the project development phase during the 2nd quarter of 2011, and commenced the redevelopment of the Kuntsevo Plaza, which had been originally opened in 1997.
Under this project, the existing building covering an area of 19,400 m2 was demolished and a new, modern complex with a total area of 245,000 m2 was constructed. The complex consists of a shopping mall, office buildings and a small number of apartment units. The shopping mall opened its doors upon the completion of construction works at the end of 2014, while the construction of the office buildings was completed in the 2nd quarter of 2015. The shopping mall has a net leasable area of 61,000 m2 and the office building a net leasable area of 29,094 m2. There is an underground parking lot with capacity for 2,028 cars. The total investment cost was USD 484 million.
The Kuntsevo re-development project was presented with several awards:
The Kuntsevo Plaza also became one of the Russia’s 37 certified green investment projects by having received a green building certificate (Green Standard – GOLD) in April 2013.
In the 2nd quarter of 2013 the construction of a shopping mall at Sergiev Posad in the Moscow Region was commenced. This mall was opened for retail operations at the beginning of September 2014. It has a total area of 36,750 m2, a leasable area of 24,883 m2, and a car park with capacity for 696 cars. This project involved an investment of USD 59 million.
In the 4th quarter of 2015, construction work began on the construction of the new Kashirskaya Shopping Mall, replacing the existing mall, which had been demolished to make way for it. The new building has a total area of 196,750 m2 and a leasable area of 70,000 m2. The total investment cost, including construction, design, infrastructure works, approvals, road works etc., amounted to USD 232 million. The new shopping mall began operations in March 2018.
In spite of its short history, the Kashirskaya Plaza has been honored with several important awards:
LLC Moskva Krasnye Holmy, commenced operations in the summer of 1995. Fully owned by ENKA, it had been established following an investment agreement with a number of Russian partners, including the Municipality of Moscow, for the development of the Russian Cultural Center on a seven-hectare plot of land in central Moscow, based on a 49-year lease.
The center, featuring commercial, cultural and sporting facilities as well as office buildings, was to be developed in five stages. To date, offices, a hotel, a conference center, an art gallery and a parking lot have been completed with a total area of 156,000 m2.
As of the end of 2021, the office buildings had an occupancy rate of 83%. Existing tenants of LLC Moskva – Krasnye Holmy include reputable corporations such as ADV, AHI Carrier, Air Liquide, Avaya, BSI, Energoprom, Givaudan, Keysight Technologies, Nissan, SAP and Sephora.
The corporate policy of the company puts a strong emphasis on institutionalization and aims to increase productivity and profitability by employing the finest local staff and the best local subcontractors alongside a core Turkish management team. The total number of company employees has reached 101.
The company’s turnover in 2021 was about USD 27 million.
LLC Otel Moskva – Krasnye Holmy, Swissotel Krasnye Holmy, was established in 2005 as a 5-star hotel with 234 rooms. It is operated by Accor group.
Swissotel Krasnye Holmy Moscow brings to the heart of the Russian capital unsurpassed service and luxury combined with the most breathtaking views of the city. The hotel is situated very conveniently in Moscow’s business district. Surrounded by major office complexes and financial institutions including the Paveletskaya Tower, the Aurora Business Park and the Vivaldi Plaza, it is also very close to Paveletsky railway station, which offers business travelers a significant advantage when transferring to Domodedovo Airport.
Swissotel Krasnye Holmy Moscow was presented with several awards:
The bars and restaurants of the hotel host various Moscow and international gastronomic festivals and master classes of world-class bartenders. Its trendy roof bar, City Space Bar & Restaurant, is considered one of the world’s top bars. This highly popular venue has also received accolades in the World Travel Awards. It is the ideal place to drink a cocktail while enjoying breathtaking 360-degree views of Moscow.
The turnover of the hotel in 2021 was about USD 9 million and it has 165 employees.
LLC Mosenka, In 1991, ENKA took advantage of its good business relations in Russia, as well as the country’s steady economic progress, to found LLC MosENKA as its first investment company in Moscow, together with a group of Russian partners. The company aimed to meet the growing demand for office space in the Russian capital and acquaint the country with real estate services delivered to western standards.
Now 100% owned by ENKA, MosENKA continues to develop and rent out office space. It has reconstructed 6 historic buildings with a total construction area of 46,500 m2 and converted them into modern office buildings.
M1 and M5 buildings were restored and handed over in 2012 and 2019 respectively.
As of 2021, the company is operating 4 modernized buildings.
The occupancy rate for its buildings was 76% at the end of 2021.
Tenants of MosENKA include well-known local and international companies such as Accor, Becton, Caspian Pipeline Consortium, Claas, Dickinson, Ipsen, Lego, Lexmark, Lufthansa, MGCom, Saipem, Seaco, Tecnicas Reunidas ve Varian Medical System.
The company employs a staff of 79 and its turnover in 2021 was about USD 10 million.
LLC ENKA Flex Office, ENKA Real Estate Group launched Flexity in March 2021 as its own managed office solution.
Flexity provides businesses with an office space that drives business development and acts as a part of firms’ growth strategy. Flexity focuses on creating a smooth work process and removes distractions from the core business process which hinder many firms’ potential growth and development.
Special attention is paid to the interior, which has been developed for Flexity by a “WELL” certified international architectural bureau. The company’s approach is based on detailed data research and takes into consideration important aspects such as adaptability, ergonomics, lighting, zoning, personal space and biophilic design. In addition to rational planning of the interior, Flexity is thoughtful in choosing locations of its office buildings and adjacent infrastructure, so that the working routine of Flexity residents is supported by the most comfortable and productive environment.
Currently, Flexity’s portfolio includes 2 locations over 4,000 m2 in Paveletskaya Plaza and 20,000 m2 at Ovchnikovskaya embankment building, giving a total area of almost 25,000 m2 of flexible office space. Within a short period of the company’s existence, Flexity managed not only create a market positioning strategy from scratch and prepare premises for leasing based on the highest standards, but also attract large global firms such as TBWA, Citibank and Ozon. The small initiative of the ENKA Real Estate Group grew into one of the largest providers of Flexible Office Spaces in the Russian Capital within six months.