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NEW YORK, January 16 (Itar-Tass) —— A Morgan Stanley (MS) real estate fund has decided to buy the largest shopping mall in St. Petersburg, Russia, for about 1.1 billion U.S. dollarss, Bloomberg reported, citing two people with knowledge of the transaction.
“Morgan Stanley Real Estate Fund VII will purchase the Galeria centre from Meridian Capital CIS Fund, which is run by a buyout firm backed by a group of Kazakh investors including Askar Alshinbaev, the people said. They declined to be identified because the transaction is private and won’t be completed until later this month,” the agency said.
Galeria, which cost 380 million U.S. dollars to build and opened in November 2010, has 250 stores occupying 93,000 square metres over five floors, according to Mace, one of the construction companies that built the facility. The mall, located on the intersection of Ligovsky Prospekt and Nevsky Prospekt near the city’s Moscow railroad station, features a multi-screen movie theatre, a 27-lane bowling alley plus underground parking for 1,200 vehicles, the report said.
Morgan Stanley spokesman Tom Walton declined to comment. Meridian Capital didn’t return a call seeking comment and its broker, Jones Lang LaSalle Inc. (JLL), also declined to comment through Moscow-based spokeswoman Natalia Kopeichenko.
The purchase takes the Morgan Stanley fund a step closer to investing money that its backers committed in June 2010. So far, the fund has invested less than half of the 4 billion U.S. dollars currently at its disposal.
Bloomberg cited data compiled by Real Capital Analytics Inc., a New York-based research firm as indicating that Russian commercial real-estate sales totalled about 5 billion euros (6.3 billion U.S. dollars) in 2010, a 15-percent decrease from 2010. The data show that this is 48 percent less than the investment in 2008.
Rising retail sales and Russia’s lack of modern mall space has fuelled a boom in shopping centres in Russia.
Growing wages in Russia push demand, which persuades owners of international brands, seeking sales growth outside Western Europe and the U.S., to open stores in Russia. Developers will open almost 3 million square metres of mall space in the country in the 18 months to the end of 2012, according to research by Cushman & Wakefield Inc.
The broker estimates that Russia has about 80.5 square metres of mall space per 1,000 inhabitants, compared with an average 240.3 square metres in the European Union, Bloomberg said.