Landmark Group Ltd. (TASE:LDMK) is buying a seven-acre lot in Kaliningrad, the non-contiguous Russian oblast on Baltic Sea, for €3 million. Landmark is partnering with a local developer, owned by a former Kaliningrad municipal official. Landmark will own 80% of the project. This is the first time that an Israeli company is investing in Kaliningrad.
The lot is slated for construction of a 50,000-sq.m. residential and commercial complex; the purchase price is €60 per sq.m. of built-up space. Construction costs, including planning, financing, and land, are €600 per sq.m. of built-up space, and expected proceeds are €1,500 per sq.m., on the basis of a survey conducted by Landmark. The company expects a profit of €45 million.
Since the break-up of the USSR, Kaliningrad is Russia’s only year-round ice free port on the Baltic; St. Petersburg is icebound during winter. The Russian government is now trying to develop the oblast, declaring it a free-trade zone, and granting tax exemptions for investments exceeding €6 million for building factories. These incentives are attracting US and European companies. The government is also providing mortgages to residents seeking to redevelop their apartments in old buildings in the city.
Published by Globes [online], Israel business news - www.globes.co.il - on September 2, 2007
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