OREANDA-NEWS. October 14, 2008. Russian developer Renova StroyGroup's Akademia City project in Yekaterinburg is the first of the country's integrated urban developments. Following the completion of the engineering infrastructure, construction on the first residential area began in October 2007. The overall project is scheduled to add 9 million m2 of residential space and 4.2 million m2 of commercial space at a projected total investment of USD 30 bn (EUR21.2 bn). Completion of the entire project is projected for 2025. Sunny Valley 1 be the company's second new town project, comprising 3.2 million m2 of residential space, 1.8 million m2 of social and commercial space on an area of 1,200 hectares at a projected cost of USD 8 bn (EUR 5.64 bn). Completion is scheduled for 2024.
 
One of the starting points for Renova StroyGroup's development approach came from a look at the problems facing Russian cities. According to Veniamin Golubitsky, president of Renova StroyGroup, Russian cities were typically blocked by their borders and overly reliant on old and overloaded engineering and transport infrastructures. Far from alleviating these longtime problems, the developments of the past 15 years have increased the pain on their infrastructures. A new approach was necessary. To bring in international experience and expertise, the developer hired French architectural firm Valode & Pistre to do the planning of Akademia City and RTKL for Sunny Valley. Embarking on such massive and expensive developments as the global economy falters and credit becomes ever scarcer is, at the very least, odd timing. Yet Golubitsky is not overly concerned about the effects of the credit crunch, claiming the reduced availability of credit is more of a problem for smaller developers.

The long-term nature of the projects also provides for a certain flexibility. Golubitsky: 'The Akademia City project is conceived in a such a way that it has the capacity to both accelerate or slow down the volumes of completed (and delivered) segments. And, on a horizon of two to three years, we have the solid capacity to withstand the market's fluctuations.' The viability of new town projects is perhaps least certain in regional Russia. According to JLL's Nikulicheva they will be 'more difficult to do in the regions because fewer people are able to afford mortgages there.' Rising construction costs present another financial hurdle for the new town developments. Nikulicheva: 'The problem is that construction costs are growing very fast. The way to attract people is to have very competitive prices and market prices are not rising as fast as construction costs. This is an even more significant problem in the regions because, with construction costs the same across Russia, fewer people can afford them there.' Large conglomerates which are using their own construction holdings to control costs are naturally at an advantage. Nikulicheva sees others miscalculating I cost versus revenue.