This investment focus area of the Corporation is represented by a number of companies, the key ones being Leader Invest (property development) and Business Nedvizhimost (rental assets).
Sistema's strategy in real estate is focused on increasing portfolio value with a view to its subsequent monetisation through rental income, property development and sale.
Real estate development
Leader Invest is a development company carrying out residential and commercial real estate projects in Moscow. Its portfolio includes 45 projects with a total area of roughly 3.0m sq m. The company's business priority is residential construction, including both small complexes in well-developed and comfortable neighbourhoods and modern comprehensive development projects. Leader Invest aims to increase the returns of its project portfolio through higher turnover and improvement of the efficiency of design, construction and sales.
Leader Invest's infill construction activities include 42 projects at various stages to the total area of 520,000 sq m. The average area of one project is 12,000 sq m and the implementation period is 2.5 years. During 2017, the company launched ten new infill construction projects and commissioned two: clubhouses at Sretenka and Serpukhovsky Val. Active sales have already started at 26 infill construction projects.
Comprehensive development is represented by three projects: ZIL Yug (1,690,000 sq m), Nagatino i-Land (472,000 sq m) and 120 Lobachevskogo St. (273,000 sq m). Under the ZIL Yug project, the site design was approved, the land survey started and the applications for technical specifications were submitted in 2017. P stage design documents are to be developed in 2018. Under the Nagatino i-Land project, the site design was approved, and the architectural concept and P stage design documents were prepared. Construction of the first stage of the project is to start in 2018. Under the 120 Logachevskogo St. project, the design documentation was developed, the positive opinion of the Moscow State Expert Review Committee was obtained, the architectural and urban planning solution was approved and the construction permit was received in 2017. Sales of apartments in the residential complex started in 2018.
In 2017, Leader Invest was focused on systematisation of business processes and improvement of efficiency at all stages of project implementation. The company's profit margins are among the highest in the Russian development industry. Leader Invest's long-term strategic goal is to become a leader in the Moscow market of residential construction. The company's strategy envisages maintaining the development projects portfolio at 1m sq m.
Business Nedvizhimost leases out its own real estate assets and the real estate assets under its management. Operations of Mosdachtrest, a subsidiary of Business Nedvizhimost, are mostly related to the lease of cottages in Serebryany Bor and Barvikha and office buildings in Moscow, as well as maintenance services.
Mosdachtrest's assets are residential houses and land plots in Serebryany Bor and the Moscow region, while Business Nedvizhimost's assets are class C offices, including former ATS buildings. The companies also own assets intended for sale (a number of ATSs and land plots for construction of summer cottages in the Moscow region). There is a group of assets for development – construction of new cottage villages in Serebryany Bor and development of chain rental products on the basis of former ATSs in Moscow. The beneficial location of the properties and geographical diversification are the key advantages of Business Nedvizhimost's assets, which are within walking distance from metro stations in established residential and administrative districts far from industrial sites. The average area of Business Nedvizhimost's properties is in the 3,000-5,000 sq m range, which is optimal from the lease point of view.
In 2017, as a result of the portfolio restructuring, Business Nedvizhimost's assets were divided into three key groups: assets for lease, for sale and for development. Two serviced apartment pilot projects (renovation of ATS buildings) are to be launched in 2018. The company's operational strategy envisages growth of value, consolidation of rental assets and development of an efficient rental business with returns over 10% per year. The company intends to renovate and develop a number of assets, including reconstruction of 80,300 sq m of commercial premises, and commission new housing for renting out.