Trump Lays Bet on New Moscow Skyline

If things go the way Donald Trump plans -- and they usually do -- he will be the first big-time developer since Josef Stalin to attach his name to high-rise towers in Moscow.


While in Moscow last week to survey potential construction sites, the U.S. casino and real estate mogul announced his intentions to invest an estimated $250 million in a number of building projects.


Trump told a Wednesday press conference at the Baltschug Hotel that he is planning to put his name to a luxury residential center of at least 30,000 square meters -- to be called Trump International -- near Triumfalnaya Ploshchad in central Moscow.


"We have an understanding that we will be doing it," he said. A second project is also in the works for a Moscow Trump Tower, an immense residential building of approximately 55,000 square meters that is planned for the Prospekt Mira area. The exact location has not yet been made public.


The first building in the series -- and the one with the greatest degree of commitment -- is the Trump International, scheduled to be completed before the turn of the century as part of the Ducat Place development on Ulitsa Gasheka. The Ducat site is being developed by Liggett-Ducat, a subsidiary of the U.S.-based Brooke Group, Ltd.


Liggett-Ducat, which holds a 98-year lease on the site, has been working with Trump through the person of Bennett LeBow, the president of Brooke Group and a well-known figure in the U.S. cigarette industry and investment circles.


The project architect, Theodore Liebman of the New York-based Liebman Melting Partnership, said the residential high-rise on the Ducat site will include a members' club, a health club and "will house the finest residences in Moscow." An ice-skating rink and an office building with shops and restaurants will front the tower, he added.


LeBow said he expected it would take six to nine months to obtain building permits, and estimated construction would take about two years. The building will be completed, he said, "sometime in 1999."


Trump said he expected construction costs of $250 to $300 per square foot -- about $2,800 to $3,300 per square meter -- which would put the cost of the project at $90 million to $120 million.


At those building rates, the combined price tag for the Trump International and the proposed Trump Tower would run $240 million to $280 million.


Beyond those two marquee projects, there may be more plans in the offing: Trump said he would be meeting with high-level city officials, saying only that "there are some other ideas we want to explore" with them.


David Geovanis, Liggett-Ducat's director of real estate, said Trump is also pursuing plans to develop a hotel in Moscow.


During his visit, Trump met with two of Moscow's vice mayors, including Vladimir Resin, the vice mayor in charge of construction and "one of the key people in charge of attracting foreign invest to the Moscow real estate market," Geovanis said. He added that the city was "very receptive" to the idea of Trump's developments in Moscow.


If Trump can indeed win the city planners over to his designs for flashy high-rises, his other big obstacle will be financing. And that, he said, is already taken care of. "We have tremendous financial commitments from various groups," Trump said. "We're ready to go anytime we want to go."


LeBow added: "We are confident that we have the financing in place to begin one of these projects." He named four financial backers: his own Brooke Group; the investment banking firm Jeffries & Company, Inc.; one of the largest real estate owners and investors in the United States, the Apollo Group; and the Trump Organization.


For many investors, sinking money into Moscow is seen as too much of a gamble. But for Trump -- a man who went from boom to bust to boom again, riding a string of profitable casinos back to fiscal health -- it is a high-stakes bet he is willing to make.


Specifically, he is betting that there is a market for ultra-high class residential space in Moscow, and that Russians and international clients will be willing to pay to live in digs that rival those found in New York's premiere uptown addresses.


Jack Kelleher, a partner with the real estate firm Noble Gibbons, said there is nothing currently on the Moscow residential market that compares to the size and opulence of Trump's proposed buildings.


"There's a tremendous demand in the market for something that is well done," Kelleher said. "He's stepping into a market that -- if he prices it right -- is a big, big market to absorb."


But Kelleher cautioned that if the apartments are priced too high, he will overshoot the market and fail to attract New Russians who have already bought a Moscow apartment -- and perhaps dachas and homes in Russia and abroad.


Kelleher added that well-traveled New Russians know the market, and know what they could to buy for the same prices internationally. "Russians have been quick on the pickup," he said.


Liggett-Ducat's Geovanis said sale prices had not yet been set, but that the Trump apartments would be priced above current projects on the market. "His buildings are best in the world, and people pay a premium for Trump quality," he said.


Until Trump's projects are completed, those seeking luxury digs in Moscow have had to remodel existing apartments or choose from among a number of small, and sometimes out-of-the-way, luxury developments.


Kelleher pointed to the Sretenka and Palazzo buildings in the Tsvetnoi Bulvar area as current top-of-the-line apartment developments.


Another luxury development in the works is Zolotiye Klyuchi, or Golden Springs, a 26,356 square meter, 114-unit luxury apartment development between Kutuzovsky Prospekt and Mosfilmovskaya Ulitsa in western Moscow.


Golden Springs, which is being developed by the company Obnovleniye, is set to open within a month, said the firm's commercial manager, Alexander Borzenkov. Sale prices for the apartments are set at about $4,500 per square meter. Borzenkov, who said about half of the apartments in the development have thus far been sold, called the demand for luxury housing "moderate."


The idea of building in Moscow was rumored to have come to Trump after he saw the rising number of wealthy Russians signing on for apartments in his high-rent New York residential addresses, which include Trump Palace, Trump Parc and Trump Plaza.


Trump gained notoriety in the United States in the 1980s, when the U.S. press followed his moves as a brash and fierce New York real estate baron with almost as much vigor as they probed his failing marriage to Ivana Trump and his return to the altar with model Marla Maples.


Trump now owns a number of office skyscrapers on New York's Wall Street, holds a reported 50 percent of New York's Empire State Building, and owns four casinos in Atlantic City, New Jersey. He has recently proposed building the world's tallest building -- a 140-story, 537 meter structure that would house the New York Stock Exchange -- and just bought the Miss Universe, Miss USA and Miss Teen beauty pageants for an undisclosed sum.


His other holdings include yachts, a handful of mansions, and the largest undeveloped parcel of land in New York City. He has penned two autobiographies, both U.S. bestsellers.


In short, Trump thinks big. And he sports a correspondingly large optimism about Russia. Trump confirmed that his high-profile entry into the country stood as his vote of confidence that Russian market reforms are irreversible.


"If I thought there was a chance of reversibility, we wouldn't be able to be here," he said. "I hope so [that reforms are irreversible]. If they're not, then we've made a mistake."