Shanghai group to invest US$1.3b in St Petersburg
Chinese firms will develop residential and commercial district in Russian city
Five large Shanghai state-owned companies will spend US$1.3 billion to develop a massive real estate project in St Petersburg, making it the largest Chinese investment in Russia, company officials said yesterday.
The 'The Pearl of the Baltic' project will have a total gross floor area of 1.43 million square metres on a site area of 208 hectares and be able to house 35,000 people. It will take six to eight years to complete.
It will be the biggest foreign investment project in the city.
The project, in swampy land in the Krasnoselsky district of the city, has a strong political flavour with heavy backing from the two governments eager for a high-profile example of their co-operation.
The consortium will first have to build roads, power, water and gas lines and will also have to construct schools, kindergartens, libraries and health clinics.
The five Chinese investors are Shanghai Industrial Investment, Jinjiang International Group, Shanghai Industrial Investment Group, Shanghai Industrial Eurasia Development Centre and Greenland Group.
'It will be an all-round residential, commercial and business district and better and more modern than the Lianyang district of Pudong which the St Petersburg Mayor visited,' a Shanghai Industrial spokesman said.
'We will earn a profit from this project. The government is demanding that major state conglomerates like ours make investments abroad.'
The project has several major segments including one for a 10,000 square metre building with offices, exhibition space and luxury accommodation. Another will be a road 1.5 kilometres long and 40 metres wide.
A third will be a square of eight hectares, surrounded by buildings in Russian style with 90,000 square metres of space as well as a commercial area built over 50 hectares.
The Chinese consortium, because of their heavy investment on the project's infrastructure, will obtain strategic investor status and secure the land through allocation from the city government instead of going through a tender.
Investment by private Chinese companies in Russia has been limited because of concerns over corruption, arbitrary rules and poor law and order.
Trade between the two countries is also relatively small.
In the first four months this year, bilateral trade was US$9.69 billion, up 23.4 per cent over the same period last year. China's overall trade in the first six months totalled US$795.7 billion.