The hotel construction project in Yekaterinburg is on the verge of failure

Construction of the four-star Marriott hotel in Yekaterinburg may never begin. The investor and project developer, the Uralmash engineering corporation, explains this by saying that the need to include two architectural monuments in the complex, which are located on the territory of the future hotel, will increase the cost of the project by 200 million rubles. Market participants support the developer, saying that the approval procedure for projects involving the restoration of historical buildings can last for years. Yesterday, at a construction meeting, which is held monthly by the governor of the Sverdlovsk region Eduard Rossel, the director of property and non-core assets management of the Uralmash MK, Alexey Kurbanaev, asked to remove the project of construction of the Marriott hotel in Yekaterinburg from the control of the head of the region. As Mr. Kurbanaev clarified in a conversation with a Kommersant correspondent, the sketch of the hotel involves the construction of a nine-story four-star hotel with about 300 rooms on Rosa Luxemburg Street (the area of the Cathedral). The plan also includes the renovation of two historic buildings that are located on the site. According to the plan, they will be included in the overall concept of the complex - it is assumed that they will house shops and restaurants. However, according to Mr. Kurbanaev, their restoration, as well as the resettlement of 36 families who now live in the houses, requires an additional investment in the project of about 200 million rubles (he refused to name the total cost of building the hotel). “If we consider that we need to reduce the number of floors to six, because the hotel should not rise above the dome of the cathedral, the cost per square meter in the complex increases by 15 thousand rubles, and this will make the project unprofitable,” he noted.

However, Governor Rossel emphasized that the regional authorities do not intend to abandon this facility. “We will not remove it from control. You will report on implementation every month,” he said at the meeting. The construction of the Marriott hotel in Yekaterinburg was largely the initiative of the governor himself, who announced the need to build this hotel several years ago. The start of the implementation of this project, however, was announced only this year, and unofficially at the governor’s residence it was said that Mr. Rossel personally participated in negotiations with representatives of Marriott.

The chief architect of the city, Mikhail Vyatkin, heard about the requirements for reducing floors that the regional authorities allegedly presented to Uralmash from a Kommersant correspondent. “These are excuses. The company just realized that it couldn’t handle this project,” he suggested.

At the same time, market participants treated the developer’s problems with understanding. According to a source from among Yekaterinburg construction companies, businessmen today prefer not to take on projects that involve the reconstruction of ancient monuments. “As practice shows, the approval procedure for such projects can literally last for years. It is necessary not only to negotiate with the head of architecture and expertise, but also with the agency for the use of historical and cultural monuments and the NPC for the protection of historical and cultural monuments. This requires not only a large amount of funds, but also connections in the authorities,” explained Kommersant’s interlocutor. And the chairman of the board of JSC Construction Company Aston, Vyacheslav Trapeznikov, added that the restoration of architectural monuments can increase the cost of construction by up to 30%. “We are now building the Tsarsky Bridge business center, the project of which also involves the reconstruction of an architectural monument. The approval process took us a lot of time, and in the current market conditions it is very unprofitable,” noted Mr. Trapeznikov. In addition, he concluded, for such an object as a four-star hotel, the developer may simply not attract finance. “Banks have been having a hard time giving loans to builders for several months now, and most likely they won’t issue loans at all for a project involving reconstruction, restoration and large construction,” he believes.

Olga Bondar

Kommersant (Ekaterinburg) No. 178 dated 10/02/2008

"Marriott" sank on monuments