Q1 2008
                                                                            RESIDENTIAL REAL ESTATE MARKET OVERVIEW

                                                                                                                                              Q1 2008


   Summary……………………………………………………………..…………………………………….                                                                         3
   Residential real estate. Russia. Residential construction ………..……………...…………………… 4
   Residential real estate. Moscow region. Residential construction …………………….…………….                                        5
   Residential real estate. Moscow………………………………………………………………………...                                                           7
   Residential real estate. Elite segment. Moscow. Sale………….……………………………………..                                               11
   Residential real estate. Elite segment. Moscow. Rent..……………………………………………….. 16
   Residential real estate. Elite segment. Moscow region. Rent………………………………………... 19
   Countryside. Elite segment..…………………………………………………….………………..…….... 20
   Countryside. Land market………………………………………………………………………………… 24

                RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540
                                                                                      RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                  Q1 2008


    The volumes of housing construction in Russia in Q1 2008                Rental kept on growing in Q1 2008 at the quarterly rate of 3-5%.
amounted to approximately 10,2 mln sq. m. This indicator is in 700          As of the end of Q1 2008, the average elite flat rental amounted to
thous. sq. m excess over the similar indicator reached in 2007.             $6 100 per month, elite cottage - $16 700 per month.
The volume of housing construction demonstrated a negative dy-
                                                                                Suburban realty market was developing steadily in Q1. 20 new
namic in Moscow and Moscow Region. Nevertheless, in absolute
                                                                            projects were launched within these three months. Active sales
figures they take the lead among the Russian regions in the hous-
                                                                            were underway in 305 projects. Primary sales were underway in
ing construction. In Q1 2008 almost 1 mln. sq. m of housing were
                                                                            263 villages located in the most popular western directions. The
accepted by state commissions in Moscow Region and 716 thous.
                                                                            most saturated is the segment of business class villages, most of
sq. m were accepted in Moscow. The prospects of new construc-
                                                                            all in the areas located in the vicinity of Novorizhskoye shosse.
tion in Moscow and Moscow Region look optimistic: in the Region
                                                                            Competition in this segment keeps on growing. There is a consen-
new construction can be undertaken by way of comprehensive
                                                                            sus of opinion among key market players that supply in the busi-
development of a large number of empty land plots, in Moscow this
                                                                            ness class segments is in significant excess over demand. Econ-
can be done by way of implementation of the programs originated
                                                                            omy class segment is also developing steadily. The aggregate
by the city authorities.
                                                                            volume of supply in this segment is already higher than in the pre-
    A decrease in the volume of supply and an upswing in the buy-           mium class. However, demand is still in excess over supply there.
ing activity were noted in Moscow’s housing market in Q1. Rea-
                                                                                Contrary to the traditional expectations related to post-New
sons therefore included a growth in the population’s incomes,
                                                                            Year seasonal slack, there was an upswing in the consumer activ-
presidential elections, move of some investment players from the
                                                                            ity at the market. Prices for suburban realty grew up by 12-19% in
stock market to the real estate market etc. prices in Q1 grew up by
                                                                            the most popular directions. Maximum growth was seen in the
12-15%, and the average prices reached the level of $6 300 per sq.
                                                                            areas close to Novorizhskoye shosse, Kaluzhskoye shosse and
m in the primary market and $6 400 per sq. m in the secondary
                                                                            Minskoye shosse. Prices were also growing steadily on Dmi-
market. Price growth is expected to slow down in summer.
                                                                            trovskoye shosse which is catching up with Kaluzhskoye shosse
    No major changes took place in the elite residential realty mar-        and Kievskoye shosse in terms of price level.
ket. Whilst the secondary market demonstrated positive dynamics
                                                                                Just as in the residential suburban realty segment no seasonal
of supply, the new buildings segment was still in attendance of the
                                                                            decline was seen in the land market. According to Q1 bottom line,
release of new objects. Buyers of elite dwelling were noticeably
                                                                            the prices of land plots grew up by 10-15% in average. Market
active in the beginning of this year thus triggering quarterly price
                                                                            players believe that land plot prices will rise by at least 35-40% by
hike of 10-15% in average. Therefore, the average price in the
                                                                            the end of this year. Main reasons for growth in land plot prices lie
primary market amounted to $21 000 per sq. m. in the secondary
                                                                            in the ongoing increase of initial land development costs and the
market it was a bit higher ‑ $22 200 per sq. m.
                                                                            absence of new allocated primary lands in a situation where the
    The beginning of 2008 was marked by the traditional burst of            state keeps on toughening its control over the lands in federal or
activity in the market of elite rent and by a growth in the volume of       municipal ownership.
new supply. Demand intensified in late February-early March.

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                    RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                                                                                       Q1 2008


    National Project «Affordable and Comfortable Housing for the              Residential supply trends in Russia, 2003-2008
Citizens of Russia» was launched in Russia in 2006. One of the
                                                                                               80,0                                                                                                                    160,0
top-priority objectives of this Project is an increase in the volume of
                                                                                               70,0                                                                                                                    140,0
housing construction. He volume of commissioned housing space
                                                                                               60,0                                                                                                                    120,0
are expected to reach at least 80 mln. sq. m by 2010.
                                                                                               50,0                                                                                                                    100,0

    Another step towards the attainment of this objective was made

                                                                                               40,0                                                                                                                    80,0
in 2007 when the country’s housing stock increased by more than                                30,0                                                                                                                    60,0
60 mln. sq. m. In the current year this indicator is to increase by                            20,0                                                                                                                    40,0
20% - up to 72 mln. sq. m. The volume of new construction in Q1                                10,0                                                                                                                    20,0
2008 demonstrates that the objectives set for Russia’s construction                             -                                                                                                                      -
industry in 2008 are attainable.                                                                               2003              2004                2005              2006             2007           2008
     Almost 10,2 mln. sq. m of housing space were commissioned in                                              new supply per y ear , mln. sq.m
                                                                                                               new supply , mln. sq.m
the first three months of 2008 in Russia. This is 700 thous. sq. m                                             growth rate, % to the corresponding period of the prev ious y ear
more than in the same period of last year. In Q1 2008 the rate of
                                                                              Source: Federal State Statistic service
growth in the construction industry became lower: in the early
                                                                              Residential supply trends in Russia, 2005-2008
months of 2007 the growth rate was more than 50%, but at present
this figure hardly reaches 8%. It was an expectable result as last
                                                                                              18                                                                                                                  180
year’s «construction boom» in the Russian capital and in Moscow
Region could not but give way to a stabilization of construction ac-                                                                                                                                              150
tivity. Nevertheless, such growth rate is acceptable from the view-                           12                                                                                                                  120

point of top-priority construction programs inspired by the Russian                           10

Government. A growth of at least 10%-12% is expected in the vol-
                                                                                               6                                                                                                                  60
ume of commissioned housing space.                                                             4
   Should such growth rate persist in the next few years, the                                  0                                                                                                                  0
planned annual figure of 80 mln. sq. m of housing would be













    Volume of housing construction in Moscow and Moscow Region                                                              new supply , mln. sq.m
                                                                                                                            % to the corresponding period of the prev ious y ear
showed a negative dynamics. Around 1,7 mln. sq. m of housing
space were built in the period under review versus 2,3 mln. sq. m in          Source: Federal State Statistic service

the similar period of last year. In Q1 2008 the share of Moscow and           Residential supply in Russia, Moscow region and Moscow,
Moscow Region in the total volume of commissioning across Russia              2003-2008, mln. sq. m
came down to 17% (versus 20% in the last year) whilst the share in
the Central Federal District remained the same - 29% (against 30%
in Q1 2007).
   In spite of the decrease in the housing construction volumes, in
absolute figures Moscow and Moscow Region, retained its leading                               9

positions in this sector in the period under review.
   Moscow Region. About 1 mln. sq. m were accepted in Moscow
Region by State Acceptance Commissions in Q1 2008. Housing                                    3
construction volumes went down by almost 5% versus the similar
period of last year. However, this decrease was not substantial.
                                                                                                        QI 2003              QI 2004                 QI 2005            QI 2006                 QI 2007          QI 2008
One can therefore forecast that the Government’s plan to build al-
                                                                                                    Moscow                                   Moscow region                                           Other regions
most 7 mln. sq. m in Moscow Region in 2008 are feasible.
                                                                              Source: Federal State Statistic service

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:                                     Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                              RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                                    Q1 2008


    The point is that the Moscow Region’s market is rather attractive              Residential construction growth, % to the corresponding
nowadays in terms of investments. First, demand for housing ob-                    period of the previous year
jects in Moscow Region is growing among people who come there
from other parts of the country, as well as among Muscovites who                            230
intend to improve their living conditions but are unable to do it in the
capital. Second, at present some towns of Moscow region that are

located close to Moscow, such as Odintsovo, Khimki, Mytischi,                               150
Krasnogorsk, Reutov, Domodedovo, surpass some sub-districts of                              130
Moscow in terms of infrastructure development and transport ac-                             110
cess. Moreover, these towns have a large number of empty land                                90
plots fit for construction thus making Moscow Region’s market lu-
crative for large construction companies.
                                                                                                    QI 2003 QI 2004 QI 2005 QI 2006 QI 2007 QI 2008
    For example, «Mirax Group» plans to develop 29 hectares of
land on one of the peninsulas in Myakininskaya Waterbed. The                                    Russia                   Moscow region                        Moscow
land plot is located at the first kilometer of Novorizhskoye shosse                Source: Federal State Statistic service
near the already-known Rublevo-Arkhangelskoywe residential set-
tlement. The project is presently under development. 600 thous.
sq. m of low-rise elite housing are to be built here.                              that allows to satisfy a deferred demand. A major drawback is the
                                                                                   substantial volume of areas of different types pinpointed for com-
    «Eurasia-City» Co. plans to develop 3 087 hectares of land near
                                                                                   missioning. This volume may protract the construction period and
Domodedovo, a town in Moscow Region. Konstantinovo, a new
                                                                                   increase a risk of project failure.
satellite town is to be built here by 2015. There are plans to build
6,5 mln. sq. m of residential and 2,6 mln. sq. m of commercial realty                  Moscow. Q1 2008 was marked by a sharp decline in the con-
in this satellite town where the population is expected to be at the               struction activity in Moscow where only 716 thous. sq. m were
level of 150 thousand.                                                             commissioned. This figure is 40% lower than the one reached in
                                                                                   the similar period of last year. The reason for this is downturn in
    «Elinar» Holding Company was another corporation that came                     construction activity that naturally followed last year’s s sharp
out to the realty market of the Moscow Region. It plans to develop                 growth. Another reason lies in a limited number of empty land
509 hectares near the town of Naro-Fominsk. «Kotovo» multi-                        plots fit for development and also in the release of the Law «On
functional park will include offices, logistic and industrial facilities, as       the ban on dotty construction» which has triggered delays in the
well as a residential estate for 20 thousand inhabitants and a rec-                commissioning of several residential estates under inspection.
reational zone. The project is to be implemented by 2010.
                                                                                       Still, the Government’s plans look optimistic - 5,3 mln. sq. m of
    Foreign companies were the next after Moscow-based building                    residential premises are to be built in the capital in 2008. How-
companies to announce an entry to the market. A project of Limit-                  ever, almost 50% of them (2,6 mln. sq. m ) will be allocated for
less, an Arab developer and RDI Group, a Russian company, will                     various social projects. Therefore, the total volume of supply in
be launched in early 2009. Moscow’s satellite town for 12 thousand                 the capital’s economy class housing remains limited thus entailing
inhabitants will be built on a land plot 113 hectares near Khimki.                 unsatisfied demand and subsequent increases in process for the
The town will have high-rise blocks, townhouses and cottages.                      most affordable dwelling.
Target completion date for the construction was set for 2016.
                                                                                        Redevelopment of industrial zones, reconstruction of residen-
   One should not forget some other major projects, such as                        tial quarters, demolition of villages and development of land plots
«Project А101» in MR’s Leninsky District, «Bolshoye Domodedovo»                    adjacent to MKAD are regarded by the Moscow Government as
in Domodedovsky District, «Project Plescheyevo» in the vicinity of                 the key backup measures for future construction in the capital.
Novorizhskoye shosse.                                                              One should not forget, though, that the implementation of all these
    The scope of the foregoing projects is both a plus and a minus                 programs would require a lot of time and money.
of such type of construction. The advantages include comprehen-                       The most intensively expanding sphere of Moscow’s housing
sive development of a land plot with a full and well-planned set of                construction sector is the redevelopment of industrial zones based
infrastructure facilities, higher degree of diversification of developed           on the restructuring and relocation of industrial enterprises.
areas, improvement of the quality of construction in Moscow Region

                            RESEARCH AND CONSULTING DEPARTMENT / E-mail:        Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                     RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                        Q1 2008


   •   Redevelopment of industrial zones. As stated by the Mos-              monolith-brick building with sections of different height (14 and
 cow Government, the areas of industrial zones are to be cut                 17 floors) will be commissioned this year at ul. Lobachevskogo 8-
 down by 2,5 times in the next few years. Most of the capital’s              1 in replacement for demolished buildings of the Khruschev era.
 industrial areas - 20 thousand hectares – will be razed and the             Total area of the building is 26 thous. sq. m, of which almost 11
 remaining 7,9 thousand hectares will be reserved for the con-               thous. sq. m will be occupied by dwellings. As of now, 23 off-
 struction of technology parks and small enterprise clusters. Note-          market five-storey buildings have been demolished and replaced
 worthy are the following approved projects aimed at the decom-              by 8 modern residential houses in Prospekt Vernadskogo sub-
 missioning of industrial zones:                                             district within the framework of the program.

                                                                                Moreover, in order to ensure the successful attainment of this
− part of the currently unused territory of Moscow Integrated
                                                                             objective, the Moscow Government decided to optimize the proc-
   Bread-Baking Plant in South Administrative District (SAD) in
                                                                             ess of demolition of five-storey buildings and resettlement of their
   Birulevo Vostochnoye. A residential estate of 420 thous. sq. m
                                                                             inhabitants by selecting a single business customer for the pro-
   will be erected here. It will also have 43,9 thous. sq. m of com-
                                                                             gram as a whole.
   mercial premises, car park for 9 thousand vehicles and 15,2
   thous. sq. m of social infrastructure. Target completion date for
   the construction is set for 2009.                                           •   Reconstruction and demolition of villages. Another pro-
                                                                             gram that allows to release lands for construction is the program
− buildings of the second stage of construction of Micro-District
                                                                             of reconstruction and demolition of villages. According to the
   34 «D» and «Е» will replace the cement elevator in Pechatniki.
                                                                             head of Moscow construction sector, an inventory of all Mos-
   Residential buildings with the total area of 60,2 thous. sq. m
                                                                             cow’s residential settlements and villages has been completed.
   and the relevant infrastructure are to be erected there. Market
                                                                             By the end of 2008 Moscow Committee for Architecture must
   evaluation of all buildings and installations of «Cement-Service»
                                                                             determine the territories to be reserved for municipal construc-
   and other project-related documents will be made by Q3 2008.
                                                                             tion on the basis of the developed urban planning documenta-
− OJSC «Russian Railways» jointly with CJSC «Zhildoripoteka»                 tion.
   is currently implementing a project of construction, reconstruc-
                                                                                 An example of such reconstruction is Butovo residential settle-
   tion and conversion of real estate objects owned by OJSC
                                                                             ment in South West Administrative District (SWAD). 53,3 thous.
   «RR». At present RR owns 26 large land plots totaling 640
                                                                             sq. m of housing space are to be built here in 2008, as well as
   hectares in Moscow, St. Petersburg, Novosibirsk, Vladivostok
                                                                             three kindergartens. Most of the construction will be carried out
   and other big cities of Russia. Of these 15 land plots are in
                                                                             on the land plots that are now occupied by private buildings and
   Moscow. The plans are to release shortly the land plots of the
                                                                             that will subsequently be released for construction. Six residen-
   Factory named after Voytovich; land plots adjacent to Lenin-
                                                                             tial building totaling 70 thous. sq. m were commissioned in
   gradky, Yaroslavsky and Savelovsky Railway Stations; section
                                                                             Butovo in 2007.
   between Fili and Setun railway platforms. Both residential and
   commercial buildings will be erected on these land plots.
                                                                               •   Development of land plots adjacent to MKAD. Intensive
                                                                             work on the program for the development of land plots adjacent
   •   Demolition of decrepit and five-storey residential build-
                                                                             to MKAD is currently underway. As of now, the pre-project
 ings. In accordance with this program, Moscow’s outdated hous-
                                                                             documentation for 21 land plot has been developed and ap-
 ing stock is to be reduced to 10% in the course of reconstruction
                                                                             proved. In this connection the developers of the new General
 and repairs. So far the program has been successfully imple-
                                                                             Plan suggest that the status of Moscow’ «new Garden Ring» is
 mented in two of the capital’s Administrative Districts – Central
                                                                             given to MKAD. Junctions of radial highways and MKAD were
 and South. As of today, the total volume of the housing stock
                                                                             included in the «New Moscow Ring» program.
 planned for reconstruction amounts to 8,7 mln. sq. m. According
 to the program, 259 bearing-wall five-storey buildings are to be              Remediation of lands located under power transmission
 demolished in the current year, 260 in 2009 and 63 in 2010.                 lines. The Government of Moscow is taking many efforts to
                                                                             develop a program for the remediation of lands located under
    One example of successful implementation of this program is
                                                                             high-voltage power transmission lines. A list of 154 land plots to
 located in Prospekt Vernadskogo sub-district (SAD). A modern
                                                                             be vacated for construction and relocation of power transmission

                         RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                        RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                           Q1 2008


 lines to the subsurface. Most of these land plots are located in                 pected to have a new subway ring and a new line from Kapot-
 South Administrative District (30). It is followed by West Adminis-              nya sub-district to Nagatinskaya Poima sub-district.
 trative District (28), South East Administrative District (22), North
 East Administrative District (16), North Administrative District             − Reconstruction of railways. The authorities plan to expand and
 (15), East Administrative District (14), Zelenograd Administrative               reconstruct the network of rapid transport lines to Shere-
 District (12), South West Administrative District (10) and North                 metyevo and Vnukovo airports. In addition, Moscow Circular
 West Administrative District (6). One land plot under a power                    Railroad will have passenger trains driven on it again.
 transmission line of 2,1 thous. m will be redeveloped on Shele-
                                                                              − Construction of express tram lines. According to the General
 pikhinskaya nab., Central Administrative District.
                                                                                  Plan, 12 special express tramway lines in the overll length of
    Transport programs. Apart from the foregoing programs, an                     200 km will be laid by 2025 in all districts of Moscow. First
 emphasis is laid in the new General Plan on the addressing of                    lines are to appear in the next five years in EAD and SEAD.
 transport issues, in particular to the development of public trans-              Trams will go on one of the lines from «Ploschad Ilyicha» sub-
 port. The following actions within the framework of this program                 way station along Shosse Entuziastov to Novokosino. The
 should be noted:                                                                 second line will go between Kozhukhovo and Tekstilschiki.

− Subway construction. By 2025 the authorities promise to build                   After the implementation of the program for the improvement of
   440 km of underground railway. New sections of Zamoskvoret-                transport access many sub-districts of the capital will become
   skaya, Lublinskaya and Mitinsko-Stroginskaya subway lines are              more prestigious. One can therefore forecast a significant change
   to be laid between 2011 and 2015. «Slavyansky Boulevard»,                  in prices for flats in these sub-districts in relation to the sub-
   «Novoperedelkino» and «Novokosino» stations will be built in               districts that take the lead in prices.
   the nearest future. 70 km of railway and 30 new stations must
   be built within the next four years. By 2025 Moscow is ex-

    In Q1 2008 there was a slight (around 5%) decrease in the                 Planned residential construction distribution
number of new buildings offered in the capital’s market. This was             by Moscow districts, March 2008
due mostly to a decrease in the volume of commissioned space
and a growth in buying activity. Moreover, taking the price uncer-              South-East
tainties into account, developers tend to withhold flats in new build-
ings until the price of one sq meter reaches its maximum value and
until the prices in the market reach a certain level of stability.
    Just as in the similar period of last year, West Administrative            North-West
District took the lead in the supply pattern in the market of new               North-East
buildings (21%). High volume of construction are determined by                        North
the popularity of this zone among both the buyers and the develop-
ers. This district is one of the most environmentally clean. It also
has a well-developed infrastructure. In addition, there are some
former industrial lands fit for construction and areas of old buildings                     0%           5%         10%          15%          20%          25%
that can be refurbished. There are plans to build around 1,3 mln.
sq. m of housing space in this district in 2008. Should these pans            Source:
be implemented successfully, this would make up one quarter of
the total volume of supply in the capital thus allowing WAD to re-
main in the lead with regard to supply volume.

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                        RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                           Q1 2008


    Offers are in the minimum quantity in SEAD (4%), NAD (6%)                 New objects distribution by Moscow districts, March 2008
and SAD (7%). However, successful implementation of the pro-
                                                                                                         East                            West
grams aimed at reconstruction and demolition of five-storey build-                   South-West
                                                                                                         16%                             21%
ings, as well as redevelopment of industrial zones will enable NAD            South-East
to leave the ranks of outsiders. A plan of r the commissioning of                4%                                                                          North
about 569,8 thous. sq. m of dwelling is in place. NAD would there-                                                                                            6%
fore become one of Moscow’s three leaders in the volume of con-
struction.                                                                    South
                                                                               7%                                                                          North-East
    Moscow’s secondary market is usually more responsive to                                                                                                  10%
shifts in the overall market situation. Volume of supply usually                                                                    North-West
change depending on specific market cycle. Between January and                                                                         18%
March 2008 the market entered a standby phase. Sellers were
                                                                              Source: Blackwood research
withholding flats due to changes in prices. Therefore, steady price
hikes in the secondary market were accompanied by a decrease in
the number of new offers, including investment apartments.                    Secondary market objects distribution by Moscow districts,
                                                                              March 2008
    This is how the supply pattern in the secondary market: most
of the supply is concentrated in CAD (about 22%) and WAD (16%).                             North-East                 North-West
The reason for this lies in the fact that the appreciation of square                           9%                          8%
                                                                                   North                                                                    Central
meter affected mostly the economy class segment while the expen-
                                                                                    8%                                                                       22%
sive dwelling segment now demonstrates a smaller rate of growth
in price indicators. Prices in it are growing gradually but steadily.
This is why the popular elite districts take the lead nowadays. Sup-
ply pattern in other districts is generally even.
                                                                                 West                                                                         South
   Several projects of residential estates were announced in Q1
                                                                                 16%                                                                          10%
2008. The following are noteworthy:                                                             East                South-West               South-East
                                                                                                8%                      9%                     10%
   •   «Snegiri Eco» low-rise residential estate. It will be built on a
   land plot of 5,26 hectares, at the junction of Minskaya and Mos-           Source: Blackwood research
   filmovskaya. The total area of this estate will be 62 thous. sq.
   m. The construction is to be completed in March 2011.

   •   Four residential complexes of «Midland Development» Co.
   totaling 470 thous. sq. m. A residential building of 102,3 thous.
   sq. m is to be erected on Vernadskogo prosp. «Lobachevsky»
   multi-functional residential estate will be built on Aminyevskoye
   shosse (270 thous. sq. m), Malaya Pirogovskaya ul. (73 thous.
   sq. m) and Ostozhenka (27 thous. sq. m).

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                              RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                                                                        Q1 2008


    In general, an increase in demand, both on the part of investors          Credits extended to individuals, Moscow
and people intending to buy flats for residence took place in Q1                        140                                                                                                             30
2008. Growth in housing prices is a driver for an intensive buying
activity: buyers whose intention is to improve their living conditions                                                                                                                                  25

have become aware that dwelling becomes less and less afford-                           100

                                                                             bln. rub
able as prices get higher. This factor urges them to be faster in
deciding to buy flats.

    Growth in the population’s incomes and mortgage crisis in the                                                                                                                                       10
US played their respective roles. The impact of the mortgage crisis
on the Russian market manifested itself in a smaller number of                           20                                                                                                             5

lending opportunities offered to Russian banks in the international
                                                                                          -                                                                                                             0
market and, consequently, in the tougher lending terms inside the













country. Development of this process prompted the buyers who,
until now, had been delaying the purchase of flats to purchase flats                                           v olume of housing loans
sooner using mortgage loans before the rates become higher and                                                 Including mortgage loans
                                                                                                               housing loans, % to the total households loans
the terms become even more tough.
                                                                              Source: Central Bank of RF
    Presidential elections in Russia, regardless of the predictability
of their result, were perceived as yet another driver of growth in            to 26%. A conclusion can thus be drawn that, in spite of the
demand for dwelling – such event as «pre-election fever» was seen             tougher lending terms, mortgage markets keeps on developing
in the market. Buyers were afraid of any major change in the mar-             steadily.
ket and were thus trying to buy flats as soon as possible.
                                                                                  Well-to-do inhabitants of the capital and the regions, as well as
    International financial crisis also had an impact on the existing         investment players are still the most active buyers of Moscow’s
situation – investors that had traditionally been working in the stock        residential realty. Other Muscovites become more and more inter-
market came to the housing market with an intention to protect their          ested in dwelling on the outskirts of Moscow. A certain distance
assets in the financially unstable environment. Nevertheless, such            from the capital and, consequently, a somewhat lower price of flats
flow of funds from one market to another would hardly have a con-             is one of the key factors of Moscow Region’s attraction. Apart
siderable magnitude: in situation marked by protracted financial              from flat prices, some towns located near Moscow attract the Mus-
crisis dwelling may become an even more vulnerable asset instead              covites by their developed infrastructures, quality of housing con-
of being a «salutiferous» one.                                                struction and relatively good transport access.

    According to the Bank of Russia, loans granted for the pur-                   As of now, the capital’s investment market seems to be rather
chase of dwelling amounted to RUR 120 bln. in the period under                lucrative from the viewpoint of return on investment. The stable
review. This figure is equal to 25% of the overall volume of loans            growth in prices may lead to high future profits from the flats pur-
granted across Russia in Q1 2008. This indicator is twice as high             chased today. An investor may gain up to 50% annual profit, pro-
as the one reached in the similar period of last year. Since January          vided that it joins a construction project at its early stage.
2007 the share of loans for the purchase of flats grew up from 18%

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:                       Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                          RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. RUSSIA                                                                                                                             Q1 2008


                                                                                 Prices dynamics in primary and secondary markets of
    The housing market that had been in a state of unsteady bal-
                                                                                 Moscow, $ per sq. m
ance throughout 2007 “chose” the second of the two options for the
further development of the cost situation, i.e. recoil in prices or their        6 500
                                                                                                   primary market
further growth. Acceleration of this market commenced as early as                6 000
                                                                                                   secondary market
in January 2008. Prices grew up by 7-8% in the first two months of               5 500
2008. March 2008 saw an even greater price hike – by 5-7% in                     5 000
average for various objects. Therefore, he growth amounted to                    4 500
about 12-15% in Q1 2008.                                                         4 000
                                                                                 3 500
    Price growth was triggered by such factors as pre-election fever
                                                                                 3 000
that had engulfed the market in the beginning of this year, dollar’s
                                                                                 2 500
downfall, instability in the world’s financial market, as well as the

overall revival of Moscow’s and Moscow Region’s markets gener-
ated by the expectations of its players in respect of further develop-
                                                                                 Source: Blackwood research
ment of the cost situation.
    As of March 2008, the average price at Moscow’s primary mar-                      However, as demonstrated by the history of the development
ket amounted to $6 300 per sq. m. At the secondary market they                   of the housing realty market, acceleration of price growth is the
were as high as $6 400 per sq. m. The most expensive flats on                    final process. After a period of wanton growth the market comes
both markets were traditionally identified in CAD and WAD. The                   to a price threshold that cuts off some potential buyers who be-
most affordable dwelling was offered in the southeast and south of               come unable to buy flats due to limited financial resources. This
Moscow – in the least prestigious sub-districts of Moscow where                  contributes to a lowering of demand level and a “cooling” of the
prices amounted to $4 900 - $5 000 per sq. m in the primary market               market. Blackwood analysis are of the opinion that in 2008 the
and $5 000 - $5 200 in the secondary market respectively. There-                 market will develop along the same scenario (acceleration will be
fore, the accelerated rate of price growth led to an appreciation of             followed by recession). Most of the adjustments will be made in
one square meter by 30% versus the rate recorded in March last                   summer, the period traditionally marked by a fall in consumer ac-
year.                                                                            tivity.

Average prices at the primary housing market with breakdown                      Average prices at the secondary housing market with
by Moscow Districts, $ per sq. m, March 2008                                     breakdown by Moscow Districts, $ per sq. m, March 2008

 Source: Blackwood research                                                      Source: Blackwood research

                              RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                  RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                                         Q1 2008


   No changes took place in Q1 2008 in the elite housing market.                Supply by Moscow districts and inside the Central District,
Some new offers appeared in his market in the end of 2007, but not              Q1 2008, %
even one significant object appeared in the market in the first three
                                                                                                                                                                            Khamov niki 15%
months of 2008. At the same time announcing of new projects

    In particular, the following new projects in the central part of the                                                 Other 13%
                                                                                                                                                                            Y akimanka 14%

city were announced:
                                                                                                                                          Centre 62%
• Two hotel and residential complexes in Khamovniki (ul. Ostoz-
                                                                                                                                                                            Presnenskii 9%
                                                                                                                        West 25%

    henka and ul. M. Pirogovskaya) to be erected by Midland De-                                                                                                              Taganskii 6%
    velopment,                                                                                                                                                         Zamoskv orech'e 6%

• Project for the development of the territory of the sparkling wine                                                                                                         Tv erskoi 5%

    factory (ul. Sadovnicheskaya in Zamoskvorechye) which is                                                                                                                     Arbat 5%
                                                                                                                                                                                  Other 2%
    being implemented by «Kuznetsky Most Delopment»,
                                                                                  Source: Blackwood research
• Two large-scale projects aimed at the construction of about
    200 thous. sq. m of dwelling each: the project for the develop-
                                                                                Dynamics of new supply on the secondary market*, %
    ment of the territory of “Rosstroyexpo” exhibition complex             500%
    (Frunzenskaya nab., Khamovniki) which is being implemented             400%
    by Gasprombank-Invest, as well as the project for the develop-
    ment of Kamushki area in the «Big City» (Presnensky sub-
     As opposed to the primary market, the secondary market was                 0%
demonstrating positive dynamics in the offers of new flats. A sig-









nificant portion of the supply was represented in the form of flats in
new buildings offered by their owners.

     Central Administrative District and West Administrative District                                                            2007                     2008
still take the lead in the supply pattern (more than 80% of the total
                                                                                * - according to the Company’s database; January - 100%
volume), as well as in the volumes of commissioning of elite and
                                                                                Source: Blackwood research
business class dwellings. The share of formerly non-prestigious
sub-districts, such as Presnensky and Yakimanka, kept on growing.               Dynamics of supply in terms of budget, $ per apartment, %
This was due mostly to the construction of several new objects
                                                                                 50%                     Q1 2007
                                                                                 40%                     Q1 2008
    Supply pattern kept on shifting to higher budgets – the share of             30%
flats priced at more than $3 million kept on growing. The most                   20%
«affordable» offers (up to $500 thousand) that are lucrative mostly              10%
to investment–oriented buyers now remain only outside the Central                  0%
Administrative District (in particular in a new business class resi-                              < 500 000         > 500 001 > 1 000 001 > 3 000 001 > 5 000 001                          > 10 000
                                                                                                                   and <1 000 and <3 000 and <5 000 and <10                                   001
dential estate on ul. Yekateriny Budanovoy in Kuntsevo sub-district
                                                                                                                       000        000         000       000 000
                                                                                Source: Blackwood research
    The market is now waiting for new offers, but the commission-
ing of new projects is being delayed. The ban on dotty construction
in the city restricted the ability of the developers to arrange for a           ized by substantial encumbrances and large size. Therefore, the
prompt market entry of smaller and more flexible projects. With-                process of their entry to the market is likely to be a lengthy one.
drawal of industrial enterprises from the central part of the city                  Nonetheless, an increase in the volume of supply by way of
seems to be very promising from the viewpoint of the elimination of             launching major projects may take place already in the second half
shortage of supply in the elite realty market, but the projects that            of 2008. This is when the construction of «Sadovye kvartaly» is to
are being implemented in the former industrial zones are character-             start on the land plot formerly occupied by RTI «Caoutchouc».

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:                      Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                          RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                      Q1 2008


                 Map. Moscow. CAD*. High-budget residential real estate. Volumes and pattern. New projects

 * - Central Administrative District
 Source: Blackwood research

                              RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                 RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                            Q1 2008

Table. Moscow. CAD. High-budget residential real estate. Projects planned for construction
             Company                                 Place                                           Area, segment                            Class
                                                                                                                                                             ing planned
                                                                                      5-hectare land plot, residential space: 300
 1             Decra                    Territory of Mosdormash Factory                                                                  business/elite             -
                                                                                     thous. sq. m (flats and serviced apartments)

 2             Tellax                        Mira prosp. 40, bldg. 1                                  reconstruction                     business/elite       2007-2008

            Sistema Gals
 3                                        Territory of Hamovniki Plant                    3-hectare land plot, 100 thous. sq. m          business/elite             -
                                                                                      More then 200 thous. sq. m of residential
 4        Guta Development                      «Zolotoi ostrov»                     space, about 140 thous. sq. m of office and               elite                -
                                                                                                    retail space
                                            Territory of Kauchuk Plant                More then 100 thous. sq. m of residential
 5     Bank «Rossiiskii kredit»                                                                                                          business/elite           2011
                                      ul. Usacheva-Trubetskaya-Efremova                                space
                                                                                   30 thous sq. m of residential space, 57 apart-
 6   Mirax Group, «Sistema-Gals»            Kostyanskiy pereulok, 13                                                                           elite              2008
                                       Shmitovskiy proezd, 20, territory of          land plot 0,51 ha, 14,8 thous. sq of residen-
 7          JSC «Patita»                                                                                                                 business/elite             -
                                             «Patita» shoe factory                                    tial space
                                            Tsvetnoi bul'var district,                   213-322 thous sq. m (residential, retail,
 8        RGI International                                                                                                                    elite              2011
                                            Chelsea Development                                      office space)
                                    on the territory of «Mashmir» factory, not
 9                                                                                         30 thous sq. m of residential space                 elite                 -
                                          far from Frunzenskaya nab.

10          «Olter» LLC                        Mytnaya ul., 40-44                         61,4 thous sq. m of residential space          business/elite             -

11          Instroiresurs                      ul.Efremova, vl. 9a                                                                             elite                 -
                                                Luzhnetskaya nab.,
                                    the territory of «Soyuz» and «Geliimash»
12   Mirax Group and «Absolyut»                                                          Multifunctional complex 350 000 sq. m           business/elite             -
                                     and a plot operated by «Luzhniki» com-
                                                                                        Square enlargement from 1 200 sq. m to 1
13     «Novyi osobnyak» LLC            Bolshoi Golovin pereulok, 7, str. 1                                                               business/elite           2008
                                                                                                      621 sq. m
                                                                                        Multifunctional complex with underground
14                                           Petrovka ul., 26, str. 9                                                                       business                -
15                                           Prechistenskaya nab.                                  20 flats club house                         elite

16                                             Smolenskiy bul’var                              27 flats residential complex                    elite

                                               Shabolovka ul., 7-9,                              Multifunctional complex
17          Stolitsa-group                                                                                                               business/elite
                                       the territory of Apakov Tram depot                             190 670 sq. m
                                                                                              Hotel and residential complex
18      Midland Development                    Ostozhenka ul., 8                                                                               elite                -
                                                                                                     27 thous sq. m
                                                                                              Hotel and residential complex
19      Midland Development               Malaya Pirogovskaya ul., 9/6                                                                    business/elite             -
                                                                                                     73 thous sq. m
                                            Sadovnicheskaya ul., 57,
           Kuznetskii Most
20                                     the territory of champagne factory       67 thous sq. m of residential space                       business/elite            -
                                                                 serviced apartments
                                                                                         200 thous. sq. m. MFC: exhibition area,
1а                                           Olympiyskiy prosp., 16                                                                         business                -
                                                                                               hotel, serviced apartments

                                                                                        80 thous. sq. m of residential, offices and
2а        AFI Development                    near B. Pochtovaya ul.                                                                         business                -
                                                                                        office centre and serviced apartments with
3а                                         Novaya Doroga ul., str.11b                                                                       business
                                                                                                    underground parking

                             RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                          RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                                                     Q1 2008


    Buyers were rather active in Q1 2008 in the market of high-                Dynamics of demand* at the housing market, %
budget dwelling. A boost in their activity was seen already in the
start of this year. In January 2008 the number of requests received
by Blackwood was more than five times higher than the number of                 800%
requests reached last year.                                                     600%
    Among the factors that affected this increase in demand one                 200%
must note the overall resumption of intensive market activity after               0%









the end of the protracted period of inadequate stability, crisis in the
world’s stock markets that caused a flow of some investment as-
sets to the more stable elite dwelling segment, as well as the presi-
dential elections in the RF which, in spite of its predictable out-
come, triggered further growth in demand.                                                                                       2007                            2008
   Analysis of the changes in the numbers of requests received by              * - requests to Blackwood, January - 100%
Blackwood in Q1 2008 shows a certain stability in demand during
the first three months of this year. However, there was a slight
                                                                               Demand structure by Moscow districts and inside the Central
decrease in the number of requests in the end of Q1.                           District, Q1 2008, % of total requests
    Traditional decrease in demand due to the holiday season is
expected in Q2 2008. Specialists from Blackwood believe that the                                                                                                                       Hamov niki 15%
                                                                                    no pref erences 4%
consumer activity will resume in autumn and that the flats offered                     Others 3%
within the framework of new projects will be in highest demand.
                                                                                    North 4%
                                                                                                                                                                                       Presnenskii 13%
   As for the geography of demand, Central Administrative District
                                                                           North-West 5%
and West Administrative District are traditionally the most popular
                                                                                                                                        Centre 64%
among buyers. In the center Khamovniki is the most demanded                                                                                                                            Tv erskoi 11%

sub-district. At the same time Presnensky sub-district is notably
                                                                                                                                                                                       Basmanny i 5%
growing in popularity. This is due, first and foremost, to its develop-         West 20%
                                                                                                                                                                               Zamoskv orech'e 5%
ment as the capital’s new business zone.
                                                                                                                                                                                          Arbat 4%
     An analysis of the changes in the demand pattern with break-                                                                                                                      Y akimanka 3%

down by budgets shows a notable decrease in the number of po-                                                                                                                            Others 5%
                                                                                                                                                                                  no pref erences 3%
tential buyers of dwellings priced below $1 million. At the same               Source: requests to Blackwood in Q1 2008
time the share of buyers willing to pay $3 million to 5 million for a
flat is growing intensively.                                                   Dynamics of demand in terms of budget, $ per unit, % of total
    In spite of a limited choice in the elite realty market, require-
ments for the dwellings to be purchased remain tough among their            60%
potential buyers. Parameters formerly regarded as secondary are                               Q1 2007
                                                                            50%               Q1 2008
becoming increasingly important nowadays. One of the examples               40%
is the interest of potential buyers in environmentally-oriented resi-       30%
dential estates, i.e. those with ecologically clean materials, high         20%
degree of amenity planting, leisure zones, parks etc.                       10%
     Another example is growing interest in the offered services.
                                                                                       < 500 000                > 500 001          > 1 000 001 > 3 000 001 > 5 000 001                                         > 10 000
«Copernicus» Residential Estatewas one of Moscow’s first residen-                                              and <1 000          and <3 000 and <5 000 and <10 000                                              000
tial estates to offer hotel services. At present it is one of the five                                             000                 000         000         000

most expensive residential buildings of Moscow. In spite of a very             Source: requests to Blackwood in Q1 2008
high price of one square meter, flats in «Copernicus» are in high

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:                       Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                   RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                 Q1 2008

MOSCOW. SALE. PRICES                                                                   Price distribution in Central Administrative District, primary
                                                                                       market, Q1 2008, $ per sq. m
    Prices grew up considerably in Q1 2008. The reason for this
was the intensification of demand accompanied by limited supply.
Prices for high-budget dwelling grew up by 10-15% in average in
the first three months of this year.

    According to Q1 2008 bottom line, the average price in the pri-
mary market of high-budget dwelling amounted to $21 000 per sq
m. In the secondary market it turned out to be much higher - $22
200 per sq. m. As compared to last year, developers were more
intensively shifting to prices denominated in rubles, regardless of
the difficulties in the perception of such denomination on the part of
the buyers. The reason for this lies in the instability of the US na-
tional currency.

    The most expensive flats were traditionally offered in the central                 Price distribution in Central Administrative District, secondary
part of the city. In Q1 2008 another increase of maximum supply                        market, Q1 2008, $ per sq. m
price up to $70 000 per sq. m took place in the primary market of
CAD (and, respectively, in Moscow’s market in whole). Such prices
were set for flats in penthouses in a new club house located at 2nd
Zachatyevsky per. 11/17 in Khamovniki sub-district. Projects im-
plemented by Barclay Co. (2nd Zachatyevsky per. 11/17 and a
house in Khilkov per.) are still the most expensive new buildings of
Moscow. This is due, first and foremost, to the attribution of these
buildings to the highest class group (club houses within the
«Golden Mile»).
    Maximum price in the secondary market, just like the maximum
price in the primary one, was noted in Khamovniki sub-district ($62
000 per sq. m). Minimum supply prices in CAD’s primary market
were spotted in Basmanny sub-district ($4 500 per sq. m). In the
secondary market of the central part of Moscow the lowest price                                                                           primary market
threshold is much higer - $8 000 per sq. m. Price range was also                          Average price for elite                          $ 21 000 sq.m
broad in the other districts of Moscow where flats are in the highest
                                                                                                Q1 2008                                  secondary market
demand - from $3 400 to $28 000 per sq. m. Penthouses in busi-                                                                             $22 200 sq.m
ness class new buildings were offered at maximum prices. In gen-
eral, one can say that prices are exorbitantly high in Moscow’s                         Price distribution in Moscow districts beyond Central Adminis-
high-budget housing market (a gap between the general average                           trative district ($/sq. m), March 2008
                                                                                                    District                  Primary market             Secondary market
market price and the average price in the elite segment is more
                                                                                                     West                      3 800-20 000                4 300-28 000
than 400%).                                                                                       North-West                   3 400 - 15 000              3 600 -22 000
    At the same time there still room for further price growth. This                                 North                      3 800-13 500                4 200-23 000
is demonstrated by the fact that market players gradually accept
                                                                                        Most expensive flats in Moscow, March 2008
the constantly growing maximum price values. Specialists from
                                                                                                                                                                        Price, $
Blackwood believe that an acceleration of price growth that started                                                                         Unit area,
                                                                                                  Address                     District                    Unit price, $ per sq.
in Q1 2008 is likely to halt and the market would “cool down” most
                                                                                                                              Primary market
obviously in the summer months when the market activity is low.                           Smolenskii 1-yi, vl. 19-21
                                                                                                                         Central/Arbat          682       22 722 500     33 317
Nevertheless, positive changes in the price indicators would still be                     "Smolensky" club house
taking place.                                                                                    Hilkov per. 5
                                                                                                                                           340,4          20 424 000     60 000

Most expensive new buildings in Moscow, March 2008                                                                         Central/
                                                                                             Barykovskii per., 6                            378           17 041 500     45 083
           Address                        District         Price, $ per sq. m                                             Secondary market
   Zachat'evskii per. 2 11/17        Central/Khamovniki        to 70 000
                                                                                           Frunzenskaya 2-ya, 12           Central/
                                                                                                                                            484           20 000 000     41 322
        Hilkov per. 5                Central/Khamovniki        to 60 000                        ( "Pyat' zvzd")           Khamovniki
      Barykovskii per., 6            Central/Khamovniki        to 45 000                  Trubnikovskii per. 4 str. 2
                                                                                                                         Central/Arbat          350       18 987 500     54 250
 B. Yakimanka, 22, "Kopernik"        Central/Yakimanka         to 45 000                   ("Arbatskaya usad'ba")
  Eropkinskii per., vl. 16/23/1      Central/Khamovniki        to 40 700                  Vrazhskii 2-i per., 3 ( "Tri     Central/
                                                                                                                                                420       13 860 000     33 000
                                                                                                   topolya")              Khamovniki
                                                                                       Source: Blackwood research

                                  RESEARCH AND CONSULTING DEPARTMENT / E-mail:     Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                         RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                                    Q1 2008


     The beginning of 2008 was marked by the traditional burst of              Supply volume dynamics*, % to basis period
activity. End of winter holidays and growing demand on the part of               250%
tenants led to a more than two-fold rise in the volume of demand in
March versus the volume reached in January, the month when the
elite rent market activity is at its lowest. Moreover, the beginning of
any year is a period when the existing lease contracts are revised               100%
thus supplementing the volume of available offer with a rather large              50%
number of flats. New objects keep on coming to the market in a                     0%







trend that is almost the same as the one seen last year. This is yet



another proof of a rather stable and natural development of the
market in accordance with seasonality factors in the last few years.
                                                                                                                                 2007                 2008
    As for the territorial preferences in the supply pattern, CAD              * - according to the Company’s database; January - 100%
                                                                               Source: Blackwood research
takes the lead - around 50% of all apartments are offered for rent
there. Even in Central Administrative District supply is spread
rather evenly: most of the supply is concentrated in Tverskoy sub-
district. Arbat, Khamovniki and Presnensky take up equal shares.               Supply structure by Moscow districts and inside the Central
Tagansky, zamoskvorechye and Basmany have smaller volumes of                   District, Q1 2008
supply. Gradual growth of supply in Presnenskly is quite natural as
the city’s business activity gradually shifts into this sub-district.                                                       Others 3%                                       Tv erskoi 8%
                                                                                                     North-East 6%
This is why the growth in popularity is followed by the growth in
                                                                                            North 8%                                                                         Arbat 6%
supply. Elite flats are also widely represented outside the Mos-
cow’s center, i.e. in the districts located in the western part of Mos-          North-West 11%                                                                            Hamov niki 6%
cow – SWAD, WAD and NWAD.
                                                                                                                                    Centre 48%                             Presnenskii 6%
     It is obvious that, in terms of budgets, flats of the lower price
range make up a significant share in the supply pattern. The rea-                                                                                                           Taganskii 5%
                                                                                       West 12%
son for this lies in the high demand for inexpensive but good dwell-
                                                                                                                                                               Zamoskv orech'e 5%
ing. However, a shift of the lowest level of rental is becoming more
and more visible. One year ago, i.e. in early 2007, there were                                                                                                         Basmanny i 5%
                                                                                           South-West 13%
many high-quality apartments offered for less than $2 000, includ-                                                                                                           Others 6%
ing those in CAD. Now there are no such flats available for such
budget. The minimum amount required to rent a high-quality flat is             Source: Blackwood research
now within the range between $2 000 and $3 000 per month. For
example, in CAD a person with this budget can rent a small flat of             Supply structure in terms of budget, USD/month, Q1 2008, %
up to 100 sq. m with cosmetic repairs and, possibly, a requisite set
of furniture in a Stalin-era building or in a brick building. At the
same time the share of offers in the uppermost price range, i.e flats                                14%                                 31%
for more than $10 000 per month, grew up considerably. As com-                        7%                                                                                           2 000-3 000
pared to the similar period of last year, this share grew up almost                                                                                                                3 001-4 500
two times and amounted to 14% of the total volume of supply in Q1                                                                                                                  4 501-6 000
                                                                                11%                                                                                                6 001-8 000
2008. On one hand, this attests to a growth in price that deter-
                                                                                                                                                                                   8 001-10 000
mines the move of a flat from one price category to another. On
                                                                                         15%                                                                                       >10 000
the other hand, this demonstrates a growth of supply in the «super-                                                                     22%
elite» segment.
                                                                               Source: Blackwood research

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:                  Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                        RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                   Q1 2008


    In Q1 2008 the demand in the elite rent market was subject to             Demand structure by Moscow districts and inside the Central
seasonality factors to the same extent as was the supply. There               District, Q1, % of total requests
was a considerable downswing in the market activity. In February
the demand for rentable flats livened up a bit and regained its usual
                                                                                                                                                Hamov niki 10%
active state by March. Traditionally, year start is a period of flat                                Others 10%
search among Russians who come to Moscow for permanent or
                                                                                                                                               Tv erskoi 9%
temporary but lengthy residence, as well as among foreigners.                      North-West 12%

    As before, the largest volume of supply in the elite segment was                                                                         Presnenskii 9%
concentrated in the Central Administrative District. Central part of                                                 Centre 54%

Moscow is in stable demand among tenants due to its concentra-                        West 12%                                                   Arbat 8%

tion of the highest-quality dwelling and also due to its convenient
                                                                                                                                           Zamoskv orech'e 6%
location. Moscow’s heavy transport load in the last few years re-
                                                                                         South-West 12%                                       Basmanny i 5%
sulted in the demand for centrally located flats on the part of not
only the people who come from other regions, but on the part of                                                                                 Others 7%
Muscovites as well. Those in the latter category prefer to have
permanent residence outside the city limits in one of Moscow Re-
                                                                              Source: requests to Blackwood in Q1 2008
gion’s most prestigious areas and an apartment in the center for
temporary residence on weekdays, for representation purposes etc.
                                                                              Dynamics of demand in terms of budget, USD/month, % of
in close proximity to the city’s business quarters.                           requests total
    In the Central Administrative District Khamovniki is in the high-     25%                                                                    Q1 2007
est demand among tenants. Ostozhenka zone is especially popu-                                                                                    Q1 2008
lar due to its prestigious location. Presnensky sub-district has been
gaining leadership position over the last few years – in Q1 2008 the      15%
share of demand for dwelling in Presnensky was at the level of
traditionally popular Tverskoy and Arbat sub-districts. Business          10%
activity in this sub-district is in constant growth. This prompts ten-        5%
ants to look for flats in close proximity to their places of work.
   Demand for rented dwelling outside CAD is spread rather                         2 001 -       3 001 -      4 501 -      6 001 -       8 001 -            >10 000
evenly between the districts located in the west of the capital:                      3 000         4 500        6 000        8 000         10 000
SWAD, WAD and NWAD. These districts are popular due to their
good environmental conditions and relatively good transport ac-               Source: requests to Blackwood in Q1 2008
                                                                              most expensive flats was another trend seen in Q1 2008. On one
    Analysis of the demand pattern with breakdown by budgets in
                                                                              hand this proves the fact that the level of rental is often too high to
Q1 2008 once again demonstrated a shift of demand from the
                                                                              satisfy the requirements of potential tenants. On the other hand,
lower price ranges to the higher ones. This attests to the adequacy
                                                                              such trend may result from the renting of some flats for represen-
of evaluations of the existing supply prices made by tenants – their
                                                                              tation purposes, i.e. for temporary residence. This makes the re-
requirements grow and so do the budgets required for renting flats.
                                                                              quirements for the size and, therefore, for the amount of rental
   However, a certain decrease in the share of requests for the               less tough.

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                     RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                          Q1 2008


    Regardless of the overall lull in the elite rent market, rental kept                 Rental rates by CAD, March 2008, $ per month
on growing in Q1 2008 at the quarterly rate of 3-5%. Continuing
downfall of the dollar rate may be identified as the main reason for
this growth. Most of the flats in the elite segment are now offered in
the USD equivalent thus urging landlords to constantly raise rates in
order to keep up with the requisite level of profitability in rubles.

    A more visible growth was noted in the end of that quarter, in the
period of traditional market upswing. As of the end of Q1 2008, the
average rental in the elite segment amounted to $6 100 per month.

    As for the geography of prices, on Q1 it looked as follows:
Khamovniki was the leader in average size of rental due to the offers
of expensive flats in Ostozhenka, the most prestigious area of Mos-
cow. It was followed by Basmanny with its most expensive offers in
the area of Chistye Prudy, as well as by Arabt and Tverskoy, the
sub-districts that are traditionally popular among Russian and foreign
tenants. Intensive development and growing popularity of some of
CAD’s sub-districts in the last few years have led to the emergence
of quite expensive offers outside the most popular zones – this trend
kept its pace in early 2008. For instance, in Q1 Zamoskvorechye
had a flat offered for $25 000 per month, Presnensky had a flat for                      Rental rates by town areas, March 2008, $ per month
$30 000. However, at present the most expensive flats are still of-
                                                                                                    Area                <60 sq.m        < 125 sq.m       < 170 sq.m        > 200 sq.m
fered in Ostozhenka where rental in Q1 2008 was as high as $50
                                                                                                                                     Class A**
000 per month.                                                                           Centre. Most popular
                                                                                                                       3 500-7 000 4 000-20 000 7 000-20 000              10 000-50 000
    Subsequent forecasts with regard to the development of elite rent
                                                                                         Centre. Others                3 500-5 500 4 000-10 000 7 000-16 000              10 000-30 000
market must take the seasonality factor into account. By the end of
                                                                                         Other districs
Q2 a decrease in the activities among both tenants and landlords is                                             West 3 000-4 500 3 000-12 000 6 000-20 000                9 000-30 000
expected. This decrease is likely to affect price growth, but the tradi-                                  South-West 3 000-4 500 3 000-10 000 6 000-10 000                5 500-18 000
tional burst of market activity in the second half of the year will lead                                  North-West 3 000-4 000 3 000-10 000 5 000-15 000                9 000-30 000

to the next price hike. Moreover, the price growth that has recently                                                                 Class B**
                                                                                         Centre. Most popular
started in the elite housing market would shortly affect the elite rent                                                3 000-4 000      3 000-5 000      3 500-8 000      8 000-15 000
market. In total, according to the forecasts made by Blackwood’s                         Centre. Others                3 000-3 500      3 000-5 000      4 000-8 000      5 000-13 000
analysts, the annual increment would be close to 15%.                                    Other districs
                                                                                                                West 2 000-3 500        2 000-4 000      4 500-7 000      8 000-12 000
                                                                                                          South-West 2 000-3 500        2 000-4 000      3 500-6 500      5 500-12 000
                                                                                                          North-West 2 000-3 000 2 000-3 500             3 500-5 000      7 500-12 000
                                                                                          *- Arbat, Tverskaya, Ostozhenka, Chistye Prudy, Patriarshye Prudy

                                                                                          **Classification of high-price flats
                                                                                                                                   Class A                              Class B
                                                                                                                                                             Newly built housing of business
                                                                                                                   Newly built housing of business and elite
The most expensive flats for rate in Moscow, March 2008                                      Type of building                                                class, renovated houses and old
                                                                                                                       class or fully renovated houses
                                                                     Price, $ per
        Address                   District        Unit area, sq. m                        Quality of renovation Western, design-based or exclusive             Western or high quality
                                                                                           Level of public areas
                             Centre/Hamovniki-                                                                        Quality finishing of entrance points            not obligatory
     Pozharskii per.                                    300            30 000                    finishing
                             Centre/Hamovniki-                                                                     A mandatory requirement, guarded,
                                                        200                                      Parking                                                            not obligatory
  Zachat'evskii 1-i per.                                               33 000                                       underground or fenced, in closed
   Vorotnikovskii per.        Centre/Tverskoi           350            50 000                                       Armed security, video surveillance and    access control, the concierge,
                                                                                                                              access control                          door phone
                             West/Prospekt Ver-
    Leninskii prosp.                                    300            30 000
                                                                                          Communication sys-          Connection to several telephone
                                                                                                                                                                    telephone line
                                                                                               tems                 lines, satellite TV, dedicated Inter-

Source: Blackwood research                                                                Source: Blackwood research

                                RESEARCH AND CONSULTING DEPARTMENT  / E-mail:        Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                        RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                                                                         Q1 2008

                                                                              Dynamics of cottages supply volume*, % to basis period
    The turn of the year is traditionally the main peak of activity in          180%
the elite cottage rent market. Demand for the rent of summer cot-               150%
tages usually starts growing by the end of Q1 and so does the sup-              120%
ply. Experience of the past years urges tenants to think about rent              90%
for summer as early as possible.
    In general, the elite cottage rent market is in acute shortage of             0%








supply. This is especially true for the specialized rent villages with
developed infrastructure, guards, high level of services etc. Pro-
jects of such rent villages are appearing in Moscow Region, but so
far only a few of them are in place.
                                                                                                                               2007                      2008
    For example, «Snegiri» Group of Companies initiated the con-              * - according to the Company’s database; January - 100%
struction of elite rent village «Residentsia Rublevo» on No-                  Source: Blackwood research

vorizhskoye shosse in one kilometer from MKAD. This construction
is to be completed in late 2009. The Project contemplates the                                         Average rental rates
                                                                                                       for elite cottages ,                                         $16 700 per month
erection of townhouses totaling more than 50 thous. sq. m on a                                              Q1 2008
land plot of 20,6 hectares. Location of the village in close proximity
to Moscow would allow to satisfy some of the high demand for the
                                                                              Rental rates for cottages by directions, March 2008, $ per
rent of buildings within the city limits. The panic demand in this            month
segment is caused not only by the existing shortage of supply, but
                                                                                                      Highway/Direction                                                          Rental rates
also by the limited capacity for new construction.
                                                                                                     Rublevo-Uspenskoe                                                       6 000-110 000
    Unsatisfied demand for house rent leads to permanent growth                                                  Novorizhskoe                                                    3 500-33 200
in rental rates. In Q1 2008 the average cottage rental amounted to                                   Kaluzhskoe, Kievskoe                                                        3 500-35 000
$16 700 per month. The rental value range remains very wide.                                                     Dmitrovskoe                                                     3 500-26 000
                                                                                                            Volokolamskoe                                                        3 500-30 000
     Potential tenant of small elite country house in one of the pres-
                                                                                                                 Pyatnitskoe                                                     3 500-40 000
tigious areas outside the city must have at least $3 500.
                                                                                                                   Moscow                                                        5 000-60 000
   Villages located in the most prestigious and the most de-                  Source: Blackwood research
manded areas near Rublevo-Uspenskoye shosse traditionally have
the maximum values of rental. In particular, the most expensive
                                                                              Rental rates for some cottage estates, March 2008, $ per
rent offer was a house of 1 450 sq. m in «Usovo» village for $110             month
000 per month.                                                                                          Village name                                                      Rental rates
    The most expensive offer inside Moscow is still a house of 650                                                                  Moscow area
                                                                                                             Usovo                                                  25 000-110 000
sq. m in Yekaterinovka cottage village located in WAD. It can be
                                                                                                          Lesnye gorki                                              25 000- 50 000
rented for $60 000 per month.
                                                                                                             Sosny                                                   25 000-75 000
                                                                                                                 Zhukovka                                                7 000-50 000
                                                                                                                 Kotton Vei                                          20 000-40 000
                                                                                                                  Diplomat                                           12 000-35 000
                                                                                                                  Barviha                                            10 000-30 000
                                                                                                                 Vatutinki                                            5 000-12 000
                                                                                                                 Rosinka                                              15 000-25 000

                                                                                                    Pokrovskoe-Glebovo                                               20 000-45 000
                                                                                                      Serebryanyi Bor                                                 15 500-25 000
                                                                                                    Poselok hudozhnikov                                              15 000-30 000
                                                                                                       Ostrov fantazii                                                   7 000-23 000
                                                                              Source: Blackwood research

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:                     Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                        RESIDENTIAL REAL ESTATE MARKET OVERVIEW

COUNTRYSIDE. ELITE SEGMENT                                                                                                                                  Q1 2008


    According to Q1 bottom line, Moscow Region had around 600             Average parameters of realizable cottage villages with break-
                                                                          down by the directions, Q1 2008
cottage villages, with sales underway in 305 of them. 263 villages
in the most popular western directions were at the stage of intensive                                                 Average Average land
                                                                                                        Number                                            cottage
                                                                                    Direction                         cottage   plot area,
sales. About 20 new cottage villages in the sector under review                                        of villages                                        price, $/
                                                                                                                     area, sq.m   sotka.
came to the market in Q1. This figure is higher than the ones
                                                                               Rublevo-Uspenskoye             28           751                 36            6 707
reached in the similar periods of the last two years. Novorizhskoye            Novorizhskoe                   79           443                 27            3 831
shosse, Kaluzhskoye shosse and Dmitrovskoye shosse take the                    Minskoye                       16           404                 28            5 638
lead in the numbers of new projects. No new projects were                      Kievskoe                       25           402                 36            3 013
launched on Rublevo-Uspenskoye shosse. So, Novorizhskoye                       Dmitrovskoye                   48           314                 19            3 046
shosse is still the leader in the volume of supply in the primary mar-         Kaluzhskoye                    47           430                 23            3 799
ket of cottage villages. The share of this direction is close to 35%.          Yaroslavskoye                  20           273                 18            2 364
                                                                           Source: Blackwood research
Kaluzhskoye shosse and Dmitrovskoye shosse rank second. Their
share amounts to 16%. Rublevo-Uspenskoye shosse has about                     Pattern of construction of the new cottage villages depending
7%. Should the emerging trends persist, one can forecast a further            on the distance from MKAD, Q1 2008
strengthening of the positions gained by the most popular directions                                          Number of villages under constuction
and a decrease in the volume of supply in such directions as                         Highway                                                     Total in the direc-
                                                                                                           <15 km 15-30 km >30 km
Rublevo-Uspenskoye shosse, Minskoye shosse and Mozhaiskoye
                                                                               Rublevo-Uspenskoye            11           17               -               28
shosse by the end of this year.
                                                                               Novorizhskoe                   8           30              41               79
     Most of the new projects (11 villages) are located at a distance          Minskoye                       5            6               5               16
of 15-30 km from MKAD, 6 villages are in 30-50 sector and 3 are                Kievskoe                       2           11              12               25
                                                                               Dmitrovskoye                   4           19              25               48
attributed to the segment of faraway dachas (80 km or more).
                                                                               Kaluzhskoye                   13           20              14               47
Therefore, the middle zone of Moscow Region is being developed                                                4            7               9
                                                                               Yaroslavskoye                                                               20
most intensively. As of the end of Q1, 65% of the volume of supply             Total                         47           110         106                 263
were concentrated in the areas that were located at a distance of          Source: Blackwood research
15-50 km from MKAD. The level of competition is getting higher in
                                                                              New projects on the countryside real estate market, Q1 2008
the faraway dacha segment where the supply has doubled in the
last few years. As of now, areas located in 50 km from MKAD or                                                     tance                              Price, $
                                                                               Name of the                                      Village
more take 22% of the supply. The share of MR’s areas that are                                     Highway           from
                                                                                 village                                         class
                                                                                                                   MKAD,                        min          max
close to Moscow (up to 15 km from MKAD) is only 13% and is likely                                                    km
to keep on shrinking in future (for example, only one new project -            Pokrovskoe -
                                                                                                Novorizhskoe         43        premium 1 733 000 5 229 000
"Belgiyskoye predmestye" (Belgian Suburb) –was launched at the                 Rubtsovo
market in Q1).                                                                 Pereleski        Novorizhskoe         56      business          240 584     824 225

     An overwhelming part of the supply accounts for business class            Staronikolskoe     Kievskoe           23      business          383 101    2 659 000
segment. Competition keeps on growing in this segment where                    Bulgakov         Kaluzhskoye          34      business          950 000    2 200 000
most of the new projects launched at the market are the villages               Belgiyskoe
                                                                                                Kaluzhskoye          9       business          800 000    2 300 000
with cottages priced at $700 000-$2 000 000. According to the esti-            predmestye
mates made by the key market players, supply in this segment is in             Hyde Park        Kaluzhskoye          25      business          399 327    1 387 137
major excess over demand. This would ultimately lead to a slower               Evropeiskaya
                                                                                                Kashirskoye          15      business          690 000     851 000
                                                                               derevnya 7
rate of project implementation. The current rate is 4 houses per
                                                                              Source: Blackwood research
month. This figure is two times lower than the figure reached in the
villages where cottages are offered for less than $500 000. In spite
of the intensive development of the remote areas of Moscow Re-
gion and the market entry of new economy class projects, demand
in this segment is still in excess over supply. As a result, villages
with affordable prices demonstrate the highest rates of sales re-
gardless of their location. Nonetheless, competition is gradually
growing. The current aggregate volume of supply in this segment is
already higher than in the premium class. Supply is gradually fad-
ing in the elite segment where only one project was released -
"Pokrovskoye - Rubtsovo".

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:    Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                           RESIDENTIAL REAL ESTATE MARKET OVERVIEW

COUNTRYSIDE. ELITE SEGMENT                                                                                                                                                    Q1 2008


    In Q1 2008 the number of requests in the elite suburban realty           Rating of the directions by demand for countryside elite real
segment grew up by 17% versus Q4 2007 and by 105 versus Q1                   estate, Q1 2008
2006. Therefore, in Q1, contrary to the traditional expectations
related to a seasonal slack, there was an upswing in the consumer
activity at the market.
    Rublevo-Uspenskoye shosse is still the leader in supply. Num-                           Ilinskoye
bers of requests were growing in Q1 in all directions, except Min-                         Minskoye
skoye shosse and Mozhaiskoye shosse. Kievskoye shosse,                              Ostashkovskoye
Kaluzhskoye shosse and Rublevo-Uspenskoye shosse showed the                           Mozhayskoye
highest rates of growth. The number of requests for areas close to                    Dmitrovskoye

Novorizhskoye shosse is growing, but at a slower pace. As a re-                     Other directions

sult, Kaluzhskoye shosse and Kievskoye shosse are now in the 3rd                                        0%              5%         10%          15%         20%         25%       30%
and 4th positions in the demand ratings, leaving Minskoye shosse             Source: requests to Blackwood in Q1 2008
and Mozhaiskoye shosse behind. Kaluzhskoye shosse is the most                The client’s preferences by distance from MKAD, % of the total
stable in terms of supply/demand situation. In the business class            number of requests, Q1 2008
segment of Novorizhskoye shosse supply is in significant excess                                          7%             6%
over demand thus slowing down the sales in cottage villages. The                                                                                       < 10 km
situation is reverse in other segments.                                                                                                                11-20 km
                                                                                                                                                       21-30 km
                                                                                                                                                       > 30 km
    In Q1 the demand pattern in terms of distance from MKAD un-
derwent some changes as well. The share of clients who intend to
buy a cottage within a distance of 10-20 km from MKAD increased              Source: requests to Blackwood in Q1 2008
considerably and was accompanied by the respective decrease in
                                                                              The client’s budget, % of the total number requests, Q1 2008
the share of requests for cottages located in the 20-30 km from
                                                                                                             5%              10%
MKAD. These changes prove that such factor as transport access                            11%
                                                                                                                                           21%        < $1 000 000
                                                                                                                                                      $1 000 000-1 500 000
to dwelling areas is very important for the buyers. Steady develop-                                                                                   $1 500 000-2 000 000
ment of the suburban realty market in the areas around Kievskoye                                                                                      $2 000 000-3 000 000
                                                                                                                                                      $3 000 000-5 000 000
shosse is yet another vivid example of the importance of the above            21%                                                                     $5 000 000-8 000 000
                                                                                                                                                      > $8 000 000
factor. Reconstruction of the highway and erection of new flyovers                                                                        16%
at junctions led to a significant improvement in the market positions
of this direction.                                                           Source: requests to Blackwood in Q1 2008

   As before, cottages of 300-500 sq. m were in the highest de-              The most popular cottage area, % of the total number of re-
                                                                             quests, Q1 2008
mand making up about 49% of requests received by the company.                                   17%                               10%
Most of the requests for large-size cottages were limited to the ar-                                                                            31%
                                                                                 6%                                                                       < 300 sq.m
eas of 700-900 sq. m. As for the land plot sizes, the optimal size                                                                                        300-400 sq.m
                                                                                                                                                          400-500 sq.m
considered by the buyers is 15-30 sotkas (100 sq. m). the share of
                                                                                                                                                          500-600 sq.m
requests for land plots of more than 50 sotka is also quite big, i.e.                                                                                     600-700 sq.m
                                                                                                                                                          > 700 sq.m
    In Q1 there were no significant changes in the amount of                 Source: requests to Blackwood in Q1 2008
budget per purchase. Most of the requests were still made for the            The most popular land plot area, % of the total number of re-
cottages priced at $1-3 million.                                             quests, Q1 2008
                                                                                                13%                          9%
                                                                                                                                                      < 15 sotka
    In general, as demonstrated by the incoming requests, the most                   2%                                                   23%
                                                                                                                                                      16-20 sotka
optimal co-relation of parameters for the business class segment              14%
                                                                                                                                                      21-30 sotka
(average budget is $1,5 - $2 million) is a cottage of 300-400 sq. m                                                                                   31-40 sotka
standing on a land plot of 20-30 sotka. In the premium class seg-                                                                                     41-50 sotka

ment (average budget is $5 - $7 million) the most popular is a cot-                                                                                   > 50 sotka
tage of 750-950 sq. m on a land plot of 30-50 sotka.
                                                                             Source: requests to Blackwood in Q1 2008

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:                   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                          RESIDENTIAL REAL ESTATE MARKET OVERVIEW

COUNTRYSIDE. ELITE SEGMENT                                                                                                                                  Q1 2008


    The bottom line for Q1 shows a 12-19% increase of suburban                 Average price of objects in villages under construction depend-
realty prices in the most popular directions. The reason for this              ing on the directions, Q1 2008
increase lies in the ongoing fall of the dollar exchange rate and in                                     Cottages, $ per sq.m             Townhouses, $ per sq.m
the intensive market activity. The maximum growth figures were                                                                                       15-30
                                                                                                      <15 km 15-30 km > 30 km < 15 km                      > 30 km
attained in such directions as Novorizhskoye shosse, Kaluzhskoye
shosse and Minskoye shosse. Prices were growing steadily on                                             8 560       6 160            -      4 623     5 112              -
Dmitrovskoye shosse which is catching up with Kaluzhskoye                      Novorizhskoe             7 528       4 457        3 065      3 919     3 043         2 225
shosse and Kievskoye shosse. In terms of distance, the highest                 Minskoye                 8 326       4 483        1 995      7 420     2 671              -
rates of appreciation were reached by the realty located in 30 or              Kievskoe                 4 936       4 029        2 864      2 812     2 369         -
more kilometers from MKAD. Therefore, a trend towards gradual                  Dmitrovskoye             4 627       3 704        3 742         -      2 024              -
closing of a gap between the areas of Moscow Region located in
                                                                               Kaluzhskoye              3 990       3 971        2 118      3 290     2 545         -
the medium and close distances from MKAD. It should be noted at
                                                                               Yaroslavskoye            2 318       2 776        2 113      2 137     1 472              -
the same time that the zones of maximum price growth differ by
                                                                               Source: Blackwood research
directions. For example, on Dmitrovskoye shosse the maximum
growth of cottage prices was seen in the 20-30 km zone, whilst on              Dynamics of prices in some villages under construction,
                                                                               Q1 2008
Minskoye shosse the maximum price growth zone was in the vil-
lages located near Mozhaiskoye Water Reservoir.                                                                                          Price, $ per sq.m  Differ-
                                                                                  Name of the                               from
                                                                                                        Highway                                             ence.,
                                                                                    village                                MKAD,
    In the end of Q1 2008 the average price of one square meter in                                                                       dec. 07    mar. 08   %
a premium-class cottage village in the leading directions amounted                  Novakhovo            Il'inskoye             15        6 141       6 806         11%
to $6 802 (with consideration to the price of land). The average
                                                                                  Belgian village     Kaluzhskoye           8            8 237        9 100             10%
price of one square meter in a business class village under con-
struction was $3 307. In the economy class villages the average                      Pavlovo         Novorizhskoe               14        6 778       6 983             3%
price was т $1 686 per sq. m.                                                       Residence
                                                                                                     Novorizhskoe           17           8 101        8 980             11%
     As follows from the analysis of average prices in cottage vil-               Grafskie prudi        Kievskoe                20        4 233       4 872         15%
lages, Moscow Region’s suburban realty market is developing un-
                                                                                   Linden Park        Kaluzhskoye           24           5 081        5 793             14%
evenly. Western part of this region presently has the highest level                                    Rublevo-
                                                                                 Usovo Ogarevo                                  11        8 483       8 720             3%
of prices. However, the gap between the costs of house properties                                     Uspenskoye
in the west, southwest and northwest parts of Moscow Region is                 Source: Blackwood research

gradually closing. Rublevo-Uspenskoye shosse retains its lead in
                                                                               Average prices for cottage villages in western directions,
suburban realty prices. According to Q1 bottom line, the average
price of house properties in this direction amounted to $6 707 per
sq. m, including the price of land. Minskoye shosse ranks second
in the average level of prices due to sales in such premium class
villages as "Stolnoye" and "Doville", although prices for house prop-
erties are lower in all other cottage villages in this direction. If we
take the above two villages out of this sample, we would see that
he average price level on Minskoye shosse is $4 541 per sq. m.
Due to inadequate transport access, this direction, in spite of its
location and beautiful landscapes, is developing inefficiently and
lags behind Novorizhskoye in the number of requests.

                                                                               Source: Blackwood research

                           RESEARCH AND CONSULTING DEPARTMENT / E-mail:     Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                       RESIDENTIAL REAL ESTATE MARKET OVERVIEW

COUNTRYSIDE. ELITE SEGMENT                                                                                                                               Q1 2008


    According to expert opinions, in 2008 price growth in the subur-          project implementation is 4 years. “Dolgorukovo” cottage village
ban realty market would reach at least 30%. It is assumed that the            will be built on a land plot of 5,41 hectares (in 69 km from MKAD
share of mortgage deals would increase considerably: from 5-7%                by Novorizhskoye shosse). It is expected to be a business class
to 30-35%. A greater number of customers would replace their                  village with approximately 130 houses also designated for perma-
urban dwellings by suburban ones. Profitability of suburban pro-              nent residence. Investments in “Dolgorukovo” will amount to RUR
jects is assessed at the level of 20-100% per annum. Annual incre-            1,67 billion (or $69,6 million), including the cost of land. The pro-
ment in land prices may amount to 25%-80%, depending on the                   ject is to be implemented in 3 years, including 2,5 years of village
direction and land plot parameters, in dwelling prices the increment          consruction.
may come within the range between 27% and 70%.
                                                                                  “OPK Development”, a business division of Obyedinennaya
   One of the major events of Q1 was MIPIM-2008 exhibition in                 Promyshlennaya Korporatsiya (OPK (United Industrial Corpora-
Cannes.                                                                       tion)) plans to build “Gribanovo” cottage village in 12 km from
                                                                              MKAD by Rublevo-Uspenskoye shosse. The village will occupy
     Mirax Group Corp. intends to build 600 thous. sq. m of low-rise
                                                                              the area of 470 hectares, half of which will be designated for lei-
elite dwelling on a peninsula in Myakininskaya Waterbed. Accord-
                                                                              sure. Ponds and 35-hectare park of the former Count Shere-
ing to Maxim Temnikov, Member of the Board of Directors, in the
                                                                              metyev’s manor are located on the land plot of this village. More-
summer of 2007 Mirax Group purchased a land plot of 29 hectares
                                                                              over, the village will accommodate an 18-hole golf course of 104
from «Absolut» Group. The project is located on the 1st kilometer
                                                                              hectares designed by Palmer Course Design Company. The ar-
of Novorizhskoye shosse opposite Rublevo-Archangelskoye village
                                                                              chitectural design of “Gribanovo” is being developed by a major
(where the project of “Nafta-Moscow” is to be implemented). Ex-
                                                                              French architectural agency headed by Jean-Michel Vilmotte.
perts presume that Mirax Group could have paid $ 87 million for
                                                                              According to expert estimates, “Gribanovo” project would require
this land plot, on the basis of $ 3 million per one hectare. Invest-
                                                                              more than $1 billion to be implemented.
ments in this project may amount to $1,2 billion.
                                                                                  “Eurasia” Investment and Industrial Group plans to invest more
    «Snegiri» Group of Companies plans to erect «Residentsia
                                                                              than RUR 375 billion ($15 billion) in the project aimed at the com-
Rublevo» elite village on Novorizhskoye shosse, also in one kilo-
                                                                              prehensive development of "Konstantinovo" land plot located in
meter from MKAD. An estate of 134 elite townhouses is to be built
                                                                              Domodedovo Urban District, Moscow Region. 5 mln. sq. m or
there by the end of 2009. The village will have the total building
                                                                              residential and 2,6 mln. sq. m of commercial realty are to be built
area of 53,6 thous. sq. m and the areas of house properties ranging
                                                                              on this 3 087-hectare land plot within the framework of this project
from 364 to 494 sq. m. According to Dmitry Shmelev, Commercial
                                                                              by 2015. It is expected that Konstantinovo satellite town will have
Director of “Snegiri”, houses in the village will be offered for rent.
                                                                              150 thousand inhabitants. The project also includes the construc-
The 20,6 hectare was purchased by the Group in 2004. $230 -
                                                                              tion of Russia’s first media park that will incorporate a multi-media
$250 million, including the cost of land, are to be invested in the
                                                                              complex for the production of films, TV and radio programs, the-
construction of this village. Experts estimate the rental in the town-
                                                                              matic leisure park and a residential micro-district for people en-
houses of «Residentsia Rublevo» at $20 - $40 thousand per
                                                                              gaged in various sorts of creative work. 140 hectares of land were
                                                                              allocated for the media park. "Pervy kanal" (First Channel) TV
     Rodex Group, an investment and construction holding com-                 Company will be the general partner of “Eurasia City” in the media
pany, announced its plan to build two new cottage villages in Istrin-         park construction. Total volume of investments will amount to
sky Distrtict. “Pereleski” (Woodlots), a business class cottage vil-          RUR 35 billion ($1,4 billion). Besides, "Astrarossa" Center for In-
lage for permanent residence, will be built on a land plot of 37,6            dustrial Design and Innovation will be erected in "Konstantinovo".
hectares (in 65 km from MKAD by Novorizhskoye shosse). 230                    At least RUR 2,7 billion ($113 million) will be invested I this pro-
houses (plus 20 twin houses – 250 house properties in whole) will             ject. “Konstantinovo” is also expected to accommodate a highly-
be erected in accordance with the master plan for the village. In-            developed social infrastructure, shopping and entertainment cen-
vestments in the project would amount to RUR 3 billion (or $125               ter of regional importance, business park with А and В+ class of-
million) with consideration to the purchase of the land plot. The             fices, large health center and an “academic town” incorporating a
village is to be built over the period of 3,5 years. Overall term of          university branch, MBA center and business incubator.

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                         RESIDENTIAL REAL ESTATE MARKET OVERVIEW

             ELITE SEGMENT                                                                                                                                   Q1 2008


    In Q1 Simferopolskoye shosse with its 18% share was the                  Pattern of supply of land plots in the western part of the
leader in the supply at the land plot market. This direction is now          Moscow Region by the directions, Q1 2008
one of the most intensively developed in the eastern part of Mos-                   Simferopolskoe

cow Region. Noteworthy is the fact that most of the land plots of-                    Novorizhskoe
fered for sale in the areas close to Simferopolskoye shosse are
located in 80 km from MKAD. Supply of land plots keeps on shrink-
ing in the areas near Rublevo-Uspenskoye shosse. According to
Q1 bottom line, the decrease amounted to 7%. The most acute
shortage of supply was noted in the areas within 15 km from                            Kaluzhskoye
MKAD, since 88% of the land plots offered for sale near this road                 Volokolamskoye
are located at a distance of more than 20 km from MKAD. At the                Rublevo-Uspenskoye
same time 50% of the request pertaining to this direction were                        Mozhayskoye
made for the land plots within the limits of 10-17 km from MKAD.                    Other directions

    Some minor changes took place in the land plot supply pattern                                      0%          5%              10%             15%               20%

in terms of distance, as compared to the previous period. The vol-           Source: Blackwood research

ume of supply in the areas of Moscow Region’s located in a me-               Pattern of supply of land plots in the western part of the
dium to short distance from MKAD dropped by 5%. At the same                  Moscow Region by distance from MKAD, Q1 2008
time, the share of land plots located in 50-100 km from MKAD                                                5%
                                                                                              8%                              14%
incfreased.                                                                                                                                              < 15 km
                                                                                                                                                         15-30 km
   Land plots of up to 20 sotka in the areas of unorganized devel-
                                                                                                                                                         30-50 km
opment, “gardening partnerships” and villages make up an over-
                                                                                                                                                         50-80 km
whelming portion of the supply. The share of cottage villages                 25%                                                                        80-100 km
where land plots are sold without any construction contract is mini-                                                                                     > 100 km
mal. Currently it does not exceed 11%.                                                                           24%

                                                                             Source: Blackwood research
    No major changes occurred in the demand pattern with regard
                                                                             The most popular directions for land plots, % of the total
to specific features of various directions in the three months of Q1.                                                                               Novorizhskoe
                                                                                              3% 3%         5%
Land plots on Novorizhskoye shosse and Rublevo-Uspenskoye                                5%                                           31%
                                                                                  5%                                                                Ilinskoye
shosse are still in the highest demand. In aggregate, they ac-                   5%                                                                 Mozhayskoye
counted for 61% of requests. Thanks to the active development of                                                                                    Kaluzhskoye
the suburban realty market, good transport access and adequate                                                                                      Minskoye
levels of prices Novorizhskoye shosse has been the leader in the                                                                                    Dmitrovskoye
                                                                                        8%                                                          Kievskoye
number of requests for several decades, leaving Rublevo-                                                                30%                         Other directions

Uspenskoye shosse behind. This direction is also highly appreci-
                                                                             Source: requests to Blackwood in Q1 2008
ated by key market players. According to the results of a poll made
by web portal among leading experts in suburban realty,           Pattern of demand for land plots depending on the area, % of
                                                                             the total number of requests
Novorizhskoye obtained the highest marks. Kiesvskoye shosse
was rated second by the experts.                                                                        9%                     13%
                                                                                                                                                         < 15 km
    In terms of distance from MKAD, some minor changes took                                                                                              15-30 km
                                                                                                                                                         30-50 km
place in consumer preferences. The share of requests for the land
                                                                                                                                                         50-80 km
plots in the areas of Moscow Region’s located in a medium to short                                                                                       80-100 km
distance from MKAD decreased versus the previous quarter. This                                                                                           > 100 km
was due mostly to the high level of prices that keep on growing. As
                                                                                              22%                                      35%
a result, consumer preferences are now shifting to more remotely
located land plots.
                                                                             Source: requests to Blackwood in Q1 2008
    There were no changes in the demand pattern in terms of land
plot sizes. As before, most of the requests come for the land plots
of 15-30 sotka.

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:        Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                       RESIDENTIAL REAL ESTATE MARKET OVERVIEW

             ELITE SEGMENT                                                                                                                              Q1 2008


     Just as in the residential suburban realty segment no seasonal         Average price of land plots with utilities depending on the dis-
decline, nor price stagnation were seen in the land plot market.            tance from MKAD, $ per sotka. Q1 2008
                                                                                                                    Distance from MKAD
According to Q1 bottom line, the prices of land plots grew up by 10-             Direction
15% in average. Key market players believe that land plot prices                                         <15 km                15-30 km              > 30 km
will rise by at least 35-40% by the end of this year.                                              45 000 - 420 000      16 000 -150 000                 -
    The main reason for growth in land plot prices is another in-           Ilyinskoye              35 000 -200 000        -                     -
crease in the initial land development costs, i.e. costs on the ob-         Novorizhskoe           45 000 - 100 000      20 000 - 110 000       10 000 - 38 500
taining of technical specifications, laying of communication lines,         Minskoye                12 900 - 116 000       11 000 - 30 000       7 500 - 20 832
changes of the type and permitted use of land plots etc. Another            Kievskoe                12 200 - 50 000        7 000 - 46 000        7 100 - 35 000
reason lies in the absence of new allocated primary lands. The              Dmitrovskoye            15 000 - 40 000        4 900 - 95 000        3 000 - 11 600
state keeps on toughening its control over the lands in federal or          Kaluzhskoye             15 000 - 57 800       10 000 - 40 000        6 500 - 35 000
municipal ownership. As noted by market players, it is becoming             Yaroslavskoye           12 000 - 40 000        8 000 - 30 000        6 000 - 30 000
more and more difficult to purchase land from the state. Therefore,         Source: Blackwood research

one can predict further growth of land plot prices across all direc-        Prices for land plot for individual construction on western di-
tions in Moscow Region.                                                     rections, Q1 2008

    Land plots located in a short or medium distance from Moscow
may show the highest price growth rates due to the apparent short-
age of supply in these areas. At present the average price of land
plots within 15 km from MKAD amounts to at least $17 000 per
sotka and is steadily approaching $20 000. The only exception is
the western part of Moscow Region where land plot prices have
exceeded the $30 000 level long ago. In fact, they almost doubled
over the last two years.

    Maximum price values grew up in the directions of Rublevo-
Uspenskoye shosse, Novorizhskoye shosse and Dmitrovskoye
shosse. As before, Barvikha Sanatorium where one sotka costs
$420 000 was the leader. Growth versus December 2007 level
was 20%. Prices of land plots in the villages built on the shores of
Klyazminskoye and Pestovskoye Water Reservoirs (Dmitrovskoye
shosse) rose considerably. In particular, in Nemo village land plots
on the waterfront are already priced at $90 000 per sotka.
                                                                            Source: Blackwood research
    Maximum prices of land plots located in the vicinity of No-
vorizhskoye shosse were spotted in Agalarov village, Monolith,
Residenzia Benelux, as well as in projects of Incom-Nedvizhimost
company. These land plots are in fact forest blocks with all com-
munications and permissions to use them for individual housing

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                       RESIDENTIAL REAL ESTATE MARKET OVERVIEW

             ELITE SEGMENT                                                                                                                               Q1 2008


    MR Group, a developing company, bought 1 100 hectares of                  forestry laws and the land laws. These amendments may expand
land near Kolychevo in Stupinsky District of Moscow Region from               the capacity to erect buildings on the former forest lands, including
“Globex” Bank. MR Group intends to build more than 1 mln. sq. m               lands in green belts. In fact, the current version of the Forestry
of low-rise economy and business class dwelling using the carcass-            Code that was adopted in 2006 and became effective on January
based construction technology and sandwich panels. The devel-                 1, 2007 does not allow any economic activity on such lands.
oper also plans to accommodate some sort of soft production en-
                                                                                  Moscow Region Duma (Parliament) adopted the Draft Law "On
terprise and logistics complexes in this mini-town. According to
                                                                              the amendments to the Moscow Region’s Law "On the regulation
expert estimates, investments in this project would amount to at
                                                                              of land relationships in Moscow Region" in the first reading. This
least $1,2 billion, but it would take the developer almost 20 years to
                                                                              draft law proposes to establish a repurchase price for land plots
implement it. The formal transfer of the lands from one category to
                                                                              currently in federal or municipal ownership payable by commercial
another and the elaboration of the relevant master plan would take
                                                                              enterprises or individual entrepreneurs which/who own the build-
two years.
                                                                              ings, structures or installations erected on these land plots. Such
     “Otkrytye investitsii” (Open Investments) Company announced              price would amount to 2,5% of the cadastral value of a land plot.
its intent to funnel $ 2,7 billion on development projects within the         The same price would be paid by individuals or non-profit organi-
next two years. The company plans a three-fold increase of the                zations, provided that their title to the realty objects came into ef-
land bank by the middle of 2009. Almost one third of announced                fect before the adoption of the RF Land Code, unless the federal
investments will be spent on the purchase of land plots. Last year            laws stipulate another procedure for the purchase of land plots by
this developer executed a number of major transactions which                  such individuals/legal entities. When land plots are sold to other
made it the owner of 3,5 thous. hectares of land in Moscow Re-                persons who own buildings, structures or installations, the sales
gions and Tver Region thus increasing its land bank up to 5,6                 price would be equal to the land tax rate multiplied by ten. These
thous. hectares. Denis Davidko, Financial Director of OJSC “                  rates will be applicable until 2010. Starting from January 1, 2010
Otkrytye investitsii” reported in the press that another 10 thous.            the sales price will be established by the Government of Moscow
hectares of land will be purchased by the company in the Central              Region.
Federal District in 2008-2009.
                                                                                   Another purpose of this draft law is to motivate the re-
    Federal Agency for Forestry (Rosleskhoz) is currently drafting
                                                                              formalization of land plots formerly given to legal entities for per-
amendments to the Forestry Code that will facilitate the transfer of
                                                                              manent unlimited use. Therefore, the land rentals were set in the
forest lands from federal to municipal ownership. According to
                                                                              following amounts: 2% of the cadastral value of rented land plots;
Commersant newspaper, these amendments are related to 2 mln.
                                                                              0,3% of the cadastral value of rented land plots from among the
hectares of forest lands which may be used for construction. The
                                                                              land of agricultural use; 1,5% of the cadastral value of rented land
rules that govern the use of green belts are to become less tough.
                                                                              plots withdrawn from commerce or restricted in commerce. The
Some of these lands may be made available for economic activity.
                                                                              list of documents required from individuals and legal entities for
    Mikhail Giryaev, Deputy Head of the Federal Agency for For-               the formalization of the titles to the land plots where buildings,
estry, this institution is drafting a number of amendments to the             structures or installations owned by them stand will become
Forestry Code that will address the issues pertaining to both the             shorter thus facilitating the land plot re-formalization procedure.

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                          Q1 2008



                                                                         «Copernicus» Residential Estates is located in the prestigious Yaki-
                                                                     manka sub-district near President Hotel, Park of Arts and Moskva River
                                                                     embankment. The concept of the project is the integration of hotel services
                                                                     in the elite residential building. Residents of the house can enjoy a number
                                                                     of extra services from the ordering of meals from the restaurant located in
                                                                     the estate to the services of car park jockeys. Luxury entrance hall is
                                                                     decorated with «space» motives. Sculptural composition «Nicholas Coper-
                                                                     nicus at Work» made by famous sculptor Mikhail Shemyakin stands in the
                                                                     center of the entrance hall.
                                                                           Terra Sport fitness club with 22-meter swimming pool is located on the
                                                                     first two floors of the building. The ground floor accommodates a lobby bar
                                                                     and a reception. «Observatory», an elite restaurant, is located on the first
                                                                         Sections of different height: 6-9-11-12-16 floors
                                                                         Quantity of flats: 114
                                                                         Areas for sale: from 100 to 450 sq. m.
                                                                         Underground car park for 136 cars
                                                                         Ceiling height: 3,2 m
                                                                        Prices start at RUR 391 000 per sq. m

                                                                      «Art House»
                                                                         «Art House» residential building is located in Tessinsky pereulok on the
                                                                      bank of Yauza River. It is a new project by architect Sergey Skuratov who
                                                                      is known for such projects as the residential buildings at Butikovsky per. 5,
                                                                      and Butikovsky per. 3 (Copper house).
                                                                         «Art House» is attributed to such fashionable trend in modern dwelling
                                                                      as LOFT, the distinctive features of which are: «factory-type» exterior of
                                                                      the building, high ceilings (at least 3,80 m), large panoramic windows.
                                                                      Flats in such houses provide boundless opportunities for the implementa-
                                                                      tion of the most adventurous ideas in architecture and interior design. The
                                                                      house on Tessinsky per. is a unique project among the houses of de luxe
                                                                         «Art House» is, in fact, a complex of two buildings of 5 and 6 floors with
                                                                      18 and 12 flats, respectively. The flats have areas from 80 to 250 sq. m.
                                                                      Under the complex is a two-level car park for 109 cars. Ceiling height
                                                                      varies from 3,8 m to 5,1 m on a standard floor and from 9 m to 10,3 m in
                                                                      the penthouses overlooking the Kremlin.

                                                                      Ostozhenka Park Palace. Korobeynikov per. 1/2, bldg. 7-16,17

                                                                        The largest project in the Golden Mile zone, development area - 1.3
                                                                        Palatial architecture, enclosed court with landscaping, infrastructure that
                                                                      included a fitness club with SPA and swimming pool. The only complex
                                                                      on Ostozhenka with a large courtyard. Viewing opportunities would satisfy
                                                                      the most demanding buyer.
                                                                        The complex has 137 flats of 90 to 370 sq. m
                                                                        Ceiling height: 3,35 m on standard floors, 3,7 m on the top floor
                                                                        Three-level car park for 600 cars

                                                                        Price: from $17 000 per sq. m

                             If you want to know more, call 796-11-96

                   RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                   RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                             Q1 2008


                             1st Smolensky per. 17                                                                      B. Levshinsky per. 11
                             from 92 to 175 sq. m                                                                       from 165 to 300 sq. m
                             Elite building in Arbat sub-district.                                                      "Dvoryanskoye
                             Fenced territory, multi-level secu-                                                        Gnezdo" (Nobleman’s Nest) Resi-
                             rity system. Flats of different sizes                                                      dential Estate is one of the most
                             with modern or classical finishing                                                         attractive buildings of Moscow.
                             are in the offer. Functional plan-                                                         The facade of the building is fully
                             ning. Panoramic view of the em-                                                            in line with the architectural style
                             bankment. Parking stalls in the                                                            prevalent in the central part of
                             underground car park are included                                                          Moscow. Public spaces are ex-
                             in the price.                                                                              clusively finished with expensive
                                                                                                                        materials. Flats are offered with-
                             ID 113051                                                                                  out finishing. Parking stalls are
                                                                                                                        ID 132411
                             Shmitovsky pr. 16                                                                          Strastnoy Boulevard 10
                             334 sq. m                                                                                  from 78,9 to 335 sq. m
                                                                                                                        Elite building with a well-
                             Up-to-date business class house.                                                           developed infrastructure.      Fit-
                             Two-level penthouse without fin-                                                           ness center and swimming pool.
                             ishing is offered.    Ready-made                                                           Impressive entrance hal, round-
                             design. Panoramic views of the                                                             the-clock security. Flats of dif-
                             embankment and the central part                                                            ferent sizes with designer finish-
                             of the capital. Two parking stalls in                                                      ing ion modern style are offered.
                             the underground car park are of-                                                           Panoramic windows. Parking
                             fered.                                                                                     stalls in the underground car
                             ID 135311
                                                                                                                        ID 128051

                             Zvenigorodskaya ul. 8
                             170 sq. m
                                                                                                                        Bryusov per. 19
                             Up-to-date house with fenced and
                             guarded territory.       Underground                                                       276 sq. m
                             car park.        Flat decorated in                                                         Rich infrastructure of the building
                             “eclectic” style is offered. Drawing/                                                      includes a sports and health cen-
                             dining room, two bedrooms, study,                                                          ter. Multi-level security system.
                             three water closets, kitchen, laun-                                                        Impressive entrance hall with an
                             dry room, dressing room. Built-in                                                          atrium. Free planning apartment
                             domestic appliances from Bosch.                                                            is offered (may have four bed-
                             Exclusive furniture. Views of Su-                                                          rooms,     drawing/dining     room,
                             vorovsky Park and the inner yard.                                                          kitchen, three water closets).
                             One parking stall is included in the                                                       ID 135842
                             ID 134074

                                                                                                                        Yekaterinovka.       Cottage in
                             Kutuzova ul. 11                                                                            Moscow.
                             280 sq. m                                                                                  680 sq. m
                             "Green House" Residential Es-                                                              A cottage is offered on a land
                             tateis located in Moscow’s park                                                            plot of 14 sotkas located in a
                             belt. Well-developed infrastruc-                                                           cottage village within the city
                             ture, fenced and guarded territory.                                                        limits.   Finished in modern
                             Two level flat with turnkey finishing                                                      classical style with natural ma-
                             in modern classical style is offered.                                                      terials. Drawing room/bedroom
                             Two parking stalls are offered.                                                            with working fireplace, study,
                             ID 134256                                                                                  poolroom, cinema hall, wine
                                                                                                                        cellar, two bedrooms, three
                                                                                                                        water closets. Garage for three
                                                                                                                        cars. A 1 075 sq. m house with
                                                                                                                        elevator on a land plot of 20
                                                                                                                        sotkas is also offered.
                                                                                                                        ID 131061

                             If you want to know more, call 730-66-99

                   RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                RESIDENTIAL REAL ESTATE MARKET OVERVIEW

RESIDENTIAL REAL ESTATE. ELITE SEGMENT                                                                                                          Q1 2008


                             Arbatskaya                                                                              «Alisa»
                             164 sq. m, 3 rooms                                                                      Residential Complex
                             Luxurious apartment with ex-                                                            100 sq. m, 3 rooms
                             clusive design in historical cen-
                             tre of Moscow. Spacious bal-                                                            Exclusive apartment in elite
                             cony. Armed guard security,                                                             Residential Complex. Mod-
                             video systems, underground                                                              ern interior design. Comfort-
                             parking.                                                                                able furniture, light colors, all
                                                                                                                     modern appliances.
                                                                                                                     ID 133694
                              ID 110816

                             «Vorobyovy Gory»                                                                         «Zolotye Kluchi-2»

                             Residential Complex                                                                     Residential Complex

                             148 sq. m, 3 rooms                                                                      145 sq. m, 3 rooms
                                                                                                                     Authors design in combina-
                             Spacious apartment in elite                                                             tion with exclusive space
                             Residential Complex in de-                                                              organization and noble col-
                             manded Moscow area. Pastel                                                              ors. Panoramic view to the
                             colors, all modern appliances.                                                          park. Armed guard security,
                             Armed guard security, video                                                             video systems, underground
                             systems, underground parking.                                                           parking.
                             ID 135315
                                                                                                                     ID 71852

                             Novokuznetskaya                                                                         Kuntsevskaya
                             115 sq. m, 3 rooms                                                                      300 sq. m., 3 rooms
                             Spacious apartment, tastefully                                                          Luxurious apartments, deco-
                             decorated in majestic classical                                                         rated in art-modern style.
                             style. Comfortable furniture,                                                           Elegant colors combination,
                             golden finishing, expensive                                                             exclusive furniture.
                             materials.                                                                              Jacuzzi, all modern appli-
                             Armed guard security, video                                                             ances.
                             systems, underground parking.
                             ID 131232                                                                               ID 92312

                                                                                                                     420 sq. m, 6 rooms
                             800 sq. m, 15 rooms                                                                     Cottage with fairy-tale design
                             Luxurious residence in elite                                                            and high-quality finishing and
                             secured villa compound not far                                                          landscape design. Elite se-
                             from MKAD. Exclusive furni-                                                             cured villa compound. Sauna,
                             ture.     Fire-place, modern                                                            swimming-pool, gym.
                             kitchen, Jacuzzi. Armed guard
                             security, parking.                                                                      ID 112950
                             ID 129944

                             If you want to know more, call 730-20-00

                   RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

                                                                                                      RESIDENTIAL REAL ESTATE OVERVIEW

COUNTRY REAL ESTATE                                                                                                                                     Q1 2008


Blackwood company is ready to offer a wide selection of countryside real estate at the most demanded directions of Moscow region:
Rublevo-Uspenskoye, Novorizhskoye, Skolkovskoye, Minskoye, Kaluzhskoye, Dmitrovskoye and other. Our base includes the information
about cottages that are being built as well as cottages that are ready for living. All of them are situated in more than 80 cottage settlements.

                                      Ekaterinovka                                                                        Gorki 2
                                      Location:                                                                           Location:
                                      Rublevo-Uspenskoe shosse,                                                           Rublevo-Uspenskoe shosse,
                                      1 km                                                                                18 km
                                      Total house area:        1074                                                       Total house area: 800 sq.m
                                      sq.m                                                                                Land plot area: 53 sotki
                                      Land plot area: 20 sotok                                                            Price: $ 25 000 000
                                      Price: $ 15 450 000

                                      Near Istra Country Club                                                             Nikolino
                                      Location:                                                                           Location:
                                      Novorigskoe shosse, 35 km                                                           Rublevo-Uspenskoe shosse,
                                      Total house area:        1200                                                       26 km
                                      sq.m                                                                                Total house area: 948 sq.m
                                      Land plot area: 95 sotok                                                            Land plot area: 54 sotki
                                      Price: $ 15 000 000                                                                 Price: $ 9 500 000

                                      Usovo-Plus                                                                          Lesnoy prostor-2
                                      Location:                                                                           Location:
                                      Rublevo-Uspenskoe shosse,                                                           Rublevo-Uspenskoe
                                      11 km                                                                               shosse,19 km
                                      Total house area: 750 sq.m                                                          Total house area: 380 sq.m
                                      Land plot area: 27 sotok                                                            Land plot area: 42 sotki
                                      Price: 172 040 000 rub.                                                             Price: $ 6 600 000

                                      Kurkino                                                                             Dmitrovka
                                      Location:                                                                           Location:
                                      Kurkinskoe shosse, 1 km                                                             Dmitrovskoe shosse, 38 km
                                      Total house area: 1010 sq.m                                                         Total house area: 700 sq.m
                                      Land plot area: 17,5 sotki                                                          Land plot area: 60 sotok
                                      Price: $ 6 500 000                                                                  Price: $ 5 000 000

                                                                                                                          A wide selection of forest
                                     Novoe Aistovo
                                                                                                                          land plots and land plots at
                                     Location:                                                                            the water, total area - from
                                     Pyatnizkoe shosse, 9 km                                                              20 hundredth’ parts and
                                     Total house area: 590 sq.m                                                           more at Rublevo - Uspen-
                                     Land plot area: 44 sotki                                                             skoye, Novorizhskoye, Min-
                                     Price: $4 800 000                                                                    skoye, Dmitrovskoye and
                                                                                                                          other elite directions.

                                     If you want to know more, call 730-55-77

                          RESEARCH AND CONSULTING DEPARTMENT / E-mail:   Phones: +7(495) 730 5585 ; +7(8622) 540 540

Blackwood Real Estate

Blackwood Real Estate formed in 1991 is one of the leading companies in the Moscow Residential and
Commercial real estate markets.

•      Provides the wide range of transaction advisory services in both selling and renting of residential
       and commercial premises.

•      Recognized for high quality analytical and consulting research in all segments of Russian Real
       Estate market.

•      Offers the wide range of management services in the development and realization of the invest-
       ment projects in real estate market.

•      Has established itself as a reliable partner both of domestic and international leading companies
       and affiliations.

•      The first Russian company to become a member of the Association of Leading Real Estate Com-
       panies in the World. Due to this membership, the company is continuing to gain access to the
       world real estate directory with over 2 million in assets.

Research and Consulting Department
The Research and Consulting Department of Blackwood Real Estate is a team of professionals, con-
sisted of experts in real estate segments, economy, investment and financial fields.

•      Provides the full complex package of consulting and analytical services: residential and commer-
       cial real estate strategic consulting, concept development, financial analysis, architectural concept
       developing, monitoring of the major real estate market segments, periodical reviews, special re-
       search tailored to the client’s Specific Requirements.

•      Full and well-structured databases of the basic real estate segments, economic and financial
       fields represent a reliable foundation for carrying out research and quality consulting and analytical

Notable clients: Air France, Adventa, Halliburton, Coca-Cola, Alcatel, Sun Interbrew, DHL Worldwide,
ABN Amro, LG Electronics, Commerzbank, Brunswick UBS Warburg, Novartis, Liggett-Ducat LTD, Wrig-
ley Moscow, L’oreal, Ernst & Young, Procter & Gamble, Adidas, American Chamber of Commerce,
IKEA, Volvo, Samsung, Peugeot, Renault, Canon, British Airways, Dresdner Bank, Phillip Morris, Nestle,
Sumitomo, Sibneft, Bank of Moscow, Vneshtorgbank, Norilsk Nickel, Sberbank of Russia and many oth-

Blackwood Real Estate                    tel.: Moscow +7 495 730-5585,
119019, Moscow,                                Sochi  +7 8622 540-540          e-mail:
Volkhonka st., 6-1.                      fax:         +7 495 203-6072

Research and Consulting Department

Olga Shirokova
Director of Department

Alexandra Mamokhina                        Elena Domchenkova                     Maksim Golubkov
Residential Real Estate Analyst&Consultant Office Real Estate Analyst&Consultant Financial Analyst               

Nina Shlelenko                             Vladlena Mashkovskaya               Anna Danchenok
Residential Real Estate Analyst&Consultant Office Real Estate Analyst          Trade Real Estate Analyst            

Marina Volkova                           Nina Schadenko                        Ekaterina Simonova
Hotels&Residential Real Estate Ana-      Office Real Estate Analyst            Expert in Marketing
Anastasia Lobanova                       Vasilii Balandin                      Inna Vinnikova
Expert in Marketing                      GIS-specialist                        Countryside Real Estate                           Analyst&Consultant

Petr Mordanov                            Tat'yana Shitikova
Real Estate Appraisal                    Real Estate Appraisal          

Olga Ziablova                            Vladimir Kashirtsev
Projects Manager                         Projects Manager          

Managing Partner                         Executive Director
Konstantin Kovalev                       Maria Litinetskaya           

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