ECE Projektmanagement G.m.b.H. & Co. KG and Developers Diversified Realty Corporation (DDR), a leading US developer, investor and manager of shopping centers, have set up a joint venture to develop shopping centers in Russia and the Ukraine. The joint venture company has €225 million in equity capital and will realize shopping centers with a total value of up to €1 billion over the next five years.
ECE Board Chairman (left)
Scott A . Wolstein,
Chairman and CEO
of Developers Diversified Realty
DDR has put up 75% of the equity capital, and ECE the remaining 25%. ECE is responsible for shopping center development, leasing, general planning, financing and management and is also in charge of asset management for the joint venture. In addition, ECE has secured two projects in the Russian cities of Yaroslavl and Ryazan. In Ukraine ECE is actively working to secure land plots and joint venture agreements in Kyiv and major regional Ukrainian cities.
Alexander Otto, ECE Board Chairman, said, "The joint venture makes ECE one of the first big international developers to gain a foothold on the Russian and Ukraine shopping center market. We have been studying both markets very closely for several years and have subsidiaries in Moscow and Kiev."
Scott A. Wolstein, Chairman and CEO of Developers Diversified Realty, commented, "We are delighted to announce this exciting joint venture which will raise our international profile. Russia and the Ukraine offer outstanding investment opportunities thanks to their positive economic performance and as-yet undersupplied retail property markets."
ECE already has two projects in Russia which it plans to realize via the joint venture. The first is in Yaroslavl, a city of 600,000 people on the Volga River about 250 kilometres north-east of Moscow. Yaroslavl is one of the oldest cities in Russia and a popular tourist destination. There, in a prime location on the busiest shopping street in the city's center, ECE is building a Western European-style shopping center that will have a leasable area of around 60,000 m² and some 1,100 parking spaces. The mall will service a retail catchment area that is home to about 770,000 people. The project is estimated to cost some €150 million.
In Ryazan, a city of more than 500,000 located about 180 kilometres south-east of Moscow, ECE is developing a 60,000-m² shopping center in partnership with the Czech-based ECM Group. The mall is estimated to cost around €100 million, making it one of the biggest projects in the region in terms of capital investment. The shopping center will have about 3,500 parking spaces and will focus on specialty retail outlets.
Russia had a GNP of US $987 million in 2006, making it the tenth-largest economy in the world. The country's rapid economic recovery of recent years has given rise to a strong middle class of consumers that is fuelling double-digit growth in retail sales year on year.
The Ukraine economy grew by 7% in 2006 and is predicted to grow by 6% annually in the coming years. Official government stat