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Eastern European Markets

NEWS RELEASE
November, the 26th 2010

SRV business premises in Moscow almost fully let in the midst of economis turmoil - office premises market recovering

Last year, SRV completed a set of business premises, Etmia II, in the midst of a real estate recession of unrivalled severity. However, leasings proved extremely successful, with Etmia now almost fully let. Since the summer, the Moscow office premises market has taken a clear turn for the better. The majority of Etmia's rental agreements were concluded during the autumn.

The opening of Etmia II was celebrated on 25 November. Etmia has an excellent location in central Moscow, only a ten-minute-drive from the city centre and the Third Transport Ring Road. This class A property has a total of ca. 6,500 square metres of office and business premises. The indoor car park and the basement provide parking spaces for 165 cars. A parking ratio, of one parking space per 38 square metres of rented premises, places Etmia II in Moscow's front rank in this regard. The premises have a total floor area of over 14,000 square metres. Extensive services are available for tenants, while Western design solutions make the premises highly convenient.

Etmia is a collective property development project, between SRV and our long-term Russian partner Striminvest Group Ltd.

Fragile Recovery in the Construction Trade
Although the Russian economy plunged in the autumn of 2008, it is now showing signs of rapid recovery. However, its dependency on the prices of oil and raw materials remains problematic. Economic growth is now underpinned by a strong recovery in domestic demand. Interest rates in Russia have dropped from 20 per cent to somewhere around 10 to 12 per cent. However, construction volumes remain low. Despite growing demand for office premises, work on new developments has yet to begin. Housing production remains in the doldrums, even though there are signs of recovery in the construction of hotel and business premises. Only the production of top-level housing has seen a revival.

New city government regulations present an additional challenge, by restricting the construction of new commercial and office premises in central Moscow. These restrictions are based on the city's growing traffic problems. In the absence of new construction in central Moscow, the value of existing premises looks set to rise steeply.

Russia Requires Patience and Experience
'Successful construction and real estate projects in Russia require persistence. There are no short-cuts to easy money there,' affirms Jukka Hienonen, CEO of SRV. Gaining planning permission in Russia takes an average of 540 days, compared to 66 days in Finland. In Russia, the process may require 53 different reviews and hearings; planning permission for Etmia required a total of 248 stamps and signatures.

SRV has completed approximately 70 projects in Russia. At present, the focus is on St. Petersburg, where the construction of a shopping centre is about to begin in Baltic Pearl, an area developed by the Chinese. SRV also has an 8.5 hectare site in central St. Petersburg, with plans to construct business, office and leisure premises there. In addition, SRV is developing a logistics centre in St. Petersburg.

Local knowledge and local partnerships are SRV's strengths in Russia. Another lies in our solid business know-how in various business areas. Projects are planned according to Western standards and quality criteria, while complying with local norms and the principles of sustainable development.

Further information:
Jukka Hienonen, CEO, tel. +358 201 45 5213
Veli-Matti Kullas, Executive Vice President, tel. +358 40 5015280

www.fortum.com


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