A draft edict formalizing Itera Group's withdrawal from the construction of a large residential and office district in Minsk is to be submitted to Alyaksandr Lukashenka in the near future, Zhanna Birych, deputy chairperson of the Minsk City Executive Committee, told reporters on April 25, BelaPAN said.
An agreement has been reached with the Russian investor that the company will be allowed to construct housing totaling 10,000 square meters in the district by way of compensation for its expenses on building its utility networks, Ms. Birych said.
The Minsk city authorities are working to attract new investors into the project, according to the official. "There are a number of Russian and Iranian companies that would like to implement the project," she said.
On February 16, Mr. Lukashenka ordered the termination of the Belarusian government's contract with Itera Group because of the company's failure to launch the ambitious project during more than three years.
The directive came a week after Itera Group Chairman Igor Makarov wrote to Mr. Lukashenka, asking for the project's deadline to be extended, according to the newspaper Kommersant.
Mr. Makarov reportedly said that the Russian company had originally planned to spend $5.1 billion on the project and expected sales revenues to total $6.8 billion, but due to a slump in the real estate market the projected cost of building the district had been revised downward to $2.5 billion and the projected revenues to just $2.2 billion. As a result, he said, the project would prove unprofitable for the company unless it was given more time to wait for the real estate market to pick up.
Itera has built four apartment buildings in the district and managed to sell just 75 percent of the apartments, Mr. Makarov wrote.
The city authorities dispute the Russian investor's claim that the project would prove unprofitable.
The Minsk City district was to be built in the place of the Minsk 1 airport and the Minsk Aircraft Repair Works. According to Itera Group, a total of 3.3 million square meters of housing and commercial space, as well social infrastructure facilities were to be built by 2020 in the 318 hectares (786 acres) allocated for the project.