Revolution and renovation in St Petersburg’s property market

St Petersburg’s Church of the Saviour on Spilled Blood, seen from the Moika

It is, in many ways, a most un-Russian city: Peter the Great saw to that, inviting French and Italian architects to create his modern new capital. And so, in 1703, St Petersburg was born, around the Peter and Paul Fortress, on the swampy banks of the River Neva, to protect this important trade waterway from Swedish incursions.

The land was drained with canals, forming the 42 islands, spanned by more than 300 bridges that comprise the city today. A glorious amalgam of Amsterdam and Venice suffused with wintry northern light, St Petersburg became the home of the court and site of the most lavish palaces in the land, reigning as the capital of the Russian Empire (pace a four-year hiatus) until 1918, when the Bolsheviks returned the seat of government to Moscow.

St Petersburg, Petrograd (1914), Leningrad (1924), and back to St Petersburg (1991) – re-christenings that chart the country’s chequered history. As Russia’s second city, the new St Petersburg has yet to be affected by the bling of Moscow. But change is afoot. Elegant department stores are appearing – DLT off Nevsky Prospect being the most recent arrival – while the smartest restaurants command prices that rival those of London’s.

“The trouble with property in St Petersburg,” my guide says, “is all the palaces. They have created a problem because under the Soviets these were subdivided and turned into kommunalkas, where many families lived and shared facilities. Anybody wishing to develop these properties has first to persuade the existing tenants to leave and relocate them. So situations can arise where you buy an apartment in a building, only to find yourself living next to kommunalka tenants.”

On the city’s waterways, from the Neva and the Moika (popular with the old nobility for its proximity to the Winter Palace) to the Fontanka, which formed the 19th-century limits of St Petersburg, magnificent baroque and neoclassical mansions can be seen in varying states of repair. As the historic centre has been Unesco-listed since 1990, costly restorations often involve the demolition of a building to create upmarket apartments, while retaining (or recreating) the historic façade.

One such project, on Mytninskaya Embankment, became the city’s most expensive property when an apartment sold for $50,000 per sq metre (it is rumoured that Russian gas giant Gazprom bought 15 of the building’s 19 available apartments in a single day). Renovation is also about to commence on a historic building next to the Mariinsky Palace, within view of the burnished dome of St Isaac’s Cathedral – a prestigious address intended to appeal to wealthy Muscovites and oligarchs.

“There are three prime areas in central St Petersburg,” says Pavel Pikalev of Penny Lane Realty. “The first – and, at around $20,000, the most expensive per sq metre – is the ‘Golden Triangle’, bounded by the Fontanka, Nevsky Prospect and the Neva. The elegant buildings here have, largely, been restored. There are increasingly good shops and restaurants that Russians go to – but it is also the most touristic zone, and there are only three new buildings in this area with underground parking facilities.”

The second area, around the Tavrichevsky (or Tauride) Gardens – a gift from Catherine the Great to her lover Grigory Potemkin – is a tranquil, leafy haven. Modern and convenient, it has the greatest concentration of new developments in central St Petersburg, such as the premium Smolny Park residential complex, with one- to six-bedroom apartments, and 260 sq metre penthouses, offering spectacular views over the baroque Smolny Cathedral and the Neva. The development is due for completion in 2014, and apartments are being sold through Knight Frank for between Rbs150,000 and Rbs400,000 ($4,710-$12,500) per sq metre.

Among foreigners, however, it is the area encompassing St Isaac’s Cathedral and the Griboyedov and Kryukov canals that is most popular: a picturesque area of mixed fortunes, of palatial homes and old houses slated for restoration. A renovated two-bedroom apartment in a historic building on Kryukov Embankment is currently available for Rbs29m through Night Sky Realty – it is a stone’s throw from the Rimsky-Korsakov Conservatoire, the Mariinsky Theatre and its new sibling, Mariinsky II, the controversial creation of Canadian architects Diamond Schmitt. It is an atmospheric neighbourhood, haunted by the characters of Dostoevsky and artists from the opera house.

With land at a premium and strict planning laws in place, integral houses in the historic centre are almost unheard of – though one mansion is currently on the market, on the Neva’s magnificent English Embankment, for around $10m, unrestored. (“Had it been restored,” says Pikalev, “it would have been converted into apartments.”) But with such properties as rare as hen’s teeth, the super-rich in search of houses will repair to exclusive Kamenny Island, where government dachas and official residences now dominate.

Offering the largest properties (300-400 sq metres), it has the most rare and expensive real estate in the city, outdoing even neighbouring Krestovsky Island, whose modern apartment blocks have replaced the cheap architecture of the Khrushchev era. Free of the infrastructure and tenancy problems of historic buildings, and with all-important 24-hour security, Krestovsky boasts some of the city’s most desirable residences. Here, a spacious two-bedroom penthouse in the Fifth Element building, belonging to a Russian internet billionaire, is currently available for $6m (via Penny Lane).

It is also in this northwestern Petrogradsky area that a new project has landed. It marks, according to Galina Cherkashina of Knight Frank, a fresh collaboration between developers and “world-class design studios”. In Leontievsky Mys, a complex by Yoo Studio and Philippe Starck, 390 premium apartments are selling off-plan for between Rbs25m and Rs260m. That is shell-and-core. Additional payment will secure one of four minimalist interior designs by Yoo.

“They are very special,” says Cherkashina. “The trouble is, Russians think 390 apartments are too many to be considered elite.”

Teresa Levonian Cole was a guest of Regent Holidays,

Buying guide

● As the historic centre is Unesco-listed, it can be a lengthy and difficult process to obtain planning permission to alter an old building

● Buyers purchasing an apartment in an old building should check to see whether there are kommunalka tenants in the building

● Beware of buying off-plan. There are financial advantages but monies are not held in escrow

● New-build apartments have underground parking facilities for an average of 2.5 cars per apartment

● In 2012 the crime rate was 56.8 per 1,000 residents, slightly above the national average

What you can buy for ...

$500,000 A 130 sq metre apartment in the historic centre

$1m A new three-room apartment on Krestovsky Island

$5m A highly prized apartment on Kamenny Island

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