Africa Israel opens giant Moscow Mall

New 180,000-square-meter mall is proof that group has emerged from global financial crisis, says chairman Lev Leviev.

By NADAV SHEMER
May 24, 2011 22:46
AFIMall City in Moscow

AFIMall city 311. (photo credit: Sivan Faraj)

 
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MOSCOW – Lev Leviev hailed it as proof that his Africa Israel Group has recovered from the beating it took from the global financial crisis: the opening of an 180,000-square-meter mall in the middle of Moscow’s central business district.

On Sunday, the billionaire Israeli businessman, who is controlling shareholder and chairman of the global holding and investment company, officially opened AFIMall City at a glamorous ceremony attended by a delegation of businesspeople and journalists from Israel, although in practice the mall, Eastern Europe’s largest, began welcoming shoppers in March.

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Wearing a black kippa, Leviev, who is affiliated with the Chabad Hassidim, affixed mezuzot to two doors at the mall’s main entrance before leading his delegation through the complex and up to a special VIP section on the top floor.

There, a curious mix of guests including black-clad haredi men and leggy Russian blondes wearing the latest in European fashion drank from the finest vodka and ate from a smorgasbord of kosher delicacies, surrounded by an exhibit of about a dozen giant babushka dolls.

Situated right in the heart of Moscow City, the booming business district located four kilometers from Red Square on the banks of the Moscow River, AFIMall has six levels filled with 550 upmarket stores, including H&M, Zara and Marks & Spencer. In addition to theaters and restaurants, there are plans to introduce a concert hall and convention hall in the future. The mall was designed by Canadian firm B&B Architects and was constructed by AFI subsidiaries Danya Cebus and Negev Israel. It is expected to generate $150 million in revenue next year.

Following Sunday’s ceremony, Leviev and AFI CEO Izzy Cohen met with Israeli journalists at the company’s Aquamarine Hotel, where they discussed the mall’s opening, the impact of Moscow’s recent real-estate crisis and even delved briefly into politics.

“It’s true that we kept very quiet during the construction phase,” Leviev said of the mall’s completion under the firm’s Russian real-estate arm, AFI Development. “We knew that what would help the company would not be words, but rather actions, and in effect this outcome is evidence more than words could be.”



“Today I can say that we did it, with a lot of energy and a lot of effort,” he said. “It’s not easy to start a project of this size in the center of Moscow. At the time of the global crisis, Russia went through a crisis in real estate and in general, and just as Russia was the first to enter the crisis, it is also the first to exit the crisis. It is clear to everyone that the situation in Russia today is very stable and is moving forward.”

Leviev, 54, also expanded on AFI’s partnership with Israeli companies such as electro-mechanical and construction firm Electra, with which it has worked on various projects around Moscow.

“There is enough space here for everybody,” he said, “and now we have also managed to help a number of Israeli companies to enter the market [in Russia] and to learn about the work methods and their application here, which are not exactly the same as in Israel.”

Sitting alongside Leviev, Cohen remarked that the company had survived the financial crisis through its willingness to be proactive and to take initiative.

“I am very happy about the fact that we came to a decision [to go ahead with the AFIMall project] and took risks,” he said, adding: “We could not have completed a project like this today without Danya Cebus, unequivocally. We could not have managed such a project and completed such a project with a moderate budget in a time of recession without being able to use the construction companies and the materials suppliers and without the whole project being managed and supervised in-house.”

The Africa Israel Group recorded a net profit of about NIS 1.7 billion in 2010, it reported in March, marking a dramatic turnaround from the previous year when it lost NIS 674m. – its second consecutive year in the red. In addition, the company reported that all its subsidiaries had returned large profits and experienced continued growth last year.

One of the hubs of Africa Israel’s operations is Moscow, with several different projects scattered around the metropolis of almost 12 million people, a city through which, according to Leviev, “about 50 percent of Russia’s gross national product passes.”

Among Africa Israel’s projects are: the Aquamarine compound, which centers around the four-star business hotel of the same name and which also includes several office buildings close to completion; the 4 Winds residential and office complex in Moscow City; a residential and commercial complex in Moscow’s old business district near Brestskaya Plaza; and the Paveletzkaya complex south of the city center, which includes two office buildings and a planned residential and commercial complex.

Cohen and Leviev said AFI was not looking to expand to new parts of the world, but could grow sufficiently in its four current markets of Russia, Eastern Europe, Israel and the United States.

Leviev, who made his fortune as owner of the world’s largest cutter and polisher of diamonds, said, “A mall like AFIMall is like a mine where the more you dig, the more diamonds you find in it.”

The billionaire businessman also agreed to speak briefly about the apparent rift between US President Barack Obama and Prime Minister Binyamin Netanyahu over the terms of a future peace agreement between Israel and the Palestinians. Leviev reiterated his position that Israel cannot be expected to give concessions to the Palestinians without receiving something in return. But he emphasized that it was up to Netanyahu to deal with such matters and that he would not want to interfere.

Asked whether being Jewish had caused any difficulties for him when doing business in Russia, Leviev responded that he has experienced far worse anti-Semitism in London, where he resides.

Everyone in Russia “knows that this is an Israeli company,” he said. “We don’t face different treatment or any difficulties. I wear a kippa everywhere, and as you saw, I put up a mezuza opposite the Russian version of the White House.

“I think that in everything connected to Jews and to Israel here, there is admiration and support, and they see Israel as a model of a small country whose initiative should be used as an example,” Leviev said.

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