After a year of unsuccessful attempts to auction four food markets in Moscow (Velozavodsky, Lefortovsky, Danilovsky, Kuntsevsky), the government of Moscow reduced their starting price, Kommersant reported.
Now the markets have become ca. 30% cheaper on average, but the potential buyers still regard the assets overpriced.
The Kommersant refers to Maxim Popov, CEO of the Danilovsky market, who said: "The price to be paid is too high anyway, such an investment is incompatible with the existing business model. Given the necessary renovation expenses, the market would have a 15-year payback period even if managed in a hyper-efficient way, which is comparable to infrastructural projects."
Following a 4-month revaluation, the Velozavodsky market became 18.8% cheaper to RUB 2.73 billion, the Lefortovsky decreased in price by 39% to RUB 643 million, the Danilovsky by 31% to RUB 1.433 billion, the Kuntsevsky by 35.5% to RUB 709 million, the municipal property department of Moscow City informed.
The Specialized State Unitary Enterprise for the sale of Moscow property started selling the markets in the summer of 2012. The auction date was moved back several times as no-one applied for bidding. The last auction which was scheduled for April, 2013 also failed. The next auction is slated for October 15.
Moscow City currently owns 11 markets operating below the city government's expectations. According to the government's 2011 report, revenue from the lease of premises was the highest at the Tsaritsynsky market (RUB 21 thousand per month per place), the lowest at the Lefortovsky market (RUB 12 thousand per month per place). The city authorities estimate the average potential revenue at RUB 30 thousand per month per place, with the profit margin reaching 40%.