Habitat Business Award — Reporting Format

4 — INDUSTRY SECTOR

5 — CORPORATE MISSION

Baltic Pearl will fully integrate the social resources including real estate, commerce and tourism. Construction of the city sub-center will not only provide the businesses with opportunities for growth and development, and meanwhile play an active role, such as providing employment opportunities for the society, boosting the third industry and fueling the all-sided and multi-channel development of the city, etc. As a new drive for the urban reconstruction and economic development, it will generate large amounts of tax revenue, fiscal income and job opportunities for at least 15,000 people.

Emergence of modern residences in large numbers, adoption of intelligence systems and introduction of modern close-type property management… Many residential forms distinctive from the existing ones in St. Pertersburg will be reflected in Baltic Pearl to improve the residential environment for citizens in this city and create an ideal space which organically combines modern urban civilization and the ecological environment so that citizens of St. Petersburg may enjoy modern Europeans life earlier.

In the meantime, the project, which is next to Leningrad Park, an urban green lung, will properly reconstruct the coastal area of Gulf of Finland and the two internal canals to utilize the natural, ecological landscape within the residential zone to the maximum value and realize effectively the sustainable environmental development. As the first and the largest internationalized comprehensive development project with strategic investment positioning, Baltic Pearl will continuously promote the scale and level of Sino-Russia direct investment and explore new strategic partnership between the two countries.

6 — MEMBERSHIP to voluntary initiatives and business associations

List up to five voluntary initiatives (including the UN Global Compact) and business associations of which your company is a member.

Baltic Pearl Ltd established «Sun» Charitable Foundation in 2005. The «Sun» Charitable Foundation made 300,000 dollars to two orphanages in Saint-Petersburg.

In 2007, the «Sun» Charitable Foundation contributed a lot of Chinese text books to the school in Saint-Petersburg, which began the Chinese education of 105 Middle School.

7 — CATEGORY of the Best Practice

From the list below, select ONE theme that best describes the focus of the best practice:

1. → Affordable housing solutions
2. Sustainable water, sanitation waste management and urban infrastructure solutions
3. Clean urban energy solutions, mitigation and adaptation to climate change
4. Innovative Information and Communications Technology solutions for the urban development and management
5. Conflict-related and natural and disaster mitigation and post-disaster reconstruction

8 — PARTNERS

List up to four significant partners that are involved in the best practice:

a/ Name of Organisation
b/ Address of the Organisation
c/ Type of Organisation:

• Central Government
• Local Authority
• Para-statal
• Private Sector
• → Non-Governmental Organisation
• Community-Based Organisation
• International Agency
• Foundation
• Professional Association
• Academic/Research
• Media
• Philanthropist
• Technical Experts
• Consultants
• Others, please specify

1. ZAO «Peterburg NIPIgrad»
Address: ul. Zodchego Rossi 1/3, St-Petersburg, 191023, Russia
Academic/Research

2. OAO «Lenniiproject»
Address: Troitskaya sq. 3, St-Petersburg, 197046, Russia
Academic/Research

3. Shanghai Shangshi Real Estate Investment Consultant Company
Rm.1303 LongYu Building, No/1036 Pudong Road(s), Shanghai, China
Technical Experts/Consultants

4. China Real-Estate Chamber of Commerce

9 — BUSINESS GOAL

Describe the business goal of the best practice. Example: To finance lighting infrastructure in slum areas from advertising in order to reduce the crime rate and improve business activities in these areas

Infrastructures and supporting facilities in the old town of St. Petersburg can hardly meet the requirements of modern development across the city. Therefore, developing a brand-new modern area outside the city center has become an imperative for the urban development. For a purpose to carve a modern «city sub-center» for St. Petersburg, this project is based on the overall positioning and planning of St. Petersburg, and its unique positioning takes into considerations of the relationships of multiple aspects between tradition and innovation, history and modernity, center and sub-centers.

Baltic Pearl is a multi-functional complex encompassing sectors such as residence, entertainment, recreation, catering, office, exhibition, hotel management, property management, trade, culture, education, medical care and urban infrastructure construction. Its construction process will directly fuel and radiate to the industrial processing, construction contracting, equipment & material import/export, energy supporting, environmental governance, etc of the construction material products. Integrated with human resource and intellectual strengthens in design, construction, business, management and operation areas, it will bring about a colossal industrial cluster and make a great contribution in promoting the modernization, economic and environmental improvement of St. Petersburg.

10 — MARKET COVERAGE and TARGET GROUP

Describe the current market coverage e.g., International / Regional / National — and the size and nature of the market e.g. individuals, companies and instituteions targeted by the initiative.

The sales volume of residence in Saint-Petersburg in 2007 is about 1,900,000 square metres and 2,500,000 square metres in 2006.According to the information we have known, we estimate the volume of residence in Saint-Petersburg in 2008 will be 2,000,000 square metres.

The first stage of volume sales of the residence in Baltic Pearl will be 74,000 square metres and the second stage of volume sales of the residence in Baltic Pearl will be 82,000 square metres. We estimate the sales volume of residence in Baltic Pearl will occupy more than 4% portion in the market.

11 — BUSINESS CONTEXT

Since 2000 when President Putin took office, forceful comprehensive measures have been taken to stabilize Russia’s political situation. Under unremitting efforts, Russia has entered into a politically stable period. Meanwhile, the country has also seen a rapidly growing economy, an obviously strengthened economic power and a continuously improving living quality. We may expect a continued growing momentum in the Russian economy. Undoubtedly, it will still require hard efforts for Russia to shake off the negative impacts from the previous economic crisis in specific social and economic aspects.

With respect to the real estate market, the modern property sector is still at the initial stage. Citing St. Petersburg as an example, from the Stalin-style residences in the Stalin period, to the five-storied match-box buildings in Khrushchev’s Period, to the standard prefabricated buildings developed later on, the property products for decades have been stereotyped and lacked diversity and innovation. Modern development concepts are shackled by the out-of-date architectural codes. On the other hand, modern residences and commercial properties urgently need innovation owing to the social and economic development and the ever escalating living standard and demand of the residents. In recent years, north St. Petersburg has acquired a gradually escalated value of regional position via centralized development, but the southwest part of the city is still lagging behind. With clarification and final implementation of the cooperation intent between China and Russia, developers finally chose the coastal land in the city’s southwestern area, which has certain location advantages but is still underdeveloped. The Baltic Pearl project will rise up in St. Petersburg’s property market with its brand-new image as an urban sub-center.

12 — PROCESS

At the beginning of the project, we were faced with the conservative cultural thinking mode and out-of-date rules and regulations in Russia. In terms of design, for example, we invited the most prestigious designers in the world for creative designing, but there were a lot of restraints regarding urban architecture. To protect the cultural relics, the city does not allow building any structure higher than 75m despite the fact that for a modern urban architectural complex with colorful skylines and in diversified forms, the ornament of high-rise buildings is indispensable. In a word, though we were conducting modern and internationalized planning and design, we had to face the obsolete Russian standards and conservative attitude towards new things and a string of issues regarding design, approval and management. However, the issues were solved one after another through unremitting communication with the Russian counterparts.

We also met with puzzles in terms of construction. For example, the first building — the Business Center, which is of steel-structure, had a little fault and we asked the local Russian company to rework on it. They told us they needed three months, but the opening ceremony was near at hand and there was no time to delay. We immediately invited Chinese experts. They spent one day designing and a week finishing the manufacture of the steel structure. Finally, the structure was transported to St. Petersburg by flight. The process took 28 days in total, which had made it possible for the inauguration ceremony to be held on time as scheduled. Therefore, application of modern technologies and flexible thinking method is essential for rapid development and success.

13 — ASSETS

Describe the assets used and needed to carry out the initiative.

The assets to carry out the initiative are used to build the first building-business ,centre ,purchasing the lands. Now the construction of roads, bridges, supporting energy ,schools, residence in Baltic pearl are in progress. We have put 200 million dollars to carry out the initiative.

14 — REVENUE STREAMS

Describe how revenue is generated to finance the activity.

The Baltic Pearl project is the largest strategic cooperation project between China and Russia to date, and is also China’s largest public investment project overseas. Owing to the bulkiness of the investment, capital balancing has been of primary importance throughout the process of project development.

The early stage development of this project was mainly financially supported by the share capital contributed by the shareholding companies and the loans provided by the relevant banks. As for the capital for the later stage development, the overall thought is to explore diversified financing channels, which mainly include introducing financially strong strategic partners, promoting capital operation of the project, continuing to seek loans from relevant banks and accelerating the recovery of sales capital, etc.

15 — ACHIEVEMENTS

Describe the achievements to date in its current market, as well as expected growth. Also describe how performance is measured and by whom.

What Baltic Pearl is creating is a brand-new large community in different style from the old town of St. Petersburg. The new residences, commercial and infrastructure facilities are built with new materials and technologies. The residential environment created will be new and safe-guaranteed. In addition, the modern operation and management model will represent the latest European lifestyle at the frontier of the world today — harmony between human and nature. Here, residence, entertainment, shopping, leisure and work are merged together to provide great social services for economic and trade development, information exchange and high-class European lifestyle of St. Petersburg.

People living in this community may enjoy high-class and commercial services the same easy and quick as in the downtown area, totally free from the harassment of the «Hot Island Effect». The community will gather according to different community planning people pursuing a new urban life, with the same or similar philosophy and of the same or similar social classes, which will reflect a more orderly and more civilized urban culture. People living or working in the community will enjoy sufficient green landscape resources and water landscape resources, and meanwhile live a most ideal life with the aid of the state-of-the-art technologies such as integrated information management system, premises distribution system (PDS), electro-patrol system, access control system, electronic display system, electromechanical device monitoring system, etc. Many who have visited Baltic Pearl Business Center are amazed at the hi-tech intelligent system and expecting with full confidence the modern way of living.

16 — KEY DATES

Provide no more than five dates and describe their significance in the best practice (example: launch of product, signature of agreement, reach of a certain market level, etc.).

On Dec 13, 2003, SIIC (Shanghai Industrial Investment Holding Company) came to St. Petersburg and chose the object site. The size, 2.08 sq. m., was unprecedented in the property development history of St. Petersburg.

On Dec 30, 2004, the investment company-SOUI (Shanghai Overseas United Investment Company) was established by initiation of SIIC together with Brilliance Group, Jinjiang International, Greenland Group and Shanghai Eurasia Development Center. This was also the first step for carrying out the «Integrator» concept of project investors, which marks alliance of powerful Chinese enterprises for extending product development into Russia.

Link: «Integrator» is an innovative type of enterprise aimed to take full advantage of the various concepts of multinationals on integrated operation, allocate effectively the various resources in a globalized context and provide all-sided and whole-process services towards the maximized synergy and yield of the value chain.

On June 9, 2005, the foundation laying ceremony was attended by over 200 delegates from China and Russia, including Zeng Peiyan, Vice-Premier of State Council, Ma Kai, Director of NDRC, and Ilya Klebanov, Plenipotentiary Representative of the Russian President for the Northwest Federal District, Mr. German O. Gref, Russian Minister for Economic Development and Trade, Valentina Matvienko, Governor of St. Petersburg, and Zhou Yupeng, Vice Mayor of Shanghai. As the first contracted and also the largest direct investment project concluded by the Second Sino-Russia Investment Promotion Conference, «Baltic Pearl» is brought into the premiers’ interlocution between China and Russia.

In Jan 2006, the consolidated project plan was approved when Governor of St. Petersburg signed Order No.47 to sanction the plan for Baltic Pearl after optimization of the plans which were solicited worldwide.

The plan absorbed the merits of various contributors. A worldwide plan solicitation and tendering process was executed and finally seven world-renowned design firms were selected to compose five design teams for the process. The finalized integrated plan is intended to create a brand-new community with a style distinctive from St. Petersburg’s old town. The new residences, commercial area and infrastructures will render a refreshing, vanguard lifestyle for the citizens. The project is intended to build a classic art piece of the times and modern architecture. For such reasons, it got the approval from Governor Matvienko smoothly, laying a good foundation for promoting the project.

On Mar 21, 2006, with the witness of Chinese President Hu Jintao and Russian President Putin, the investor, Import-Export Bank of China and the government of St. Petersburg City signed the strategic cooperation agreement for this project.

Baltic Pearl is China’s largest direct investment project in Russia, to which the governments on both sides have attached great importance. The signing ceremony chaired by President Hu Jintao and President Putin signified the far-reaching political and social significance of the project, and also provided a solid security for the quality and credit of its construction.

On Jul 17, 2006, Chinese President Hu Jintao surveyed the site in person.

On Jun 9, 2007, the first structure was completed. The inauguration ceremony of Baltic Pearl Business Center, also the opening ceremony for Year of China?Shanghai Week was held at the plaza of the business center. Chinese Vice-premier Wu Yi and Vadim Tyulpanov, president of St. Petersburg Legislative Assembly unveiled the nameplate of the building. As the first building of the Baltic Pearl complex, the business center, in a brand-new modern style with steel structure, has become a unique view of St. Petersburg.

17 — IMPACTS

Describe the impacts of the initiative in terms of:

• Improving the company’s social and environmental responsibility in the urban environment;
• Having technological impact on urban life styles and ecological systems;
• Expanding the market chain and base towards reaching urban consumers in the lower income segments.

What Baltic Pearl is creating is a brand-new large community in different style from the old town of St. Petersburg. The new residences, commercial and infrastructure facilities are built with new materials and technologies. The residential environment created will be new and safe-guaranteed. In addition, the modern operation and management model will represent the latest European lifestyle at the frontier of the world today — harmony between human and nature. Here, residence, entertainment, shopping, leisure and work are merged together to provide great social services for economic and trade development, information exchange and high-class European lifestyle of St. Petersburg.

People living in this community may enjoy high-class and commercial services the same easy and quick as in the downtown area, totally free from the harassment of the «Hot Island Effect». The community will gather according to different community planning people pursuing a new urban life, with the same or similar philosophy and of the same or similar social classes, which will reflect a more orderly and more civilized urban culture. People living or working in the community will enjoy sufficient green landscape resources and water landscape resources, and meanwhile live a most ideal life with the aid of the state-of-the-art technologies such as integrated information management system, premises distribution system (PDS), electro-patrol system, access control system, electronic display system, electromechanical device monitoring system, etc. Many who have visited Baltic Pearl Business Center are amazed at the hi-tech intelligent system and expecting with full confidence the modern way of living.

18 — SUSTAINABILITY

Describe the sustainability of the initiative in terms of its:

• development in the market given the financial, technological, and regulatory constraints
• adaptation to the use of renewable resources and
• accountability to environmental impacts of its activities
• replicability

Baltic Pearl is a modern, multi-functional community complete with residences, shopping malls, office buildings, hotels, creative gardens of diversified business forms. It will eventually be built into a sub-center of St. Petersburg and will play an active role in the economic development, social inclusion, effective use of ecology, and sustainability of the entire urban culture of St. Petersburg.

In terms of capital attraction, the project will become a new exemplary case of St. Petersburg in business and investment attraction and will directly bring to the municipal government a considerable amount of foreign capital. Considering the social and economic pay-back, the whole project implementation will fuel the development of relevant industries, transform the outlook of the city, create job opportunities for 15,000 people, provide 35,000 citizens with high-class, diversified residences and booming businesses, and drive forward the overall development of the urban economy.

With regard to environmental improvement, the project will take full advantage of the existing ecological advantages of «seaside and close-to-water location and green ecological appeal» in the reconstruction of the coastal area of Gulf of Finland and the two internal canals so as to realize the maximum value in natural landscape utilization. The project will merge the natural view and the urban architecture and strike the harmony between the environment and the people so as to realize a healthy and sustainable development of the city and the environment.

19 — LESSONS LEARNED

Describe the three or four most important lessons learned and how these lessons have been or are being incorporated in your initiative and/or other initiatives. Describe how these lessons learned have been or are being taken into consideration in determining ongoing or future policies, strategies and action plans.

In the early-stage development for the Baltic Pearl project, great disparity took place in the planning and design concepts of the Chinese and Russian sides. This, together with the peculiar environment of real estate development in Russia, actually brought about quite some difficulties for the project. By communicating and coordinating with the government and the relevant authorities of St. Petersburg and bringing into full play the backbone role of Russian team members, such difficulties have been effectively overcome.

During the current development process, we have encountered such difficulties as long cycles of matching energy resources and project progress being hampered by high-voltage power lines. The lessons we have learned are to speed up the localization of the enterprise, actively familiarize and adapt to the local laws and codes in Russia, energetically promote cross-culture collaboration and reinforce integrated operation in a wider scope and fields.

20 — REFERENCES

Cite one main reference website that documents the best practice and list up to four web links that provide additional information on the initiative.

The project reference — «Integration theory» of SIIC (First-prize winner of 2006 National Enterprise Management Innovation), published by The Enterprise Management Press in 2006

Author: Cai Laixing