Photo: Portal of the Mayor and the Government of Moscow
Over the past few years, we have been valuing the assets of the Moscow Youth Palace. The purpose is to prepare financial statements in accordance with international IFRS.
This project is interesting because Moscow Youth Palace is an extremely non-standard commercial real estate object. Despite the presence of office and retail space, the main part of the building is occupied by premises for theater and concert events. For a long time, the premises of the Moscow Youth Palace hall were rented by the Stage Entertainment Group, an international musical operator who adapted such well–known productions as "Cats", "Mamma Mia!", "Chicago", "Zorro" and "Beauty and the Beast" on the Russian stage. Now the Moscow Youth Palace stage is rented by a Russian company for musicals.
The non-residential building is used as a cultural and leisure center "Moscow Youth Palace". Its interiors are decorated with open staircases and balconies. There are two full—fledged theaters under the roof of the Palace: the Moscow Youth Palace Grand Hall, where musicals take place, and the Mask Theater, which opened in the fall of 2022. The excellent acoustics and technical equipment of the theaters make it possible to stage productions of any level — from classical opera to a spectacular variety show. And the Parquet hall, equipped with another stage, has become a platform for a variety of cultural events and entertainment events. Now the musicals that have already become popular are being staged on the Moscow Youth Palace stage: "Don't be afraid of anything, I'm with you", "Valentine's Day", "First Date".
The stage for the new theater hall "Mask" was designed by architect Benjamin Schneider from Austria. And specialists from the Bolshoi Theatre, the Theatre of Nations and Lenkom worked on acoustics and saturation of the venue with the latest theatrical equipment. The Masque Theatre has become a real pearl of architecture and design.
Photo: Moscow Youth Palace
Theaters and a parquet hall, despite the high quality of the halls themselves, bring significantly lower specific commercial returns in comparison with more modern cultural and entertainment facilities, since the building was built in Soviet times and its overall layout is not the most effective. Moreover, the facility provides significantly lower profitability compared to conventional commercial and office buildings. In this regard, despite its good location in the prestigious Khamovniki district, with entrance from the Frunzenskaya metro station, the Moscow Youth Palace building has a fairly low unit cost per 1 square meter of total area.
Photo: Moskomarchitecture
In 2019, plans were being developed for the reconstruction or redevelopment of the Moscow Youth Palace building. They wanted to give the object a modern look and increase the useful areas of the interior space. However, the implementation of these plans was prevented by external and economic factors. First, Covid-19, after that - a decrease in business activity and solvency of the population. Therefore, the reconstruction plans were not taken into account by us when conducting the valuation. So far, our valuations are based on actual planning, terms of lease agreements, income related to the turnover of tenants and concert activities.
Photo: Moskomarchitecture
The results of the valuation are presented by us in the form of a full report in Russian, as well as a brief report (conclusion) in English. Their users are both shareholders and management of the company, as well as international auditors based outside the Russian Federation. Repeated requests from the client and the absence of any comments from international auditors indicate the high quality of services provided by Valrus.
We have been valuing the Moscow Youth Palace since 2017 and this project is also interesting for us because we can clearly observe how socio-economic processes in our society and the global economy affect the value of a particular property.