Investing in the past: why the renovation of old buildings has become a trend
The return to circulation of old buildings in the historical districts of major Russian cities is a popular trend among investors and developers. Cultural heritage is not only preserved, but also finds a new life, becoming a comfortable home or a place to work. How the reconstruction of historical buildings is going, and whether it is worth investing in such projects in the conditions of the modern real estate market — in the material of Izvestia.
From a cultural heritage monument to premium housing
In a message to the Federal Assembly in February 2024, Russian President Vladimir Putin instructed the reconstruction of the maximum number of cultural heritage sites in the country.
The revival of cultural heritage as premium housing is associated with several reasons: the convenient location of buildings in the city center, the high potential for reconstruction and transformation into modern real estate with a high level of comfort, government support in the form of benefits and subsidies, as well as the uniqueness and special design of buildings that distinguish them from typical projects. Irina Milkina, head of the Design and Educational laboratory of Urban Development at GUU, told Izvestia about which buildings have already changed, retaining their appearance.
A complex of historical buildings was restored on Sofiyskaya Embankment in Moscow, where the facades of buildings, plaster and stucco decorations were restored, and ancient sculptures that decorated the gates of the Rakhmanov city estate were restored. Another example is the restoration of an apartment building on Bolshaya Dmitrovka Street, which now houses club apartments. The original elements were preserved in it: doors, tiles, moldings, forging, as well as the original appearance of the facade.
Today, reconstruction in Moscow is often carried out by attracting investors — the old buildings here are located in the center, where housing prices are quite high, and there are few new "clean" sites, so developers are willing to undertake projects to adapt historical buildings to modern use. In the regions, housing prices are noticeably lower, and even in the center of the "millionaires" it is more difficult to find an investor, explained Anatoly Batalin, commercial director of Sadovoye Koltso Group.
— The cost per square meter depends on the class that will be assigned to the reconstruction facility. The fact that the building is historic will be only a nominal plus, but in fact it will not add anything to the cost," Batalin said.
The same situation has developed in St. Petersburg, where there is also an interest in the old foundation, and therefore a unique program has been created to preserve residential buildings with complex architectural decorations, which includes 255 historical facades. However, this niche, despite its great potential, is fraught with additional difficulties in the implementation of the project. Philip Schrage, founder of the Kronung Group, told Izvestia that updating historical buildings requires precise engineering, careful facade restoration, approvals, and archaeology, which increases both time and cost.
Alexey Sokolov, Marketing Director of the Genesis Pro consulting agency, stressed that from an investment point of view, the old stock in city centers is still less predictable compared to new buildings.
— Firstly, there are high risks of unforeseen expenses during repairs: hidden defects in floors, worn-out communications, the need to replace the roof or strengthen the foundation. Secondly, there are legal difficulties: ownership rights to premises in such houses are often associated with incomplete documents or encumbrances," he argues.
According to him, new buildings in the same area are more understandable for investors: the transparent legal structure of the transaction, the projected profitability and the absence of large additional costs in the first years of operation, and the old fund is more a story about uniqueness and personal preferences, while new buildings are about predictability and investment reliability.
The hole in the wall goes on the warpath
Anatoly Batalin noted that the problems that investors may face depend on the condition of the facilities themselves. Work to preserve the remaining elements of a building declared a monument of federal or regional significance can be complex and expensive, requiring a non-standard approach, since it can only be the preservation of facades or window openings, and sometimes it is necessary to leave individual elements intact.
According to him, the most important mistake is the lack of coordination of any redevelopment with the local authorities who are responsible for it. Before proceeding with the reconstruction, the developer is obliged to coordinate all his actions in accordance with the security obligation, which is issued individually for each project.
— If the reconstruction of the building is carried out correctly, using high-quality materials, in compliance with all technologies, then no additional costs or problems will arise. Such a house is virtually indistinguishable from new buildings — there may be some restrictions regarding the approval of alterations or changes in the appearance of facades. But in modern new buildings, there are also restrictions and certain requirements for the appearance of facades, and any redevelopment is coordinated," Batalin emphasized.
A separate block of costs is related to fire safety, Roman Bochkov, a leading development manager at Rockwool, told Izvestia.
— In old buildings, it is rarely possible to implement modern systems "from scratch", we have to look for individual solutions. During the reconstruction of Varshavsky Railway Station in St. Petersburg, where the largest food mall operates today, one of the key tasks for us was to create a fire-resistant ventilation and smoke extraction system while preserving the historical architecture," the expert shared.
Vladimir Shchekin, co—owner and co-founder of the Rodina group, added that the difficulties of such projects determine the value of the result - when the building regains its historical appearance, finds a new life and a new content. He stressed that the historical foundation in the city center is primarily an important element of the cultural code, and developers have a responsibility to preserve it for future generations.
— Using the example of the project that Rodina implemented on behalf of the Moscow government, the House of Russian Billiards in the historical club of the Svoboda factory, designed by the great architect Konstantin Melnikov, we can say that such tasks are best achieved when it is possible to combine the preservation of the spirit of an important place for citizens with the creation of modern infrastructure, — he noted.
Shchekin said that in the House of Russian Billiards, the group not only preserved Melnikov's constructivist philosophy and his idea — historically it was a club for workers with educational functions — but also filled it with modern meanings. He noted that the House of Russian Billiards proves that when there is a synergy of efforts between the state and business, the result is excellent.
Ivan Tatarinov, Executive Director of the Glincom development company specializing in redevelopment projects, said that the main risks of renovation of historical buildings are regulatory and technical.
— Many old buildings have wooden floors, dilapidated walls and structural elements, and almost always the networks and engineering equipment are in poor condition. Huge funds are often required to strengthen load—bearing walls, foundations, and complete replacement of engineering and roofing," Tatarinov stressed.
The new life of the old foundation with the preservation of the "spirit"
Restoration and reconstruction are the foundation of architecture, because without history and layers of the past, a city cannot have a future, said Daria Turkina, CEO of the architectural studio Bohan studio. Now Russian developers have come to this conclusion.
— This has long been the norm in Europe: historical centers are never demolished, everything is restored carefully and wisely. In Russia, for a long time, historical quarters were demolished for the sake of square meters and "candles". Nowadays, high-level customers are increasingly choosing clubhouses in renovated buildings rather than towers in new buildings, but reconstruction is always more difficult and more expensive than new construction. It's a process full of surprises. The main challenge is the balance between preserving the spirit of the place and creating a modern, comfortable space," Turkina said.
She shared the story of the restoration of the Khudozhestvenny cinema on Arbat. Due to the fact that the building had been roofless for several seasons, the century—old brickwork had lost its bearing capacity. The studio analyzed the materials in the laboratory and found out that the brick had become hollow. As a result, we had to completely redesign the structure, but we managed to preserve everything possible: beams, even if they were no longer load-bearing, balcony railings and moldings, so as not to lose memorable elements and show respect for history.
According to Turkina, the trend towards conscious consumption drew attention to the value of reconstruction, emphasizing that respect for the past is the way to sustainable development. Urban laws do not change: a comfortable height for a person is 4-6 floors, which allows you to see the horizon, dawn and sunset, as well as feel in a space where you can call a child and be heard. Such proportions contribute to peace and harmony. Low-rise historical buildings are still the most valuable, but it is important to work competently with communications and ceilings so as not to turn a historical object into a "remodel inside the old shell."
Anatoly Batalin added that everything depends on the goals of a particular project — wealthy buyers value not only comfort, but also the status that a building with a history has.
— If the building is being reconstructed as a hotel complex, then there will be one redevelopment. If the goal is to create an office or business center, then it's completely different. What is always appreciated is the high ceilings and wide window openings," Batalin noted.
Ivan Tatarinov said that kitchens and living rooms, additional bathrooms and laundry rooms, master bedrooms with dressing rooms, as well as elevators in small houses are most in demand during the renovation of residential premises.
Monetary love for historical housing
Due to the high cost of work, the cost per square meter in a historic building is almost always higher than a new building, Daria Turkina said.
— Who buys such apartments? People who value not only square footage, but also their involvement in history. More often, these are well-off clients who are ready for the "hassle" associated with the operation of the old fund. Their arguments are: the atmosphere of the center, the cultural value, the feeling that you live in a house with a history. Yes, maintenance is more expensive, and engineering systems require more attention. But this is a philosophy where comfort is not only in the everyday sense, but in terms of the quality of life and the environment around us," Turkina explained.
According to the data provided by Alexey Sokolov, in Moscow in 2025, the difference in cost between new buildings and the old stock is noticeable, but not unambiguous. "Old Moscow" surpasses new buildings in price, and the average cost reaches 418 thousand rubles per square meter, that is, about 20% higher.
Philippe Schrage also said that the main rental buyer is expats, companies for representative apartments or tenants with a request for non—standard housing.
— The main argument in favor of the historical foundation is its uniqueness and atmosphere. At the same time, the main disadvantage is the constant additional costs: maintenance of engineering, facades, roofs, as well as the risks of new requirements from security authorities," explained Schrage.
Ivan Tatarinov also noted that, ultimately, the buyer is guided by other criteria when choosing — location, layout, architecture, cost, stage of readiness. There may not be any additional costs for the apartment owner in such buildings with a high-quality project implementation, but there may well be restrictions: for example, it will be impossible to carry out internal redevelopment or replace windows with double-glazed windows.
"Demolish or save"
Today, Russia is implementing a federal targeted housing renovation program, but its successful implementation depends on local authorities and the specifics of each region. Resettlement from historical areas, where many buildings have cultural value and are subject to protection, is particularly difficult, said Ekaterina Avdeeva, Chairman of the Board of Directors of Astorius JSC.
In some cases, old houses are being restored while maintaining their appearance and structure. This is an expensive process, but it applies to architectural monuments of the first category of importance. According to Philippe Schrage, it is difficult to talk about a unified strategy for working with the historical foundation at the moment, since there are only targeted initiatives by private investors, often in cooperation with the city. The resettlement of emergency homes in the historical center most often takes place through judicial mechanisms and separate programs, but there is no large-scale system model, which slows down the process of commissioning new facilities.
— The ideal renovation model in 10-15 years is a partnership between the state and private developers. The state takes on part of the costs of resettlement and engineering training, and the developer takes on the creation of a high—quality product while preserving its historical appearance. It can be housing, apartments, offices, or mixed formats," he says. — With this model, the central districts will be updated, while maintaining the cultural code of the city.
According to him, in St. Petersburg alone, in the "gray belt" there are about 6-6.5 thousand hectares of land on which up to 9-11 million square meters of housing can be built if infrastructure restrictions are lifted. However, in the city center, redevelopment and renovation will remain the main driver, which have high cost but also high added value for the market. It is such projects that will shape the new face of the historic city.
Careful reconstruction should form the basis of urban planning in old cities in the future, Daria Turkina is sure.
— It is important that we do not choose "demolish or preserve", but rather know how to combine the old and the new. Our experience shows: it's possible. And when you preserve even a small element of the past, it becomes a point of connection of time. Without the past, there is no present. And finally, we came to an understanding: conservation is not a brake on development, but its foundation," she concluded.
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