New York Times Magazine
Manhattan on the Moskva
At the center of Moscow's building boom is a 33-year-old adventure-seeking multimillionaire with a pet boa constrictor.
SERGEI POLONSKY WAS SHORT 900 tons of concrete, and he wasn’t interested in excuses. It was a sweaty July morning at a construction site just outside central Moscow, and several contractors were arguing over whom to blame. The air-conditioned office overlooked hard-hatted workers scrambling through the dust several stories below, cranes swinging into position high above their heads.
A Russian real estate developer, Polonsky is building Moscow’s first genuine modern skyscraper, the Federation Tower. When it reaches its full height, perhaps as early as next year, and at a cost of some $740 million, the tower will be the tallest building in Europe. It forms the centerpiece of Moscow City, a sprawling financial district that will inject a new modern character into this ancient, frenetic city.
From across the meeting table, Polonsky focused on the deputy director of his company’s concrete division, a middle-aged man with white hair and reading glasses that hung off the tip of his nose. The entire inner structure of the Federation Tower is composed of concrete, so the shortfall presented no small jam. “You have three days to solve this problem,” Polonsky told him, “or you can submit your resignation.”
Polonsky is 6-foot-6 and has a head of curly sandy hair that assumes various odd shapes depending on the humidity. His smooth rounded face makes him seem approachable. But in this notoriously tough town, no one achieves Polonsky’s success by being everybody’s best friend, least of all someone who is, like him, just 33.
Following the meeting with the contractors, Polonsky and Artur Aleksandrov, the project’s perpetually hassled chief of construction, grabbed their hard hats and headed out for an inspection walk of the looming tower, already 50 stories high. The Federation Tower is not the only building making visible progress around Moscow City. Several office complexes rise into the air in various states of completion in what many Russians are calling the Moscow Manhattan. It is a sweeping space — 250 riverside acres that will consist of 18 buildings and 43 million square feet of new real estate from 13 developers. At a projected cost of $10 billion to $12 billion, Moscow City is promoted by its developers as the largest investment and construction project in Europe.
The Federation Tower is the showpiece. It will actually be two towers, the taller one with 93 floors and a height of 1,161 feet, and the other with 63 floors. A 1,470-foot spire will rise between the monoliths, with glass elevators running up its core, offering a panoramic view and entry into the buildings. The towers will have 4.5 million square feet of high-end office space, luxury apartments, shops, restaurants and a 44-story Grand Hyatt hotel. The overall impression of the architect’s rendering of these slightly bowed, glass-sheathed towers and central mast is that of a mammoth sailboat rising above the Moskva River. A blue banner hugging one side of the smaller tower reads, “This is only the beginning.”
As Russia regains its economic and political clout, Polonsky and other young developers are building architectural icons on an enormous scale, visible symbols of the nation’s new wealth. The Russian state is now flush with cash. High prices for the country’s largely renationalized natural resources — oil, gas and metals, especially — and President Vladimir V. Putin’s efforts to tighten the screws on government agencies have given investors, foreign and domestic alike, reason to believe that the risk of doing business here has greatly diminished. Last year, Moscow real estate values soared, the Russian stock market grew by 90 percent and Standard & Poor’s upgraded its rating on Russia (its evaluation of the viability of doing business in the country). Foreign investment in Moscow grew 67 percent in 2005 from the previous year, to $25 billion. And while there are many critics of the Kremlin’s aggressive control of big business, Putin has created a measure of economic stability. And that is what investors want.
City leaders first began discussing the Moscow City concept in the 1980’s. The idea was to create a commercial district along the lines of La Défense in Paris or Lower Manhattan in New York. Mayor Yuri M. Luzhkov and his deputies fixed on a site on the Moskva River embankment, two and a half miles from the Kremlin. There were 22 factories and warehouses at that location, along with several dilapidated apartment buildings, a typical Moscow hodgepodge. The city demolished the structures and began soliciting investment. Then came the country’s economic crisis in the summer of 1998, which stalled development but didn’t keep the mayor’s office from campaigning for the new business district. “We spent 10 years marketing Moscow City,” says Iosif Ordzhonikidze, the deputy mayor for foreign affairs and economic relations. “We were doing it when the stores had nothing in them.”
Now Moscow is booming. It’s the biggest city in Europe, with more than 10 million people, and as the cultural and financial capital of the Continent’s eastern half, it is striving to live up to its status. Cranes twist across the skyline, great dust clouds billow from countless digs: roughly 80 million square feet of real estate will be built this year. But Moscow’s transformation goes beyond the mere number of structures. It is the nature of these new developments that matters most, as modernization and image enhancement have become just as important to the civic leaders as the supply of basic services.
The Kremlin’s towers and palaces and the gargantuan structures of Stalin’s era have long symbolized Moscow, distinct emblems of czarist and Communist authority. The skyscrapers now going up, however, would fit into the urban plan of any Western capital. And in this way, the Moscow planners and developers are trying to prove to the rest of the world — and to Russians themselves — that this country can compete with anyone.
ONE WORKDAY EVENING, Polonsky summoned a dozen of the top managers of Mirax, his company, to one of his residences, a 16th-floor penthouse in the Golden Keys high-rise. A medieval warrior, it seemed, had handled the furnishings. A couple of crossbows, nicked and well used, dangled from the ceiling beams. In one corner stood a dummy dressed in samurai armor. In the bedroom was a king-size mattress attached to motorized chains and capable of traveling 10 feet into the air. A boa constrictor, as swollen as a fire hose, was coiled in a terrarium, his split tongue testing the air.
Polonsky had invited his managers over to play Mafia, a parlor game of bluff and strategy. Once everyone was seated around a long wooden table, Polonsky and two others were secretly designated as a criminal enterprise that then went about eliminating the other players. Polonsky regards this exercise, involving blindfolds, accusations and deception, as a kind of instructive corporate bonding. Learning to think like a member of an organized crime syndicate, apparently, can have its advantages.
Polonsky frequently plays Mafia into the early morning hours. But on this evening, he concluded the session well before midnight, with an admonition that suggested he had some insight into the insidiousness of both work and play. “You must remember, it’s just a game,” he told his employees. “You shouldn’t remember, ‘Oh, I played with this guy and he kicked me out.’ It’s just a game.”
Having sent his managers home, Polonsky made his way out to the balcony where he lighted a cigarillo and looked out over Moscow’s great spread. Polonsky himself is a transplant. He was raised in St. Petersburg, where his mother worked in a post office and his father was a professional student, collecting one degree after another. Polonsky entered the armed forces after high school, joining an airborne division and serving in the Caucasus, an experience that he says “forged” him. “In the army there is no such thing as no,” he offers as an explanation of what he gained from the experience. Regarding other aspects of his military career, he chose to say very little.
Polonsky returned to St. Petersburg in 1994 after leaving the army, and, with a friend, Artur Kirilenko, started a business finishing apartments in public and private buildings. When hard times struck and building owners ran into money trouble, they began paying Polonsky and Kirilenko in apartments instead of cash. The turning point for the partners came when they took possession of an entire building, not just individual apartments. The structure was unfinished, and when Polonsky and Kirilenko added a few floors and sold the building, they had unwittingly become builders. It was one small step to becoming developers.
The two friends were like many people who profited in the early post-Soviet days: businessmen who appeared out of nowhere, able to adapt in a time of upheaval, capitalizing on circumstance. The 1998 financial crisis that swept the country was devastating to most but proved a boon to Polonsky and Kirilenko. Their company paid for construction costs in rubles, then turned around and sold apartments and offices to those who had dollars. With the ruble in free fall, they profited in the lag time between construction and sale. Dollars in hand, Polonsky and Kirilenko had placed themselves on the right side of the inflation catastrophe, and they quickly became wealthy.
Polonsky set about enjoying himself, indulging his taste for vigorous activity: hunting, parasailing, bungee-jumping, snowboarding, skiing, mountain biking, snowmobiling, off-road racing, piloting aircraft, even driving tanks and firing A-K 47’s into the sky. This was all a prelude to his ultimate adventure. Polonsky spent several months in Star City, the headquarters of Russia’s space program, where he trained to become a space tourist, just the third ever. He arranged to pay $8 million, but, Polonsky says, when engineers designed his spacesuit, they determined that he was too tall — that his legs, jammed against a control panel, were sure to break on landing. The space agency returned all but $500,000 of his money, which he says was well spent, the disappointment of rejection outweighed by the thrill of belonging to the program. “If you go to Star City, it’s impossible not to want to do it,” he says. He notes, with some pride, that the cosmonauts who trained with him phoned him from the International Space Station with New Year’s salutations.
During all of this time, Polonsky’s company was growing into one of the largest developers in St. Petersburg, eventually building Petrovsky Fort, a 540,000-square-foot complex that became the standard for business centers in the former capital. Polonsky opened an office in Moscow in 2000, after graduating from St. Petersburg State University of Architecture and Civil Engineering. Two years later Mayor Luzkhov appointed him as an adviser. He was not yet 30.
Such a quick rise to prominence in a place where cozy government relations have been a prerequisite to getting anything done has led people to assume that Polonsky is just another beneficiary of the crony system. But he would have you believe his success stems purely from his ability and willingness to be held accountable, from being, in other words, a professional, where professionals can be hard to find. “I arrived in Moscow six years ago and I knew nobody,” he says. “In my first three months here I had 200 meetings, and I was surprised how unprofessional people were. Builders thought they were economists and vice versa.”
No matter what he says, however, Polonsky can’t shake speculation of high-level associations and sweetheart deals. “There are all sorts of legends,” he says. “I’m the illegitimate son of Valentina Matvienko,” the governor of St. Petersburg. “Or I studied in the same university as Putin.”
Putin, who is also from St. Petersburg, has surrounded himself with advisers who, like Polonsky, are from his hometown. Over Polonsky’s desk hangs a lovingly rendered painting of Putin, the president’s arm lazing over the back of his chair, a teasing grin on his face. Dangling idly in Putin’s right hand is a pen, with which he may or may not ink his approval. When Putin traveled to China in March, Polonsky went along with him.
But Putin also favors the talented and accomplished, and Polonsky has a gift for attracting investment, making it stick and seeing a project to completion. In 2000, Mirax started on the one-million-square-foot Corona apartment complex in western Moscow; the company is now building 42 million square feet in the city. Mirax has become an emblem not just of Moscow’s rapid development, but also of how the style of building there is changing. “Polonsky and the Federation Tower are like a brand for us,” says Nikolai Koshman, president of the Association of the Builders of Russia.
In 2003, Polonsky won the bidding to build a tower on a particular parcel of Moscow City. He welcomed the publicity that went along with it, as well as the attention generated by his bid to travel in space. He is a frequent topic of discussion in the local press, sometimes drawing notice with ill-advised public statements. During one press conference, Polonsky claimed that the Federation Tower was designed to be impervious to terrorist attack by airplane. “Regardless of how many planes hit it,” he said, “it won’t fall down.” Several of the project’s engineers looked on in shock, aware of no such design. Nor did it hurt Polonsky’s public profile that he was at one time palling around with Anastasia Volochkova, a ballerina with the Bolshoi Ballet. Polonsky has since married Natalya Stepanova, the president of a construction consulting company. But he has not given up his relationship with the limelight. “He can attract attention to himself,” Koshman says. “Other developers are more modest.”
IN MOSCOW, A PROFESSIONAL can find it rough going, surrounded on all sides by insularity, ineptitude, corruption and the persistent after effects of a command economy. “It’s very difficult to find suppliers who will sell goods to you,” says Zhao Xiangqian, an executive manager with the China State Construction and Engineering Company, which Mirax hired to build the concrete structure of the Federation Tower. “And they always want to change something at the last minute.” (Polonsky did eventually get his concrete, but construction was delayed for several days.)
For Polonsky, these details are the least of his worries. The main difficulty in building the Federation Tower is that such a building has never been attempted in Moscow. The complexity and height of this structure bring into sharp relief the inadequacies of the current system. For one thing, there is no comprehensive building code in Russia that dictates how the tower should be built. Moreover, Mirax has never attempted a structure on this scale. “We have mass experience building 35-floor buildings,” says Aleksandrov, the chief of construction. “But 90 floors is a totally different task.” As a precautionary measure, Aleksandrov says, Mirax chose to erect the smaller tower first, to “test our technology.” Europe’s tallest building, it turns out, is also Europe’s tallest training exercise.
The Federation Tower started out on a shaky financial footing as well. When Polonsky broke ground, he had no outside financing for the skyscrapers. In Manhattan, for example, it is customary to secure 80 percent or more of the financing on a building before construction begins. “In Moscow, you won’t find a single investor who will give you money without seeing the building,” Aleksandrov says. “Not everyone has the ability to build in Moscow. Moscow can be very capricious.” Polonsky began the project with his and Mirax’s own money — how much he will not disclose. As progress on the Federation Tower has become visible, investment has poured in. The major share of financing has come from Vneshtorgbank, the country’s second-largest bank, which has extended a $250 million line of credit. The Kremlin owns 99.9 percent of Vneshtorgbank, meaning that the Russian government serves as the Federation Tower’s primary financial sponsor.
Since there is very limited skyscraper-construction expertise in Russia, Polonsky hired the Chinese contractors as well as Turner International, a firm based in New York. Turner and the Chinese firm have worked together on several high-profile tall buildings, and on the Federation Tower they are essentially acting as their own regulators, making decisions as they go along.
This is how things work in Russia, where laws are often variably applied and where the only real rule for getting things done — at least on this scale — is to have government support. “Much of what you see here is because of Polonsky’s relationship with the Kremlin and the city government,” says Thomas J. McCool, Turner’s European manager, who works out of an office on the Federation Tower site. “It’s very Russian.”
The new Russia is, in some ways, not so different from the old. The Soviets tore down thousands of buildings in Moscow, replacing them with monuments to their own way of thinking. A similar situation revisits the city now, as government authorities do as they please, obliterating any number of historical structures in the pursuit of unfettered development. “We have too much money in Moscow,” says Marina Khrustaleva, an architectural historian who is the chairwoman of the Moscow Architecture Preservation Society. She says that the city is losing as many as 300 historical buildings a year. “Some people say it is too late,” she says, that “Moscow is already lost.” While Khrustaleva does not object to Moscow’s overall modernization, she does view Polonsky’s towers as one more example of the unchecked loss of the city’s traditional character. “It’s so simple,” she says of the structure. “It has no idea. This is speculative architecture.”
The architects of the Federation Tower, Sergei Tchoban and Peter Schweger, are known for building solid, respectable buildings in Germany, where they are based. “They’re not superstars, but they have a good reputation,” says David Sarkisyan, the director of Moscow’s Shchusev State Museum of Architecture. “They’re not trying to jump out of their trousers, as we like to say, but they do stylish things.” The tower is their opportunity for a grand showcase.
Polonsky, too, is chasing big aspirations with this building. He is hesitant to discuss his vision of Moscow’s future, if indeed he has one. Talk is still cheap in Russia, if not in fact hazardous, and Polonsky won’t engage in philosophical testimonials. Still, he is clearly after something more, as he could earn a more certain profit by continuing to build the 35-story apartment blocks that have made him wealthy. “I have never had such a powerful, creative client,” says Tchoban, who was born and educated in St. Petersburg. “Ninety-nine-point-nine percent of clients don’t like to create anything new.”
Trying to do something new, and especially to be the first one to reach a new marketplace can rattle the nerves. You might arrive too soon, before the market is ready to receive you. Right now, Polonsky has only a few confirmed commercial tenants, including Grand Hyatt and Vneshtorgbank, for the Federation Tower. The narrow distribution of Russia’s wealth, as well as the sheer volume of commercial and residential space now under construction, raises doubts about how much demand there will be for high-price real estate. And that is Polonsky’s biggest gamble. He doesn’t know yet if he has hit the moment exactly, or whether he has judged incorrectly, and whether the tower will be an empty monument, or a flourishing emblem of a thriving country.
POLONSKY, RELAXED ON HIS balcony over-looking the city, said that he had difficulty imagining how it had all come to pass, how he had gone from outfitting interiors to building Russia’s first world-class skyscraper. “Your eyes are afraid of a job, but your hands do it,” he said. “The propulsive power is the lack of knowledge. If I had known how difficult it would be, I never would have opened my own office.”
He stubbed out his cigarillo and walked inside, having tired of discussing business. Polonsky preferred to talk about the thrill of Star City, and he played a DVD montage of his cosmonaut training sessions to illustrate the point. An anti-gravity plane takes him for a whirl. A centrifuge whips around, pushing him through eight G’s. He climbs into a spacesuit and tinkers on a capsule that was submerged in a large swimming pool.
Then there is a shot from the launching pad. A handful of military brass and aerospace engineers gather around, as three cosmonauts prepare for the journey to the International Space Station. The cosmonauts climb the stairs into their capsule, a dense early-morning mist hanging thick and lighted by dreamy yellow lamps. The video then cuts to a shot of the rocket punching into space. The rocket grows smaller and smaller as it reaches into pure black. Polonsky watched, unable to turn away.