Forgotten hotel gets totalled by vandals

Many real estate investments in Finland by Russians experiencing difficulties

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By Juhani Saarinen in Lappeenranta
     
      The devastation is nearly complete.
      The dining room furnishings have been smashed to pieces.
      Snow has whirled in through a window shattered by a tossed brick. Up by the ceiling there is a bird fluttering about, looking lost.
     
On the floor there are shards of broken glass, but also hotel receipts and traveller cards, from which one can read the addresses and social security numbers of the one-time guests.
      Also scattered around are the account details and payslips of former employees, and sundry threatening letters from angry creditors. Nobody seems to be paying any attention to the data privacy violations that are littered everywhere.
      Every single guest room has also been turned upside-down. The temperature inside the building is a chilly -15 degrees Celsius.
     
Hotel Joutsenranta, situated on the shores of Lake Saimaa just east of Lappeenranta, is a desolate sight.
      The hotel, which operated in the premises of a former hospital, closed down in 2004, and gradually the sizeable buildings have been damaged by vandalism.
      The hotel is believed to be property of Russian businessman Viktor Baturin. He is the only board member in the company that owns the premises and the hotel that was run in them.
     
Baturin made his money through a construction company called Inteco, which he set up with his sister back in 1991.
      According to the Russian daily Kommersant, in 2007 Baturin was worth an estimated EUR 200 million.
      Baturin’s sister Yelena Baturina is likewise part of the Russian elite: she is married to the influential Moscow Mayor Yuri Lužkov.
      Primarily thanks to large construction projects in Moscow Inteco grew into the giant building company that it is.
      According to the American business magazine Forbes, at its height Yelena Baturina’s fortune was estimated at around EUR 3 billion.
     
More recently the siblings have quarrelled over the ownership of Inteco.
      In 2007 Baturin sued the company claiming that his ownership had illegally diminished from a quarter to a mere 1%.
      Despite the wealth of millions of euros - or perhaps because of it - looking after Joutsenranta has not been high on Baturin’s agenda.
      Both the company that owns the premises and the company that operated the hotel have steadily accrued payment disturbances varying from a couple of hundred euros to thousands of euros.
     
From the City of Lappeenranta’s point of view, the situation is an awkward one.
      The city has repeatedly tried to contact the owner with regard to the neglected upkeep. There has been no reply.
      To prevent vandalism, the doors have been bolted, but someone has always managed to reopen them.
      “It is slightly frustrating”, says city building inspector Mika Sairanen.
      The owner has still been interested enough in Joutsenranta’s fate for the real estate firm to seek compensation from an insurance company because of the vandalism.
     
Joutsenranta is the most deplorable example of the failed Russian property investments in Finland.
      Traditionally, investments in Finland by Russians have been few and far between, but in the last decade the growing tourism caused some Russian investors to take an interest in the Finnish market.
      Companies with a Russian background purchased numerous tourist accommodation and holiday resort businesses.
      Some managed to find their clientele, but many drifted into difficulties.
      Already before the credit crunch, for example Hotel Varsavuori in Mikkeli and the Saimaan Loma-Hovi resort in Ruokolahti shut their doors.
      “The investments have not been outstandingly successful”, says chief executive Jukka Korkeila from the South Karelian Entrepreneurs’ Association.
      “Maybe some other investments have generated a better yield and the development funds have flown elsewhere.”
     
The Russians’ desire to purchase properties in Finland died down last year.
      In the peak year of 2008 Russian investors bought 780 properties in Finland.
      Last year the figure was reduced to only just over half of that.
      The boom was not merely about acquiring hotels and other ventures as a going concern, but also the buying up of prime waterfront sites for impressive second homes in south-eastern Finland. This, too, has waned of late (see linked article below).
     
     
Helsingin Sanomat / First published in print 1.2.2010


Previously in HS International Edition:
  Russians buying less real estate in Finland (1.2.2010)

See also:
  Rouble investors keeping step with growing tourist trade from the east (1.8.2007)
  Surge in property buying by Russian citizens in Saimaa region (15.1.2008)

Links:
  Inteco (Wikipedia)
  Yelena Baturina (Wikipedia)

JUHANI SAARINEN / Helsingin Sanomat
juhani.saarinen@hs.fi