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(An item published at 1131 BST misstated the nature of the impact of the Ukraine crisis. A correct and updated version follows.)

LONDON (Alliance News) - Property developer AFI Developments PLC Tuesday posted a drop in profit in the first half, after its result in the previous year was boosted by valuation gains, but it managed to drive higher profit at its Moscow shopping mall and in its rental and hotel operations even though the wider economy was hit by the impact of the crisis in Ukraine.

The Russia-focused property company posted pretax profit of USD5.9 million for the six months ended June 30, down from USD55.5 million a year earlier. In the previous year the company booked valuation gains of USD58.4 million which did not reoccur.

Revenue, including proceeds from the sale of trading properties, dipped to USD76.2 million, from USD123.9 million.

However, it said its operations had managed to perform strongly, even though the wider Russian economy was being hit by impact of the crisis in Ukraine. Its rental and hotel operating income grew 9% on the year to USD74.8 million, while its AFIMALL City shopping centre in Moscow contributed USD56.6 million to its first-half revenue, up from USD48.0 million a year earlier. The shopping centre's net operating income rose 27%.

"Whilst the second quarter of 2014 has been marked by political and macroeconomic uncertainty in Russia, we maintained our focus on delivering steady progress at our development projects and on continuously improving the operations of our completed properties," Executive Chairman Lev Leviev said in a statement. "The 27% year-on-year increase in net operating income generated by AFIMALL City is testament to the success of these efforts."

AFIMALL City occupancy levels rose to 82%, from 79% at the year-end. The company welcomed several new tenants including retailer NEXT kids and fast food chain KFC.

It said the increase in new office construction in the second quarter was the highest in the last four years at 323,700 square metres, but demand reacted to geopolitical events with the Moscow office market experiencing unusually low quarterly take-up at 84,400 square metres.

The volume of new construction in the Russian retail space remained strong, with 18 new shopping centres with a total gross leasable area of 683 thousand square metres opening in the first half.

AFI Development shares were up 4.9% at 0.647 pence Tuesday afternoon.

By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews

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