AFI Development makes progress on Tverskaya Zastav

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AFI Development makes progress on Tverskaya Zastava

London, 29 November 2011 - AFI Development ("AFI Development" or "the Company") announces that it has made progress in its negotiations with the City of Moscow regarding the Tverskaya Zastava shopping centre project. This follows a release earlier this year (25 March), when the Company confirmed that the City had decided not to proceed with plans to build the shopping centre.

Under a non-binding agreement, the City of Moscow will re-approve and renew the Company's development rights and leasehold interests in land plots at Plaza Ic (part of Plaza I), Plaza IIa and Plaza IV projects (which were partly subject to termination at the end of 2011) with total gross buildable area of approximately 170,000 sq. m. This compares to the previous area of approximately 192,000 sq. m. In addition, the City will not charge AFI Development municipal development rights costs of approximately US$95mn, which the Company had expected to pay in the course of the initial construction. The City of Moscow has also confirmed that the land plots can be developed as office space. To enable the City to prepare approval documentation for the Plaza IV project, the Company has to waive its' ownership to seven land plots with total area of 2,145 sq. m. at 11, Gruzinsky Val, in favour of the Moscow municipality.

AFI Development, following consultation with independent appraisers, believes this settlement represents full compensation for the development costs it has incurred on the Tverskaya Zastava shopping centre project. According to the understanding, it will soon start to transfer the unfinished construction of the shopping centre to the City of Moscow.

The other projects in the Tverskaya Zastava area (Plaza II and Plaza Ib, totaling approximately 111,500 sq. m. of gross buildable area) are not affected by the agreement and remain in the Company's land bank unchanged.

Commenting on today's announcement, Mr. Mark Groysman, CEO of AFI RUS LLC., said: "AFI Development believes this agreement represents substantial progress in our Tverskaya Zastava negotiations. It should be noted that AFI Development has achieved a green light for new office construction in central Moscow at a time when the City's policy is not to allow new office construction in the area".

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For further information, please contact:

AFI Development, +7 495 796 9988

Alexander Adadurov

Ilya Kutnov

Citigate Dewe Rogerson, London+44 20 7638 9571

David Westover

Sean Bride

About AFI Development

AFI Development is one of the leading real estate development companies operating in Russia. Established in 2001, AFI Development is a publicly traded subsidiary of Africa Israel Investments Ltd.

AFI Development is listed on the Main Market of the London Stock Exchange and aims to deliver shareholder value through a commitment to innovation and continuous project development, coupled with the highest standards of design, construction, and quality and customer service.

AFI Development focuses on developing and redeveloping high quality commercial and residential real estate assets across Russia, with Moscow being its' main market. The Company's existing portfolio comprises commercial projects focused on offices, shopping centers, hotels and mixed-use properties, and residential projects. AFI Development's strategy is to sell the residential properties it develops and to either lease the commercial properties or sell them for a favorable return.

AFI Development is a leading force in urban regeneration, breathing new life into city squares and neighborhoods and transforming congested and underdeveloped areas into thriving new communities. The Company's long-term, large-scale regeneration and city infrastructure projects establish the necessary groundwork for the successful launch of commercial and residential properties, providing a strong base for future.