UPDATE ON NEGOTIATIONS WITH VTB BANK

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

AFI DEVELOPMENT PLC

("AFI DEVELOPMENT" OR "THE COMPANY")

UPDATE ON NEGOTIATIONS WITH VTB BANK

London, 3 May 2016 - AFI Development, a leading real estate company focused on developing property in Russia, hereby provides an update on its negotiations with Bank VTB PJSC ("the Bank").

As per the Company's announcement of 30 March 2016, AFI RUS LLC had received a letter on 29 March 2016 from Bank VTB PJSC. The letter stated that the Bank had reached a conclusion that Bellgate Construction Limited and Krown Investments LLC (the borrowers under the AFIMALL City and the Ozerkovskaya III loan facilities, respectively) had experienced, in the opinion of the Bank, material adverse changes in their financial conditions and there had appeared other circumstances that indicate that their obligations under the loan facility agreements could be not met on time. The Bank proposed that the Company implement steps aimed at removing possible negative consequences of the aforesaid circumstances within 30 calendar days, otherwise the Bank would exercise its right under the loan facility agreements to claim early repayment of the loans.

As of the date of this announcement, discussions are ongoing between AFI Development and the Bank and further announcements will be made as and when appropriate.

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For further information, please contact:

AFI Development +7 495 796 9988

Ilya Kutnov

Citigate Dewe Rogerson, London +44 (0)20 7638 9571

David Westover

Sandra Novakov

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 of 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.