We find ourselves inside the Hall of The Museum of Reconstruction of Moscow and meet Sasha and Lidochka (both museum guides). At the conclusion of the museum tour one member of the group hangs behind and we are introduced to Masha (Sasha’s wife). The two sing a duet bemoaning the frustration of being newlyweds yet not having a house of their own to live together in. Their frustration descends into a fantasy in which the museum comes to life and they imagine flying furniture appearing together.
Following this Sergei reappears in the museum. He is now accompanied by his long-lost friend Boris (a homeless explosives expert) who has recently returned to Moscow from the wild north in order to get married. It doesn’t take Sergei long to realize that Boris has a fatal flaw in his plan. He does not have a specific bride in mind. However, things slot into place when Lidochka returns at the end of her museum tour and Boris is immediately taken with her. He tries to impress her but she turns her nose up at him and instead sings an aria about how she finds finding “Mr. Right” impossible.
At the end of her aria her father Baburov, appears. Baburov is in a state. The roof of the building he lives in in Moscow has collapsed destroying both Lidochka and Baburov’s flat, as well as Sasha’s. Baburov is miserable about this news, but Sasha is elated and hopes that it might be a chance for him to find a new home with Masha instead.
A civilian appears in the Museum looking for Baburov, Lidochka, Sasha and Masha and hands them out permits to their new State allocated flats in the Cheryomushki estate. Baburov continues to moan about this because in his mind Cheryomushki is on the other side of the Earth. None of the four know how to get there either, but Boris saves the day by encouraging Sergei to take his boss’s limo and to use that to drive them all there together. Reluctantly Sergei agrees.
The group travel to Cheryomushki navigating all sorts of obstacles along the way.
Meanwhile back in Moscow Vara and Drebyenetsov are waiting outside in the rain. Their chauffeur (Sergei) had been told to pick them up but has seemingly gone missing (he is in fact in that very moment driving all the rest to Cheryomushki). Drebyenetsov has helped organize the building of the estate and as a result has also been given a flat within it where he hopes to start a new life with his fourth wife, the young Vara. The cracks in their relationship are already showing and as soon as it is clear that Drebyenetsov has failed to successfully control his chauffeur Vara starts having a tantrum. He threatens her by claiming that if she doesn’t love him he won’t register the apartment in her name and she immediately changes her tune, once again becoming loving and compassionate. In the end they come to an agreement to take a taxi instead.
The group in the limo arrive to the Cheryomushki estate not to find the dreamland that they fantasized about but a group of disgruntled residents who have been waiting for hours for their keys that complain that they were sold a false reality. In order to distract themselves they make new friends and relationships, and fantasize about other places that they have lived before.
Sergei immediately joins in with this singing of his own neighborhood, only to be interrupted by Baburov who in turn romanticizes about the time when his wife was still alive. Everyone is about to up and leave to go back into Moscow when Lucy appears and sings a song about how wonderful life will be at Cheryomushki if they can all have a bit of faith. She sings what will become the anthem of the piece and everyone becomes excited about the construction site once again.
They are interrupted by the entry of Barabashkin (the estate manager) who they have been waiting to see in order to get their keys. The frustration and anger of earlier swiftly returns to the residents, and after calming them down Barabashkin invites them all into his office.
However, the calm is relatively short lived. It transpires that there is an issue with the title deeds and legally the building does not currently exist so no one can have their keys given to them. Barabashkin deflects the anger directed at him too with the arrival of Drebyenetsov and Vara. He tells the residents that if they have an issue they should take it up with the Big Boss (Drebyenetsov) instead.
Vara and Boris immediately recognize each other. They are exes. Boris is unimpressed that she has sold herself out for money not love and tells her that if she really is important now and has climbed the social ladder she should have a bigger apartment. Vara snaps back at Boris that if she wanted to have a bigger apartment she could.
The act ends with builders continuing to work on the estate and Vara triumphantly declaring that she will in fact now have a four room apartment instead of two.