Moscow investment digest

April 2018

Dear colleagues!

Moscow city Department of Economic Policy and Development, in cooperation with the Moscow city Investment Agency, presents our next digest issue highlighting the main investment events in Moscow.

NEWS EVENTS

Moscow leads the rating among Russian Regions with regard to Public-Private Partnership (PPP)

Following the results of 2017, the capital for the third time headed the Rating of Russian regions with regard to Public-Private Partnership development.

According to Natalia Sergunina, Deputy Mayor of Moscow on Economic Policy, Property and Land Relations in Moscow Government, the city had demonstrated such a success thanks to the great experience in projects implementation and favorable institutional and regulatory environment.

"Moscow carries out a comprehensive work to develop PPP practices. We welcome investment initiatives of any scale and invite qualified investors who possess deep knowledge in attracting financing, and in the building and operation of infrastructure facilities”, - noted Natalia Shergunina.

Deputy Mayor reminded that beginning from 2013 the city signed contracts on PPP terms for a total of 800 bn RUB.

Moscow and Roskosmos signed the Agreement on cooperation

Moscow Mayor Sergei Sobyanin and Igor Komarov, the Director General of the State Corporation Roskosmos signed the Agreement on Cooperation that will help attract new investments, train young qualified personnel and develop enterprises.

Within the framework of the Agreement, it is planned to implement a number of import substitution Projects, to develop educational programs, to open new laboratories, create Technoparks and Youth Innovative and Creative Work Centers.

"The level of engineering and technologies development largely depends on the work of the space industry enterprises, and is very important not only for the space industry itself, but also for a number of related industries. Therefore, for us it is critically important that the enterprises of the space industry feel comfortable in Moscow, so that all conditions for normal functioning and development of them are met, "said the Mayor of Moscow.

Cooperation with Roskosmos, according to Sergei Sobyanin, is mutually beneficial both for the capital and for the enterprises of the State Corporation. Thus, joint plans include - the localization of the corporation enterprises in Moscow, the creation of industrial clusters, scientific and production associations, Technoparks, Prototyping Centers, etc.

Skolkovo completed the construction of the first building for Moscow International Medical Cluster

The construction was started in August 2016 and was completed in March 2018. The Israeli clinic Hadassah will operate the new Diagnostic center. It will be possible to undergo a comprehensive or oncological screening for diseases, as well as contact specialists of different profiles. In addition, Hadassah plans to develop research and educational programs: to conduct short-term courses and implement long-term training programs for doctors.

"The Medical International Cluster is a very important Project for Moscow, and its importance is determined by the fact of an immediate opportunity for Muscovites to be served in the leading medical clinics of the world and besides it provides comfortable conditions for training and retraining of personnel as well as subsequent transfer of technologies to Moscow clinics," said the Mayor of Moscow Sergei Sobyanin.

The clinic plans to accept the first patients in the autumn of 2018. By 2020, it is planned to complete the second stage of the clinic's development - to build and put into operation a therapeutic building. It will host a multifunctional Medical Center, which will focus on cancer treatment.

The private investor to construct a New Museum of Modern Art and a Cultural Cluster

The Department of Economic Policy and Property-land Relations of Moscow approved granting of OOO LSR.Object-M for the land plot lease in Avtozavodskaya street for the construction of a non-state art museum.

"The city provides a site for the construction of a new museum of modern art and the development of a Cultural Cluster on the area of 21 thousand square meters. It will include exhibition halls, recreational spaces, a restaurant and a cafe, an open summer terrace, "said Natalia Sergunina, Deputy Mayor of Moscow on Economic Policy, Property - land Relations in Moscow Government.

The creation of a new Cultural Cluster is a part of the ZIL development Project. This Project covers an area of about 470 hectares, including the territory of Likhachev plant.

According to Vladimir Efimov, the Minister of Moscow Government, Head of Economic Policy and Development Department of the City of Moscow: "The reorganization of the industrial zone and building on its base new leisure centers and cultural facilities will not only contribute to the development of this district, but will also become a new attraction for tourists. That will definitely give a positive effect on the development of the economy as a whole."

Transfer hubs projects will bring Moscow RUR 23 bn as a rent fee for land lease

Moscow will get about 23 billion RUB earned on implementation of the first 16 projects of Transfer Hubs (TH), said Albert Suniev, the First Deputy CEO for Development at JSC Mosinzhproekt.

"Investors have already been found to implement these Projects. The total value of the Projects exceeds RUR 2.79 bn. The city budget will receive more than RUR 20 bn in the form of land lease payments for the period of TH implementation. ", said Albert Suniev.

According to him, Mosinzhproyekt had attracted investments for the commercial Projects of Seligerskaya, Rasskazovka, Lefortovo, Paveletskaya, Dmitrovskaya, Pyatnitskoe Soshe, Park Pobedy, Technopark Troparevo, Fonvizinskaya, Khovrino, Lyublino and Khoroshevskaya transfer hubs.

MACROECONOMICS

The exports volume of Moscow electronics in 2017 exceeded $ 1.5 billion

Within the framework of the international exhibition "ExpoElectronica" at the exposition Made in Moscow 12 Moscow companies presented a wide range of electronic products, for example, the first Russian serial 3D printer for layered printing of metal items.

Natalia Sergunina, Deputy Mayor of Moscow on economic policy and property-land relations commented on Moscow developments: "There is a stereotype that the whole electronics market is concentrated in the hands of Asian producers, that Russia only imports products and components. So, this is a myth: China is the main export partner for the capital electronics manufacturers. In 2017, Chinese companies purchased Moscow electronics for more than a quarter of a billion dollars, "she said.

Key importers of Moscow electronics were China (0.26 billion US dollars), and in addition to China, Belarus (0.25 billion US dollars), Kazakhstan (0.24 billion US dollars), Egypt (0.13 billion US dollars), Iran (0.04 billion US dollars).

SUBSIDIES

Moscow enterprises received RUR 2 bn of subsidies during 6 years

More than 1,500 contracts on granting subsidies to small and medium-sized businesses totaling to more than RUR 2 bn were signed by the Moscow Government during the period from 2012 to 2017, said Alexei Fursin, head of the Department of Science, Industrial Policy and Entrepreneurship of Moscow.

Subsidies provided were aimed at compensating for the costs of purchased equipment, financial leasing (leasing), partial interest payment, as well as for participation in congress and exhibition events.

Currently, loans interest payments are reimbursable in the amount of no more than RUR 10 m. Subsidies are wired through partner banks that have concluded a Cooperation Agreement with the Department of Science, Industrial Policy and Entrepreneurship and have been selected for SME Corporation.

Subsidies for the reimbursement of partial equipment cost and lease payments are provided in the amount of not more than RUR 10 m per each payment. Compensation is subject to 15% of the costs incurred. The short listing of applicants this year will for subsidies reimbursement will last until November 1.

Alexei Fursin also noted that in the first quarter of 2018, Moscow entrepreneurs with the assistance of the Moscow Government received about RUR 5 bn of loans. This is twice as much as in the same period last year

The Moscow Guarantee Fund for the past three months issued a guarantee for 2.87 bn RUB to small and medium-sized companies that did not have sufficient security (collateral) to obtain loan-based funding. Thanks to this assistance enterprises were able to collect in aggregate 4.95 bn RUB of loans.

High-tech production of diamonds will be facilitated in the west of Moscow

New Technopark will be built on the land plot of more than 11 thousand square meters, located by Vnukovo highway. “It will include a Production complex and Research center”, said Natalia Sergunina, Deputy Mayor of Moscow for Economic Policy and Property- Land Relations.

"About 300 jobs will be created. The amount of private construction investment will amount to RUR 2.8 bn, the planned amount of tax revenues to the city budget will account to RUR 914 m during 5 years, "the Vice-Mayor said.

The land plot is leased to VanderTehnologis. Its area of specialization is the production of products from high-purity synthetic diamonds.

Moscow invites foreign investors to cooperate

In Germany, within the framework of the HANNOVER MESSE industrial exhibition, the Department of Foreign Economic and International Relations of Moscow and Moscow City Investment Agency conducted a joint round table and informed the participants about the preferences which the capital provides to foreign investors.

According to Vladimir Efimov, Minister of Moscow Government, Head of Economic Policy and Development of Moscow city Department, such branches of industry as construction, medicine, industrial production have leading positions in the capital. The turnover of trade between Moscow and Germany last year amounted to more than EUR 24 bn. The share of Germany in the foreign trade turnover of the capital is 11%.

Leonid Kostroma, CEO of the Moscow City Investment Agency said that investors implementing projects in the city can claim various forms of subsidies, including substantial tax and non-tax benefits, financial support in the form of various subsidies, soft loans, and also in case of getting Large-Scale Investment Status for the project they can receive a land plot without holding a tender.

Also, entrepreneurs can implement their investment projects in the territory of Special Economic Zone Technopolis Moscow (SEZ).

In addition, the delegation of the Moscow Government met with the city authorities of Hamburg and Frankfurt-on- Main, as well as with Heads of German companies. They discussed the possibilities for localizing German productions in the territory of Moscow.

Leonid Kostroma also visited Chemical and Medical cluster of the Industrial Park HOECHST and told his residents about measures to support investors in the capital , shared the experience of Moscow Technoparks work. According to him, in 2017, the total volume of goods sold by the pharmaceutical industry amounted to RUR 52 bn, Investments in fixed assets - RUR 1.6 bn.

AUCTION

The main shareholder of JSC Avtokombinat No.5 on Golden Street will be determined in the course of auction

Joint-stock company Avtokombinat No. 5 sells 92.2% of the total number of its shares through the Unified Trading Platform of Moscow. The auction operator is the Moscow City Department for Competition Policy.

The main asset is five buildings having a total area of more than 27,000 square meters located in the Sokolinaya Gora district. About 14 thousand square meters of the Joint-Stock Company's property are leased on a contractual basis. The total area of the land plot is 1.2 hectares. Avtokombinat No. 5 possesses this land plot on a long-term lease right.

Also, the Joint-Stock Company leases a land plot with an open-air guest car park located.

The initial price of shares is RUR 449.6 m. Applications for participation in bidding are accepted until May 17. The auction will be held on May 23, 2018.

More than 120 premises in new buildings of Moscow will be auctioned for street retail

Entrepreneurs will be able to purchase non-residential premises for the development of their business in new buildings at open city auctions.

"At the auction Entrepreneurs can purchase 127 non-residential objects located in new buildings. This is an excellent option for street retail. Especially since the first floors in many apartment buildings of the new housing developments in Moscow are specially designed for commercial premises - shops, salons or offices. The objects exhibited at open auctions are located in nine districts of the capital. Their average initial cost equals to RUR 106,000 per 1 square meter, "said Gennady Dyogtev, Head of Moscow city's Department for Competitive Politics.

The cost of objects to be sold varies from RUR 3.4 m for a premise of 32 square meters to RUR 63 m for an area of more than 700 sq.m.

Buying a room in a new housing development, the investor saves on adjusting the premises and on documentation preparation and legalization, since they are initially designed and built taking into account the needs of business. The auctions on privatization of premises in new buildings will be held on May 7, 10, 23 and 30, as well as on June 5, 2018.

Since the beginning of 2018, business was rented 101 objects of urban property

In 2018 at the premises and land plots lease right auctions 101 object of Moscow city property was sold for the amount of RUR 285.3 m.

“Since the beginning of this year, 87 objects having total area of more than 16 thousand square meters, as well as 14 land plots with a total area of about 2.5 hectares, have been sold. As a result of the auction, the total amount received exceeded the starting price by 82% in the premises rental, in land lease - by 53% and amounted to RUR 285.3 m”, said Maxim Gaman, Minister of Moscow Government, Head of the City Property Department.

Currently there are over 2,5 thousand of the city real estate objects are presented at Investment portal of Moscow (www.investmoscow.info)

The Department of Economic Policy and Development of Moscow

www.depr.mos.ru

Moscow City Investment Agency

https://en.investmoscow.ru/agency/

Purchasers’ portal

www.zakupki.mos.ru

The Moscow Digest archive is available at the Moscow Investment Portal.