Moscow investment digest

March 2019

Dear colleagues!

The Moscow Department for Investment and Industrial Policy, in cooperation with the Moscow City Investment Agency, presents a new issue of the Moscow Investment Digest.

NEWS

Investments in Fixed Capital Exceeded RUR 2.4 TN in Moscow in 2018

According to the Federal State Statistics Service, the volume of investments in fixed assets in Moscow in 2018 amounted to RUR 2.43 tn, which is 15.3% higher than in 2017. Over 8 years, investment in fixed assets increased more than two times, in comparable prices.

In 2018, the share of extrabudgetary investments was 74%, which is 2 percentage points more than in the previous year. The share of own funds in the financing structure of investments in fixed assets increased from 55% to 58%.

Today, Moscow is accounting for 14% of all Russian investments in fixed assets and approximately a half of direct foreign investments in Russia. As of October 1, 2018, the volume of accumulated foreign direct investment in Moscow makes USD 237.9 bn, according to the Bank of Russia.

Investors can submit a cable way construction bid

“Moscow has coordinated the terms of a future concession agreement to create and operate the cable way between the Skhodnenskaya and Rechnoy Vokzal metro stations. Construction is planned to be financed with extrabudgetary funds under public-private partnership principles. The total, investment will amount to at least RUR 3.16 bn,” Vice-Mayor of Moscow for Economic Policy and Property-Land Relations, Head of the Department of Economic Policy and Development of Moscow Vladimir Efimov said.

According to the decision taken, a draft concession agreement to create the cable way was published at the Russia's official tendering website (www.torgi.gov.ru). It will be available till April 29th. |The companies willing to take part in the competition have to confirm they have the funds to finance the project. If no applications are received, the agreement will be concluded with the project initiator, without tendering, Head of the Moscow Department of Investment and Industrial Policy Aleksandr Prokhorov explained.

After the launch, the cable way will be owned by the city. The concession agreement is valid for 25 years. The cable way will be 2.3 km long. It will be integrated into the urban transport network, with the possibility to pay the fare with the Troika card. According to preliminary estimates, the cable way passenger traffic will reach 19,000 people per day.

Moscow is a strong rival of the world’s largest megalopolises

The Moscow Zaryadye Park was awarded a special prize by the jury of a major international real estate and investment project competition MIPIM.

The park was included into the award shortlist in the nomination “Best Urban Environment Restoration Project”, along with three competitors, namely the Chinese Changchun Eco Park, the National Art Center in Kaohsiung (Taiwan) and the city historical center reconstruction project in Frankfurt am Main. The nomination winner became the German historical center reconstruction project. The Zaryadye Park was awarded a special prize.

“The fact that the Zaryadye park construction project was highly evaluated, clearly indicates that Moscow is a strong rival of the world's largest megalopolises. Moreover, the Russian capital has its own competitive advantages and an identifiable image. Eventually, improvement and development funds are invested in the future of our city and each of its residents,” Vice-Mayor of Moscow for Economic Policy and Property-Land Relations, Head of the Department of Economic Policy and Development of Moscow Vladimir Efimov noted.

Scientific and Production Association Almaz completed the construction of a new workshop

The construction of a new integrating assembly and adjustment workshop of PAO Scientific and Production Association Almaz named after Academician A.A.  Raspletin at the Lianozovsky plant site has been completed. The building was opened by First Deputy Prime Minister of the Russian Federation Yury Borisov and Moscow Mayor Sergei Sobyanin. 

“I visited this site a few years ago, and we agreed that the concern VKO Almaz-Antei was to be granted the industrial complex status. In the recent years, the company has saved several hundred million rubles thanks to the benefits that were introduced by the city to help the company development,” the Mayor of Moscow said.

The production building area is 6,550 square meters. It will produce air defense missile system components and automation systems. Investments in construction amounted to RUR 250 m. The company has created 200 additional jobs.

Russia's first 3D-factory to produce locomotive parts is being built in Moscow

The Russian company “2050. Additivnye Tekhnologii” (“2050. AT”) has started creating the first domestic 3D-factory in Moscow to manufacture parts for locomotives and transport engineering companies.

The factory is being created on the basis of the former Moscow factory Kristall, where nine 3D printers have already been installed. In the first half of 2019, 40 to 50 FDM (fused deposition modeling) printers are expected to be installed, with 10 to 15 of them intended for large products printing.

Currently, it is possible to print several hundred parts, from all kinds of buttons, knobs, holders, sleeves and fasteners to the unique interior elements for locomotive cabins, the 3D models of which are already in the database. These include metal products. This year, the “2050. AT” company has already produced a test batch of such parts using a 3D printer.

A pumping equipment plant was opened in New Moscow

The first pumps and pumping equipment plant of the German concern KSB in Russia has been opened in the Indigo industrial park. “KSB has been known in Moscow for a long time; the concern is an important supplier working with Mosenergo and Mosvodokanal, it has significantly contributed to the construction of such important facilities as the Moscow Oil Refinery, Moskvarium, Moscow City, etc,” Mayor of Moscow Sergey Sobyanin said.  

It was no coincidence that German businessmen chose Moscow as a place to build the plant. According to them, the city has the most favorable investment climate in Russia. The industrial complex area is 4,900 sq. m and includes an assembly and production site with a testing workbench, logistics, service and training centers, as well as storage facilities and an office building. The plant is mainly equipped with Russian-made machines. The company has created 110 additional jobs.

In total, investments in the plant construction amounted to RUR 750 m. The Moscow Government has provided comprehensive organizational support for the project implementation, primarily in terms of obtaining the necessary urban planning documentation. The revenue in the first year of the plant operation is expected to make more than RUR 2 bn, which will make OOO KSB one of the major taxpayers among Moscow industrial enterprises.

Direct connection: business offers investment projects online

On March 27, an Expert Council meeting was held at the Business Protection Headquarters. It was dedicated to the improvement of business conditions in Moscow. The event was attended by Deputy Head of the Moscow Department for Investment and Industrial Policy Emil Petrosyan, Deputy Head of the Moscow Department of Entrepreneurship and City Innovative Development Aleksandr Isaevich, Head of the Moscow City Investment Agency Leonid Kostroma, and Moscow Business Ombudsman Tatyana Mineeva.

According to the Head of the Moscow City Investment Agency, the Moscow Investment Portal remains the main tool for starting and operating a business in Moscow: every day the site is visited by more than 7,000 unique users. The Investment Portal offers 17 online services, which you can use to sign up for visiting a tender facility, to apply for the industrial complex, technopark or Technopolis Moscow special economic zone resident statuses, to subscribe to the newsletter or investment digest, and more.

The portal continues to offer the Direct Line, which is a quick way to ask the Moscow Government a question, send an appeal or get advice on investment activities. Since the site was launched, entrepreneurs have send 4,400 appeals. As a rule, investors are interested in the bidding procedure, financial support and visiting the facilities, and also offer their investment projects.

MACROECONOMICS

In January and February, Moscow's industrial production index grew by 8.7%

According to the Federal State Statistics Service, the dynamics of the Moscow production sector development in January and February 2019 has exceeded the all-Russian growth rate almost 3.5 times. The highest growth of Moscow's industrial production index in 2019 was recorded by the Statistics Service in February; it made 24.3% against the previous month.

“The good pace is ensured, in particular, by the active implementation of the city targeted investment program, including the transport system development, which entails the real sector development. On the other hand, production growth is stimulated by the Moscow support program for modern production sites, which are investing in development along with the increasing business and private consumers demand,” Vice-Mayor of Moscow for Economic Policy and Property-Land Relations, Head of the Department of Economic Policy and Development of Moscow Vladimir Efimov noted.

“The growth of the industrial production index in February 2019 made 18.3% against February 2018. During the first two months of 2019, two large enterprises have launched new production lines and completed the modernization of their plants in Moscow. Today, 44 Moscow enterprises have the status of industrial complexes. For them, property tax rates are reduced by 50%. Metropolitan industrial complexes pay a reduced income tax as well, namely 12.5% instead of 17%. In general, tax banefits allow companies to invest in production, thereby creating new jobs and strengthening the position of Moscow and Russia as a whole," Head of the Moscow Department of Investment and Industrial Policy Aleksandr Prokhorov said.

SUPPORT MEASURES

Two more companies will be granted benefits by the Moscow Government

The Moscow thermal automation plant received the technopark status, and AO Innovative Research and Production Center Peptogen became the anchor resident of the Strogino technopark. Thus, 44 industrial complexes and 35 technoparks are currently operating in Moscow. They employ more than 96,000 people.

Today, the capital has a comprehensive system for supporting enterprises and investors in the real economy sector. The support measures include income, land and property tax benefits, as well as lower land leasing rates. Due to these benefits, enterprises and investors are able to reduce the tax burden by 17 to 25 percent against the usual.

The Small and Medium-Sized Business Corporation will provide entrepreneurs with soft loans in an amount of RUR 1 tn a year

The Small and Medium-Sized Business Corporation intends to annually grant concessional loan guarantees to entrepreneurs for RUR 1 tn. Any small and medium business entity can receive support. 69 banks have been selected, and the first projects have already been financed.

The concessional lending program 2019–2024 for SMEs is being implemented by the Russian Ministry of Economic Development in cooperation with the SMB Corporation. The program provides a preferential rate of no more than 8.5% per annum for the final borrower, expands the list of priority industries and authorized banks, including smaller regional banks that have experience in lending funds to SMEs.

Under this program, it is planned to provide concessional loans to SMEs in the amount of RUR 1 tn in 2019, and to increase the total volume of the SME debt portfolio to RUR 10 tn by 2025.

AUCTIONS

A new owner of a 99% share in the Nagatinskaya TH will be able to build a mall with offices and a parking lot

Large investors are invited to implement a development project to construct the Nagatinskaya transport hub. The developer will be selected by an open tender scheduled for April 24, 2019. The bidders are required to have experience in large projects implementation.

“The open tender will allow to determine the investor that will be entitled to conclude a purchase agreement for a 99% share in the authorized capital of OOO Nagatinskaya TPU. The winner will be selected by three criteria: the proposed contract value (50%), development project experience, and the total revenue and net assets (25% each). The starting tender price is RUR 74 m,” Head of the Moscow Department for Competition Policy Gennady Dyogtev stated.

The winner will be able to build a multifunctional shopping mall with offices and an above-ground parking lot with an area of up to 230,000 sq. m, on the territory of the Nagatinskaya TH,

A premise in the building opposite the Shukhov Tower was put up for auction

This is a non-residential facility that is located in a building constructed in the 1920s by the Zhirkost trust housing cooperative. The house has the status of a cultural heritage item. The auctioned premise area is 67 sq. m. Under the auction terms, the new owner will carry out restoration work and adapt the premise for modern use. In the future, the auction winner has to maintain the facility in the proper condition.

“Last year alone, more than a hundred bids were submitted for 17 lots that are considered cultural heritage items. Entrepreneurs actively participate in auctions and undertake to preserve historical facilities. Most often, the restored cultural heritage items are used as offices, hotels or apartments, some of them have been turned into art galleries,” Head of the Moscow Department for Competition Policy Gennady Dyogtev said.

Art Nouveau masterpiece: entrepreneurs will compete for the right to rent the Levenson cottage

The Novo-Peredelkino mansion topped with a turret decorated with a fairy-tale cockerel, will be lent to the city auction winner. This is one of the two remaining wooden buildings designed by Fyodor Shekhtel. It was designed at the request of the famous publisher Aleksandr Levenson.

According to Head of the Moscow Department for Competition Policy Gennady Dyogtev, entrepreneurs have been given a rare opportunity to rent a historical facility with a courtyard, a garage and a household extension. In this case, the would-be leaseholder should strictly observe the obligations to preserve the building designed by Shekhtel and considered a federal cultural heritage item.

Production land plots in the Troitsky and Novomoskovsky Districts were put up for auction

The plots are located in the Shchapovskoe settlement. The area of the first plot is 0.7 ha. It can be used to construct a facility of up to 11,400 sq. m. The area of the second plot is 0.6 ha. Here you can build a facility with an area of 10,000 sq. m

Within a 20 kilometer circle around the land plots, there is a developed transport and logistics infrastructure, which is mainly located along the Simferopolskoe highway. The attractive land cost and location in the actively developing zone are likely to arouse the interest of potential investors. Another advantage is that the plots are situated close to the Moscow Small Circle, next to large warehouse clusters.

Bids can be submitted until April 15. The tender will be held on April 18. The lot details can be found at the Moscow Investment Portal.

Videos

Mr. Efimov with MIPIM

Department of Investment and Industrial Policy of Moscow

www.mos.ru/dipp

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.