Moscow investment digest

May 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

First Business Week held in Moscow

For the first time, the city held the Moscow Business Week, which lasted from May 28 to June 1 and was aimed at developing the small and medium-sized business potential, creating a business culture and sharing experience. 60,000 participants from 40 countries, including 300 speakers, took part in the event.

The highlight of the Business Week was the Moscow Business Forum. During the Business Week master classes and sessions, participants discussed the opportunities and challenges for female entrepreneurs in the context of developing the business environment, the international expansion of the Moscow business and the effective export rules, the success stories and basic problems of family business, the social entrepreneurship that is a relatively new business sphere in Moscow, at the intersection of business, volunteerism and charity, the Moscow innovation and production cluster, providing new opportunities for the cooperation of business, science and education.

During the "Transformation-3. Digital Economy" business education forum, leading experts and entrepreneurs discussed key digital trends, digitalization and promotion tools, economy digitalization and online marketing issues. Also, the World Franchise Forum and Exhibition, the Startup Village Conference and the Moscow Fashion Forum were held during the Week.

The number of individual entrepreneurs in Moscow is growing year by year. About 17 thous. individual entrepreneurs were registered in the first quarter of this year (11.5% more than the previous year). This growth is facilitated by the city support provided to emerging businessmen, as well as the special tax regimes being developed in Moscow.

Moscow has one of the most attractive investment climates

Moscow took the second place in the National investment climate rating among Russia's territorial entities by the Agency for Strategic Initiatives (ASI), which was traditionally presented at the St. Petersburg International Economic Forum.

Moscow is constantly improving its position in the ASI rating: the city took the tenth place in 2016, and the third in 2017.

"We understand that the city harmonious development requires the inflow of private investment. Today, Moscow is achieving this in several ways: providing privileges and preferences for efficient active enterprises, creating a comfortable business environment, attracting new residents and tourists to ensure the enormous demand for almost any product", Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Natalya Sergunina said.

Moscow is also keeping its leading position in the ASI rating in terms of the public-private partnership (PPP) development. From 2013 to 2018, the PPP contracts amounted to more than 800 bn RUB. The capital is actively developing concession, lifecycle and offset contracts.

Moscow's leading positions in the ASI rating have been maintained for several years in a row due to high-quality information support for investors and businesses. The convenient communication of entrepreneurs with the Moscow authorities and prompt feedback are ensured by the Moscow Investment Portal (www.investmoscow.info).

Moscow presented major investment projects at St. Petersburg International Economic Forum

The St. Petersburg International Economic Forum (SPIEF) was held on May 24-26. Along with the business development opportunities in the real economy sector, the Moscow Government stand was presenting interesting investment projects, among which was the creation of a cable way financed by private investors and the purchase of electric buses under life cycle contracts (LCCs).

A modern cable way can be operating in Moscow as a public transport means in three years, Natalia Sergunina, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Natalya Sergunina noted. The project to create a new airway between the metro stations "Skhodnenskaya" and "Rechnoy Vokzal" is proposed to be implemented on the terms of public-private partnership (PPP). The estimated volume of investments in the construction of a new transport facility is ca. 4 bn RUB.

Due to the PPP development, Moscow will put in operation 300 electric buses within two years. Two LCCs have already been concluded, and the third one is to be signed at the end of the year. The total cost of the three contracts providing the delivery of transport vehicles and 96 relevant ultra-fast charging stations with subsequent maintenance is more than 19 bn RUB. In addition, the competition winners will arrange electric bus service centers.

Moscow signed a number of important agreements during SPIEF-2018

During the St. Petersburg International Economic Forum, the Moscow Government and the five Russian constituent entities, namely the Kaliningrad Region, the Tambov Region, the Kemerovo Region, the Nenets Autonomous District and the Khanty-Mansiysk Autonomous District - Yugra, signed agreements on cooperation and exchange of experience in the field of public procurement.

"The capital will cooperate with the regions to exchange experience in the state procurement of goods, works and services via the Supplier Portal. Moscow is offering the regions a free ready-made solution, including almost 100 thousand suppliers and 3.5 million existing offers, as well as a paperless technology for electronic transactions with crypto protection. All this will help to involve businesses in procurement and to form a healthy competition," Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Natalya Sergunina said.

In addition, Moscow will participate in the National Technology Initiative (NTI): the capital will develop air transport, energy and neurocomcommunications. Mayor of Moscow Sergei Sobyanin signed the Cooperation Agreement with CEO of JSC Russian Venture Company Alexander Povalko and CEO of Autonomous Non-Commercial Organization Agency for Strategic Initiatives for New Projects Promotion Svetlana Chupsheva.

NTI supports the development of the Russian industries, which can become the basis of the world economy in the next 20 years. The Moscow Government will help to introduce the best technologies developed by NTI participants. The Agency for Strategic Initiatives will be responsible for creating road maps for the promising markets development, and Russian Venture Company will act as a project office. This cooperation will allow to expand the high-tech economy sector, improve the urban environment and life quality for the Moscow residents.

Would-be investors will select investment projects themselves

The Moscow Investment Portal is now offering the Active Investor service, which allows entrepreneurs to familiarize with investment project parameters and calculate the costs and benefits before launch. This is another option helping entrepreneurs to understand the Moscow market and successfully merge into the сity economy.

The user can apply the service to mark most interesting business sites in the city and send a request to visit them, to select the future facility type, to ask questions about the rent, to choose the transaction type (sale, lease, concession, large-scale investment project), to propose a project to be implemented at the selected site.

Through the Investment Portal Personal Area (www.investmoscow.info), questions and proposals are received by the City Investment Agency and other executive authorities of Moscow and are taken into account to decide, whether the item is to be involved in the transaction.

Moscow Investment Portal registered the 5,000,000th visitor

"For four years since the launch of the Investment Portal, it has been visited by five million users. 20% of the total number of visits are by foreign users. The portal was visited by only about 100 users per day in 2014, and this year we daily register 6.5 thous. visitors," Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Natalya Sergunina said.

Top-5 most popular online services include such Investment Portal sections as: Auctions Property, Investor's Guide, Investment Map, Industry&Innovations, and News&Events. More than 16,000 entrepreneurs are registered in the Investor's personal area. The portal provides its users with the access to 14 online services allowing investors to solve business development issues right at their workplace and increasing the effectiveness of the interaction between businesses and the city. For example, the online service "Application for visiting an actioned facility" has been used by potential investors over 35 thousand times during the past two years.

It takes entrepreneurs just a few minutes to apply online for industrial complex, technopark or technopark resident statuses, submit an investment project for review, ask a question via the direct line, subscribe to a monthly investment digest, and more.

A fifth of the city center industrial area was rearranged

During the six-year redevelopment of industrial zones, 46 real estate objects with an area of more than 1.7 m sq. m. were built in the Moscow Central District . In 2011-2017, about 71.2 hectares of industrial zones (just over 17% of the total area) in the city center were rearranged.

According to Moscow Mayor Sergei Sobyanin, one third of all the construction projects within the Moscow Ring Road are now implemented in former industrial zones. Over the past three years, the city reviewed the issues regarding the rearrangement of 38 industrial and communal territories and confirmed the practicability of adjusting the boundaries of 14 thereof, including the plots partially or completely located in the city center.

"We are creating residential districts in Moscow with technoparks, offices and complete infrastructure. The proportion of jobs and housing is calculated depending on the location. The closer to the center, the fewer jobs are offered, and vice versa. It is necessary to ensure that as many jobs as possible are created close to dormitory suburbs in order to reduce migration within the city," the Mayor noted.

The capital has 208 industrial zones, which occupy the area of 18.8 thous. hectares within the old city, i. e. 17% of its total area. 12,5 thous. hectares of them are subject to rearrangement, which will be full for 4,7 thous. hectares and partial for 7,8 thous. hectares. The partially rearranged area is intended to maintain production. Thus, the citizens will receive more housing, social and cultural facilities, roads and parking lots.

The works have already begun at more than 20 industrial sites, namely ZIL, Serp i Molot, Lenino, Perovo, Verkhniye Kotly, the former Tushino airfield, etc.

Since early 2018, Moscow Department of City Property has concluded 33 land sale contracts with entrepreneurs and private individuals

Since early 2018, Moscow's land sale revenues amounted to ca. 1.5 bn RUB. The total area of the plots sold made over 46 hectares. 

The Department of City Property is constantly interacting with entrepreneurs that develop their business in Moscow, as well as with the Moscow residents willing to privatize land.

Over 46 hectares of land were privatized by individuals and individual entrepreneurs (IPs) during the auctions under 178-FZ "On privatization of state and municipal property", on preferential terms by small and medium-sized businesses under 159-FZ dated 22.07.2008, as well as by individuals, entrepreneurs and legal entities using the Moscow state service "Granting land ownership to owners of buildings and structures."

Moscow investors concluded 38 additional agreements for building land

During the first quarter of 2018, the Department of City Property concluded 38 additional agreements on changing the purpose of provided building/reconstruction land. The land area made 230.56 hectares, with a new construction area of 889.58 thous. sq. m.

Under the new agreements, the budget received 943.65 m RUB of investment payments. The total amount of investment payments to the budget, including the installments on previously concluded agreements, amounted to 4.66 bn RUB.

Moscow is actively cooperating with investors to construct new city facilities. Developers shall receive a land plot development plan to obtain permission for the construction of new facilities and the reconstruction of existing capital buildings. To change the building land purpose, entrepreneurs shall apply for an additional agreement.

The city provides incentives to the developers building socially important facilities (hotels, kindergartens, sports facilities, etc).

MACROECONOMICS

Moscow's trade turnover exceeded 1.1 tn RUB in Q1 2018

"In the first quarter, Moscow registered further retail growth. During the first three months of 2018, the total trade turnover increased by 4.7% against the same period of the previous year and exceeded 1.1 tn RUB, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Natalya Sergunina said.

During the same period, the attendance of major Moscow shopping malls increased by 1.8 percent, and the sales of new cars increased by 6.8 percent. In the first quarter of 2018, the city registered 46.1 thous. housing purchase contracts, which is 35.6% more than in January-March of the previous year.

Electronics, medicine and transport: Moscow industrial production growth

The yearly industrial production in Moscow grew by almost a quarter: the output of the manufacturing industries in the first quarter increased by 24.6 percent against January-March 2017. The growth was mainly due to high-tech industries. 

The electrical equipment production increased 2.4 times, the railway and medicine equipment production doubled. The chemical industry output increased by 38 percent, the passenger cars production grew by 24 percent. Consumer-oriented enterprises showed successful development, with the leather accessories manufacture increased by 49 percent, building materials production by 9 percent, and food production by 5 percent.

"Moscow's new industrial policy focused on the faster growth of high-tech industries has been yielding tangible results. Due to tax and other benefits for investors, leading enterprises are using more funds for development, increasing production and marketing, including export,"- Moscow Government Minister, Head of the Moscow Department for Economic Policy and Development Vladimir Efimov added.

SUPPORT MEASURES

Another two companies participated in Moscow Government support program

The Salyut research and production center for gas turbine construction, which is one of the oldest enterprises in Moscow, has received an industrial complex status, and Kaspersky Lab became an anchor resident of the Vodny Stadion Technopark. The decision was made at the Moscow Government Presidium meeting. Another four enterprises in Moscow were granted an industrial complex status.

RPC Salyut is the largest manufacturer of aviation gas turbine engines. Over the past five years, the revamping investments amounted to 102.6 m RUB per hectare. 890 m RUB are expected to be invested in production this year.

The Kaspersky Lab investments in the company development amounted to 153.9 m RUB per square meter over the past five years. The expected amount of investments is 1.74 bn RUB.

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 17-25 percent against the usual. 40 industrial complexes and 33 technoparks with over 94 thous. employees are currently operating in Moscow.

Small businesses received 7 bn RUB due to state support

During the four months of this year, Moscow's small and medium-sized companies received over 7 bn RUB in banks due to state guarantee support. This is twice as much as in the same period of 2017.

The guarantee support mechanism is implemented by the Moscow Small Business Credit Assistance Fund (Moscow Guarantee Fund). It was founded by the City Department of Science, Industrial Policy and Entrepreneurship.

Department Head Alexey Fursin notes the positive results: "Moscow's small and medium-sized business has revived, the trend became noticeable last year and can still be seen today. Companies are interested in attracting external financing for current needs and new projects development. Our task is to create channels for additional financing and the small and medium-sized companies' access to loans, to inform enterprises about state financial assistance programs. In January-April of this year, the Moscow Guarantee Fund issued new guarantees for 4.1 bn RUB, while the partner banks granted relevant loans and guarantees for 7.1 bn RUB."

Guarantees are granted to small and medium-sized businesses in virtually all industry branches.

AUCTIONS

Special price: small businesses will compete for renting 107 non-residential items

107 non-residential items with special rental rates are auctioned online. This offer is only valid for small businesses. "Bidders are competing for an annual rent. The winners will be granted fixed rate lease contracts for 10 years," Head of the Moscow Department for Competition Policy Gennady Dyogtev said.

The auctioned items are located on the first and ground floors of residential and non-residential buildings in ten districts: the Central Administrative District, the Northern Administrative District, the North-East Administrative District, the North-West Administrative District, the Eastern Administrative District, the Western Administrative District, the South-East Administrative District, the South-West Administrative District, the Southern Administrative District and the Zelenograd Administrative District. The area varies from 35 sq. m. in Vnukovo to 790 sq. m. in Orekhovo-Borisovo Yuzhnoye.

The next auctions will be held in the second half of May. The documentation is published at the Investment Portal in section "Items for SMEs".

Two major assets in Vnukovo were put up for auctions

The auctioned lots comprise a single complex in Vnukovo in the Tolstopaltsevo village that was designed as a seed, food and industrial potato research and production center.

One of the lots is an unfinished production building that was created as a scientific center for the improvement and reproduction of virus-free potatoes. The unfinished facility area is 12.6 thous. sq. m. The building has electricity (distribution is partially completed), central heating and hot water connections. The initial lot price is 164.8 m RUB.

The second auctioned asset is an administrative building located near the production building. This a three-story building with a basement area of more than 5.6 thous. sq. m. The building has heating, water and electricity connections. Its initial price is 258.3 m RUB.

The both items are located within a land plot with a total area of 2.85 hectares. The plot is subject to long-term lease.

Bids shall be accepted until June 21. The auctions will be held on June 27, 2018.

Seven vacant land plots will be put up for auction

Seven land plots in Moscow will be put up for auction. This decision was made at a meeting of the Urban Planning and Land Commission headed by Sergei Sobyanin. The land plots are located in the Zelenograd Administrative District, the Troitsky and Novomoskovsky Administrative Districts and the Southern Administrative District. It will affect a 2,09 thous. sq. m. trading and warehousing complex, a 18.15 thous. sq. m.. production facility and administrative and a 5.14 thous. sq. m. warehousing complex located in Zelenograd.

Other auctioned items will be a 46.3 thous. sq. m. production facility at Kharkovsky proezd, 2b (the plot area is 2.79 hectares) and a 200 sq. m. store in the Shchapovskoye settlement, the Kurilovo village (the plot area is 0,06 hectares).

The auction will also involve two production facilities in the Shchapovskoye settlement, one of them with an area of 11.85 thous. sq. m. located at Varshavskoye shosse, 4 (the plot area is 0.74 hectares) and another one with an area of 15.3 thous. sq. m. at Varshavskoye shosse, 4a (the plot area is 1.04 hectares).

Part of a line 1 building in Sokolniki was put up for auction

A part of a non-residential building, located in line 1 near the Sokolniki metro station, was put up for sale via the Moscow Unified Trading Platform.

The single auction lot includes the premises with a total area of 2170 sq. m. located in a non-residential building at Stromynsky pereulok, 4. The facility is a 4-storey building located in line 1, 10 minutes away from the Sokolniki metro station by land transport.

The facility has central water, heating, hot water and 220 V electric power connections. It needs redecoration.

The initial lot price is 151.4 m RUB.

Bids shall be accepted until June 14. The auctions will be held on June 21, 2018.

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.