Moscow investment digest

September 2018

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

Sergei Sobyanin is re-elected Mayor of Moscow

Sergei Sobyanin won the mayoral election in Moscow on September 9. According to the Moscow City Electoral Committee, 70.17% of the present voters voted for Sobyanin's re-election. The elected Mayor announced the membership of the new Moscow government. Vladimir Yefimov who had previously headed the Moscow Department of Economic Policy and Development became the Vice-Mayor of Moscow for Economic Policy and Property-Land Relations. "He is young, modern and smart", the Mayor wrote about his new deputy in his blog. Vladimir Yefimov remained the head of the special economics department.

Sergei Sobyanin has also reorganized the Moscow Department of Science, Industrial Policy and Entrepreneurship. It was replaced with two new departments in the Moscow Government, namely the Department of Investment and Industrial Policy and the Department of Entrepreneurship and City Innovative Development.

Moscow will conclude 2nd offset contract

It is a medicines supply contract, which provides for the counter investment obligations of an investing supplier to create or modernize the medicines production in Moscow. It will be concluded with OOO R-Opra.

The tender committee comprised of the representatives of the Moscow City Health Department, the Moscow Department of Economic Policy and Development, the Moscow City Investment Agency, the Moscow Department for Competition Policy has reviewed and evaluated the documentation submitted by the applicant.

OOO R-Opra proposed to fulfill the contract obligations for RUR 18.4 bn, with the initial (maximum) contract price of RUR 22.5 bn. The 10-year contract provides for the production localization with subsequent medicines supply.

"The new offset contract for the medicines to treat and prevent massive severe endocrine and oncological diseases creates the conditions for predictable pricing and uninterrupted vital medicines supply. Such investment tools help to effectively spend budget funds, to implement the import substitution program and to develop innovatiму production," Vice-Mayor of Moscow for Economic Policy and Property-Land Relations, Head of the Department of Economic Policy and Development of Moscow Vladimir Yefimov said.

Two more Moscow enterprises received an industrial complex status

Two Moscow enterprises employing more than 1,200 people, the AND Gaztrubplast plant and the Kolomensky bakery, were granted an industrial complex status. The enterprises may expect income, land and property tax benefits, as well as lower land leasing rates. These benefits will reduce the tax burden by 17 to 25%.

The AND Gaztrubplast plant is a flexible polymer insulated pipe manufacturer. It is located in the west of Moscow and occupies the land area of 2.1 hectares. The area of the premises is 11,000 sq. m. The expected volume of investments is RUR 94 m.

The Kolomensky bakery&confectionery produces wheat and rye&wheat bread, buns, marshmallows, waffles and waffle cakes. It is located in the south of Moscow and occupies the land area of 1.54 hectares. The area of the premises is 21,600 sq. m. The expected volume of investments is ca. RUR 450 m.

Today, Moscow has 42 industrial complexes and 33 technoparks receiving tax privileges. They employ more than 96,000 people.

The Moscow City Investment Agency celebrated its 7th anniversary

The Agency was created in 2011 to attract investments, promote and implement the city priority projects. During all these years, it has been supporting investment projects according to the "one window" principle, developing economic and legal project conditions, including those based on public-private partnership, with account of the city and investors’ interests, and introducing a system of investment climate improvement measures.

"The Moscow City Investment Agency is fulfilling a significant task of promoting the city investment opportunities and making Moscow attractive for investors," Head of the Moscow City Investment Agency Leonid Kostroma noted.

Moscow provided 92 hectares of land to the investor for the construction of the Kutuzovsky Prospekt North Relief Road

Under the concession agreement, the Department of City Property entered into the land and property agreements with OAO Novaya Kontsessionnaya Kompaniya for 508 land plots with a total area of 92 hectares, for the construction and operation of the Kutuzovsky Prospekt North Relief Road.

"The Department of City Property has concluded 27 lease contracts for 340 land plots with a total area of 68.7 hectares with the concessioner, for the road construction and further operation. 168 land plots with a total area of 23.3 hectares are covered by servitudes for the road construction", the Moscow City Government Minister, Head of the City Property Department Maksim Gaman said.

The road to be constructed will be 11 km long. Upon commissioning, the Kutuzovsky Prospekt North Relief Road will become the city property.

The largest data center in Russia was built in Zelenograd

The research and production complex "CISCO System Solutions" in Zelenograd is expected to be introduced in quarter IV of this year. The building was erected in Alabushevo, on the territory of the Technopolis Moscow special economic zone.

The complex with an area of 32,000 sq. m comprises an administrative and an office building, a data center building with a computer room and a technical unit. It will be one of the largest data centers in Russia for information processing and storage. The construction was funded by an investor. The developer is OOO GDC Energy Group.

At the Alabushevo site, an administrative and production complex of OOO Sapfir-Invest is being constructed. Also, there are a business center with an exhibition complex, a building complex of OOO IMT and a customs post that were commissioned earlier.  

A branch of the Spanish Roman Fernandes clinic will be built in Moscow

"The critical decision to build the Spanish Roman Fernandes Clinic is taken; the application has passed the advisory and supervisory boards’ evaluation. We are currently preparing the relevant agreement” Head of the Moscow International Medical Cluster (MMMC) Foundation Mikhail Yugay said.

The MMMK explained that the application of the Spanish Roman Fernandes oncology clinic, the construction of which will be funded by its future operator, the European Medical Center (EMC), was approved by the Medical Cluster advisory board and that the supervisory board review is expected.

"For Moscow, the International Medical Cluster is an important project. In addition to the fact that Muscovites are serviced by the world’s leading medical clinics, it offers all the necessary conditions for personnel training and retraining, as well as the further transfer of technologies to the Moscow clinics," Moscow Mayor Sergei Sobyanin said.

A research and production cluster near the Vnukovo airport will be built by an investor

A new research and production cluster will be created in the Tolstopaltsevo village in the west of Moscow. It will be launched in an existing production facility. The three-story building with an area of 12,600 sq. m is only 50% completed.

The investor purchased the facility at an auction and plans to use it for the biotechnology business. It does not only plan to do some research work, but to develop import substitution technologies as well. The building was designed for the research and production of plant, food and technical potatoes. Some greenhouses are designed to be located in the middle of the building; 20 of them are to be build on the roof. The building is already connected to electricity (the distribution network partially completed), central heating and hot water supply.

A new electrical wiring production will be created in South-East Administrative District

The production buildings with a total area of 17,270 sq. m to be located at Yuzhnoportovaya street, 9a will be mainly used to produce polyethylene corrugated pipes. Due to the new production buildings, the number of jobs at the operating enterprise will be increased up to 650. There will also be a training center to improve the employees’ skills.

The project is funded by ZAO Svyazstroydetal manufacturing equipment and materials for the reconstruction and replacement of the outdated communication networks analog infrastructure with modern fiber-optic and digital systems. In 2017, the enterprise was granted an industrial complex status by an order of the Moscow Government.

The demand for office and retail facilities in Moscow is growing

To date, about 1.5 m sq. m of offices and 1.8 m sq. m of retail spaces are under construction.

For the eight months of 2018, the construction of 10 m sq. m of real estate was approved at the meetings of of the Urban Planning and Land Commission headed by Sergei Sobyanin. This includes 3.3 m sq. m of residential buildings, 2.8 m sq. m of retail and administrative facilities, 1.2 m sq. m of - industrial facilities, 865,000 sq. m of social or sports facilities, and 206,000 sq. m of hotel premises.

In total, since 2011, the Urban Development and Land Commission has approved the implementation of projects accounting for ca. 169 m sq. m of real estate.

MACROECONOMICS

This year, the investments in Moscow will exceed RUR 2 tn

Moscow will be able to invest more than RUR 2 tn in own development due to tax deductions from the state enterprises and private businesses operating in the city. The city plans to invest more than 3 bn RUR in the federal budget, according to Mayor of Moscow Sergei Sobyanin.

"The latest data from the tax service show that this year the taxes paid to the city are growing at a rate of about 10%," the Mayor said.

This figure is associated with the active entrepreneurship development and the support measures the capital provides to the urban industries. According to Sergei Sobyanin, this is also the effect of the high-tech enterprises systemic support, modern high-paying jobs being created and the refusal to move production out of the city.

"We invest a lot of resources in the city infrastructure development, including the construction of roads, metro stations, railway lines and social facilities. We can see that businesses are actively responding with investments. During several months, the growth of investments in fixed assets reached about 5%," Sergei Sobyanin noted.

The profits and exports of the Moscow high-tech industries have increased

According to the Federal State Statistics Service, during the first two quarters of this year, the profits have grown by 22.7% for IT companies, and 19.1% for applied research and development enterprises.

The profitability of the Moscow high-tech companies, a third of which are exporting, has largely increased due to their growing success in international markets. After the first 6 months of the current year, the capital accounts for almost 16% of all the national non-resource and non-energy exports. The key consumers of the Moscow export goods and services in this field are the USA, India, Belarus, Algeria and Kazakhstan. The cumulative share of those made about 40% in the first half of the year.

"In the first half of the year, the Moscow information technology exports increased by 24.8%, and R&D exports grew by 19.7%, which is RUR 6.2 bn and RUR 5.1 bn, respectively," Vice-Mayor of Moscow for Economic Policy and Property-Land Relations Vladimir Yefimov said.

SUPPORT MEASURES

New status: benefits for the Kalibr Technopark

The Kalibr Technopark received a priority investment project status. This status will reduce the land tax, property tax and income tax down to 25%, which will allow Kalibr to use more funds for the reconstruction of existing production facilities and the construction of a new building.

Private investments in the technopark development might exceed RUR 2.8 bn by 2022. This will allow to open a new building with an area of 37,000 sq. m. Thanks to the benefits and investments, the number of the technopark residents may grow threefold and reach 100, with 3,000 jobs.

Kalibr is located in the Ostankino district. The building occupies 10 hectares, with the technopark total area of 13 hectares. The technopark specializes in communications, telecommunications, instrumentation, information and multimedia technologies R&D. Also, the residents are developing unmanned vehicles and 3D-printing projects.

AUCTIONS

The Novokosino transfer hub is put up for auction at a price reduced by 30%

"The land plot value initially made RUR 142 m in 2016. The object could not be sold during previous auctions. Experts reassessed the asset. The winning investor will have the opportunity to implement a major development project within the future transfer hub at a reduced price of 99 m RUR. However, the cost reduction may lead to competition, and the final cost may increase," Head of the Moscow Department for Competition Policy Gennady Dyogtev stated.

The land plot for the future hub has an area of 4.1 hectares. Within this territory, it is planned to build a multifunctional complex with an area of 63,500 sq. m and a transfer hub terminal with an area of 7,390 sq. m, the ownership of which should be transferred by the investor to the city after the construction completion. The validity period of the land lease agreement is 7 years.

The developer will be selected at the public auction scheduled for July 18, 2018. Applications can be filed until October 15.

A 2,700 sq. m plot in Maryino is put up for auction

The object is located in line 1 at Bratislavskaya street, 30. The lot is 20 minutes away from the Bratislavskaya metro station.

Investors are offered a two-storey integrated-attached facility with an area of over 2,700 sq. m, which is adjacent to a multi-storey residential building. The lot is in good condition, decorated as a normal fitness club. Currently, there is an encumbrance - the premise is leased out until January 13, 2021.

The starting lot price is RUR 145.6 m. At the same time, the cost of 1 sq. m does not exceed RUR 53,000. Applications can be filed until October 11. The auction will be held on October 17, 2018.

170 premises with an area of over 200 sq. m will be auctioned before the year end

Until the end of this year, the Department of City Property plans to put up for the auction ca. 170 non-residential facilities with an area of over 200 sq. m each. Among them are 10 premises intended for SMEs, with the initial annual rent of RUR 4,500 for 1 sq. m per year.

Since the beginning of 2018, 61 major real estate facilities have been auctioned for leasing, with an average area of about 370 sq. m. Most of the facilities are located in the Eastern, Central, Northern and Southern Administrative Districts.

See the details of the auctioned non-residential facilities, the participation procedure and the facilities operation conditions at www.torgi.gov.ru and the Moscow Mayor official website www.mos.ru, as well as at the Moscow Investment Portal.

Moscow City Investment Agency

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

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