The Department of Economic Policy and Development of Moscow and the Moscow City Investment Agency present the new issue of the Digest of Moscow’s principal investment events.
Investment in the capital continues to grow as it declines throughout the rest of the country. Over the last six years, investment in Moscow has increased by more than 50% in comparable prices versus the 2010 level. The capital’s share of overall investment in Russia is approximately 12%, an increase of 3.6% compared with 2010.
Deputy Mayor of Moscow for Economic Policy, Property and Land Relations Natalya Sergunina noted that Moscow has created favourable conditions for investors. “All areas of the city’s economic policy focus on investment activity. This includes a stable budget policy, tax incentives, limited tariff increases as well as the city’s measures to reduce administrative barriers and improve the investment climate”, Sergunina said.
The companies will receive substantial tax benefits and land lease benefits. The enterprises will be able to spend the money they save on modernising and expanding production. The preferences are provided for income tax, property tax, land tax and land lease rate. They will see an overall reduction of 17–25% in the regional tax burden.
Industrial complex status has been granted to JSC Avangard Moscow Machine-Building Plant as well as CJSC Hamilton Standard-Science. In addition, the territory of the All-Russian Fisheries and Oceanography Scientific Research Institute has been granted technopark status .
Moscow will now have a total of 52 territories with special status and tax benefits – 24 industrial complexes and 28 technoparks. They include more than 1,450 large, medium and small enterprises that employ some 70,000 people.
Inflation in Moscow was 1.2% over the first two months of 2017 versus December 2016, which is 0.4% less than in the same period of last year. This is primarily attributable to a substantial (0.7%) slowdown in growth in prices for services.
In annual terms, the inflationary growth rate slowed to 5.8% in January-February 2017 (down 4.4% year-on-year) mainly due to a more than 50% slowdown in price growth for foods and services. In February 2017, inflation in Moscow was half of the previous month’s level, totalling only 0.4% versus January.
“The transition to taxing commercial office real estate based on the cadastral value, which began in Moscow three years ago, is almost complete, and we can already speak about the positive results of this important project”, Moscow Government Minister and Head of Moscow Department of City Property Vladimir Efimov said during a roundtable at the Russian Chamber of Commerce and Industry.
Efimov noted the reform has resulted in an equitable distribution of taxes (based on the actual value of property), levelled the tax burden for honest and unscrupulous taxpayers and generated an anti-crisis effect in the form of reduced commercial real estate lease rates.
The property tax reform has created conditions for honest competition and established a fundamentally new and effective tool for the city’s development, he said.
Moscow ranked first in 2016 among Russia’s regions with respect to the implementation of projects involving the government and business. The rating is compiled each year by the Russian Ministry of Economic Development jointly with the Public-Private Partnership Development Centre. The rating assesses the investment appeal of the regions, the development of the regulatory framework in terms of the public-private partnership (PPP) as well as the experience of implementing specific projects.
Moscow Government officials attended the fourth Russian PPP Week infrastructural congress at which the rating results were announced.
First Deputy Head of the Department of Economic Policy and Development of Moscow Dmitry Presnov emphasized that the capital does not only utilize specific benefits, but also conducts systematic work to develop the practice of PPP. Deputy Head of the Department of City Property Natalya Prusakova spoke about projects to build transport interchange hubs as future sites for investment and note the private sector’s interest in transport and social services.
Leonid Kostroma, Director of the Moscow City Investment Agency, said that PPP projects in Moscow are being implemented in different sectors: in road construction, public transport (transport interchange hubs, the metro and ground transport), medicine and education.
In addition, the Moscow City Investment Agency and the Public-Private Partnership Development Centre signed a cooperation agreement during the fourth Russian PPP Week infrastructural congress in order to develop the institutional environment in matters concerning public-private partnership.
Moscow Mayor Sergei Sobyanin visited Technopolis Moscow where a presentation was held for the SME Business Navigator portal for small and medium-sized businesses, which allows for assessing and forecasting risks that may arise when establishing businesses. The system should help first-time entrepreneurs to avoid possible mistakes.
“Moscow’s small and medium-sized business is not only an important economic part of our city’s life, but a huge social component. One small or medium-sized enterprise is registered for each ten adult Muscovites. Almost 30% of all people working in Moscow are engaged in small and medium-sized business. And the contribution of small and medium-sized business to the capital’s economy increases with each passing year”, Sobyanin said.
The number of active entrepreneurs in the capital is increasing each year, he said. “Over the last year, income from profit tax, the simplified tax system permit and microbusiness alone increased by 16% and significantly surpassed all income from the oil and gas sector”, the Moscow Mayor said.
Open auctions on 20 April 2017 will determine the developers for the transport interchange hubs. The right to lease the land site for the construction of the Novokosino transfer hub will be listed at the open auction. The site is to be used to build a multi-functional complex as well as a transfer hub terminal, which the investor should transfer to the city following the construction work. The starting annual lease is RUB 142.2 million.
The open auction will also offer the right to lease a land site for the construction of the Alma-Atinskaya transfer hub with a multi-functional complex. The site will include a commuter parking lot, an integral car park and a pedestrian underpass. The starting annual lease is RUB 211.09 million. For more on the lot documentation of the assets, please see the Moscow Investment Portal .
Investors only have a few days left to submit an application to take part in an auction for the sale of a 99.9% stake in CJSC Khoroshevskaya Transfer Hub.
The investor will be responsible for constructing a building for the multi-functional centre of the transfer hub as well as a public business centre with underground parking for 100 cars. The investor must also transfer the facilities making up the technological part of the hub to the city free of charge under the terms of the transaction.
Applications to take part in the auction will be accepted until 18 April. The envelope opening procedure will take place on 19 April 2017. The starting price of the lot is RUB 75.8 million.
Investors have already been identified for the territories of another seven industrial zones in the capital that are to be developed this year. Now the city faces the task of endorsing and approving the land designs.
“The comprehensive development of Moscow’s industrial areas and the creation of new jobs are a priority for the Urban Planning Policy approved by Moscow Mayor Sergey Sobyanin”, Head of the Department of Urban Development Sergey Lyovkin said.
According to Moscow Stroykomplex, 61 land designs for production and public areas have been approved over the last six years. In 2018, the Moscow authorities may auction the first five pilot industrial zones, which are intended for comprehensive development and whose owners have been unable to reach an agreement on cooperation. New high-tech industrial production facilities are to be built on 50% of these territories, public and business facilities on 26% and housing on the remaining 24%.
A commercial facility with space of 187 square metres is being offered for lease at an auction.
“The space for the opening of a private clinic in Yasenevo is located in a residential area nearby schools and daycare centres. The starting annual lease cost of the facility is RUB 1.4 million”, Department of Competitive Policy of Moscow Head Gennady Dyogtev said.
According to the contractual terms, the investor must repair the facility and equip the future clinic within the first eight months. Once the centre opens, a preferential lease rate of RUB 1 per square metre will take effect. The lease term is 20 years. Applications for the open auction are accepted until 21 April. The auction will take place on 27 April 2017.
The living premises in the wing of the Samsonov estate on 35, Prechistenka Street, building 2, have total space of 118 square metres. It includes three apartments on the first and second floors. The starting price of the lot is RUB 35.2 million.
The commercial facility has space of almost 131 square metres. The space can be used as desired and is located in the estate’s basement. The starting price of the lot is RUB 14.5 million. The auctions for the two lots will take place on 19 April 2017.
Both lots have encumbrances in the form of security obligations. The Samsonov estate is a federally designated cultural heritage site. Thus, the buyers of the assets assume the obligation to conduct repair and restoration work and adapt the space for modern use while preserving the estate’s original architectural and colouristic solutions.
The Department of Economic Policy and Development of Moscow
Moscow City Investment Agency
Purchasers’ portal
The Moscow Digest archive is available at the Moscow Investment Portal.
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