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Moscow Investment digest July 2019

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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.


Two investment consortiums is going to take part in a cableway construction tender

Application acceptance for participation in tender on cableway construction between Skhodnenskaya and Rechnoy Vokzal metro stations from potential concessionaires is already completed. “There are two consortiums are going to take part in this tender. One of them is represented by OOO Moskovskiye kanatnye dorogi the other – OOO Universalnye investitsii.

First consortium showed itself during the construction of cableway in Vorobyovy Gory. It collaborates with swiss cableway production enterprise Bartholet. the second consortium includes French producer POMA SAS, OOO Nationalnye kanatnye dorogi (POMA subsidiary) and IK Region (one of the largest investment companies in Russia). On the second stage of the tender potential investors should present their suggestions to city government till September 25. “The winner will conclude concession agreement” – says Vladimir Efimov, Deputy Mayor on economic policy, property and land relations

Investment size estimated RUR 3.16 bn. Concession agreement does not suppose spends from budget neither on the stage of construction, nor during the operation of the cableway. After launching, the cableway is going to become city’s property. the concession lasts for 25 years, two and a half years from them are for construction.

Concession project is beneficial not only for city, but also for business. Traffic on this cableway can be estimated about 19,000 passengers per day. Thus, investors can expect stable dividends. Concessionaire can also profit from advertisement that can be put at the stations and cableway cabins. Moreover, investor can create commercial places near Skhodnenskaya metro station and cover the expenses. 

The Moscow government is working on several opportunities for cableway construction, that can become a part of a transport system in future. the realization of these projects can be hold within the public-private partnership by means of investors. Total length of cableways in Moscow could be estimated 26 km.

Strogino Technopark obtained a IPP status (Investment Priority Project)

The Moscow government gave Strogino Technopark an IPP status that leads them to conclude a contract. This allows to create a new up-to-date plants within its territory.

“IPP status is given to different projects because our aim is to support development in priority economic spheres in Moscow. In this case we invested RUR 606 m in projects that cover innovative and energy-saving technologies, production of medical items and pharmaceutics” – told Alexander Prokhorov, executive in Department of Investment and Industrial Policy.

As a result, a lot of new vacancies are open in these enterprises with an average salary more than RUR 72,000. Four objects to be reconstructed and one to be built in according to development plan of technopark. Thus an area of construction is raising from 17 sq. km in 2018 to almost 27 sq. km till 2020.

New Renault car to be produced in Moscow

Moscow plant just started serial production of a new model Renault Arkana. Minister of Industry and Commerce Denis Manturov took part in launching ceremony along with Mayor Sergei Sobyanin, and Groupe Renault general director Thierry Bolloré.

Russian Federation is going to become a first country to sell a new Renault. New cars to be imported in Republic of Belarus, Kazakhstan, Armenia, the Kyrgyz Republic, Mongolia and Gulf countries.

In 2013 the Moscow government and ZAO Renault Rossia signed an agreement expired in 2017 on sustaining an automobile production. In previous year new agreement were concluded and thus ZAO Renault Rossia will continue production of Renault cars till 2020. In according to this agreement the company receives some fiscal preferences. In five years Moscow plant released more than 755,000 cars, such as Renault Duster, Renault Kaptur, Renault Logan и Nissan Terrano.

KamAZ to open a production of electric buses

PAO KamAZ with a support of the Moscow government is going to create engineering and production center within the Sokolniki carriage repair station area (GUP Mosgortrans entity). Here they are starting assembling of electric buses and their spare parts. This production has all necessary equipment. Production capacity at least 500 electric buses per year.

Innovation development center is going to be opened at the repairing station. New technologies will be important for further sustaining development of electric buses. Among them electric and electric power architecture, batteries, recharging stations and lots more.

Investments in this project approximately estimated RUR 1 bn. A lot of new vacancies in the sphere of technologies are open at this enterprise for such workers like designers, production engineers, IT specialists. All of them are colleges and universities graduates. PAO KamAZ is to reconstruct and build production sites with total area 75 sq. km to place engineering and production center.

Largest microelectronics producer in Moscow to create chips for e-passports

Moscow based company Micron presented production line and chips which can be used in new Russian e-passports. Also “Micron” showed RFID-technologies for miscellaneous application. they are implemented in different spheres – from transport and financial systems to museums and hospital and used in emergency situations.

“The range of applying chips from Moscow enterprises is very wide: from space devices and drilling industry to toys, from ID documents to sophisticated computer systems, from street lights to packaging. And, as we all know, Moscow is the first region where new chipped e-passports will be spread. This is a great step towards innovative technologies. the Moscow government supports the industrial development, including products with high added value. Now there are 1,500 people working in Micron, and investment size, according to the first quarter of 2019, exceeds RUR 1.5 bn” – said Alexander Prokhorov.

Four enterprises become Moscow SEZ residents

OOO Micropribor, OOO Amedart, OOO Bitrobotics, OOO Bifirkom Technologies received SEZ residential status in Technopolis Moscow. Following ten years these companies are planning to invest RUR 600 m in production. Thus, the number of residents has grown to 62.

There are some benefits for residents: zero property and land taxes, zero transport tax for ten years, also zero taxes on goods and equipment that imported in SEZ area, residents are free from customs duty, taxes and fees, land leasing discount estimated 2% from land lot cadastral cost.

American company is to localize medicine production in Moscow

Unipharm corporation is localizing the production of their medicine in Russia for the first time. the entire cycle of production will be set on the R&D center NovaMedica Innotech capacities. This center is situated in Technopolis Moscow. In 2020 consumers can buy this medicine from the local company.

“Technopolis Moscow offers excellent conditions for placing up-to-date enterprises regardless of their origin. the point that Unipharm localizes the production of their medicine using capacities of R&D center will help NovaMedica Innotech production department raise the number of vacancies to 40 %. the efficiency estimated approximately 1 million a year can meet consumer needs not only in Russia, but also in Republic of Belarus, Kazakhstan, the Kyrgyz Republic, Armenia” - told Alexandr Prokhorov, head of the Moscow Department of Investment and Industrial Policy.

Russian-Slovak production of medical equipment opened in Technopolis Moscow

On July 1, new enterprise producing medical equipment is opened in Technopolis Moscow SEZ in Pechatniki. Russian-Slovak company Hirana+ is going to produce anesthesia and mechanical ventilation devices. Main consumers are medical centers in Russia but also importing in the Near East countries negotiated.

Localization of Russian-Slovak company in Moscow will not only bring RUR 174 m of investments but also will open more than 30 vacancies.

Italian center of sports medicine to be opened in medicine cluster in Skolkovo

Villa Stuart the Italian center of sports medicine and rehabilitation is going to be constructed at the Skolkovo medical cluster. “The investment potential of this project is very high. Besides all previous negotiations we decided to place Italian center of sports medicine and rehabilitation Villa Stuart” – told Marat Husnullin, Deputy Mayor on architecture and construction policy.

This medical center is one of the leading in the sphere of sports medicine. It is also accredited by FIFA. Now the conception of construction site and documentation is developing.

Investors rented 30 hectares of land for realization large investment projects

Since 2015 Moscow gave 24 land lots to private investors without any tenders for building large investment projects such as industrial and social infrastructure objects. Land lots situated on 30 hectares, 19 hectares of them are assigned for sport, cultural and educational projects. Total sum of annual rent cost estimated RUR 6 bn. 

Investors rent city’s land lots for their projects without tenders for six years; rent rate for social objects estimated 0.05% from cadastral cost in first two years, and for the production – 0.1-1.5%, and then raising up to 8% from cadastral cost till sixth year of construction works.

These land lots is situated mainly on city’s north-west, central area, west and south districts. the construction size total estimation 545 sq. km.

Investment potential of Moscow were presented to British business

Business seminar ‘Direct Investments: opportunities and support measures provided by the Moscow Government took place in Moscow. Representatives of Moscow investment agency, Technopolis Moscow SEZ and Moscow business attended this seminar that was arranged by Department of Investment and Industrial Policy along with the Russo-British Chamber of Commerce

To attract investments the Moscow government gives investors tax, financial, organizational measures of support, concludes special investment contracts with businessmen, develops innovative infrastructure (Technopolis Moscow SEZ, technoparks etc.)

“For investors the main interest to localize their production in Moscow is an offset agreement, – commented Leonid Kostroma, head of the Moscow City Investment Agency, – it is concluded for a long time with a guarantee that city will consume their products. Two agreements have been already signed that suppose construction of pharmaceutics enterprises. Total sun of investments estimated RUR 8.8 bn, supplies – RUR 32.4 bn.


Moscow is gaining momentum: certain categories of goods showed an increase in export to the African continent

Following the results of 2018, the export of storage medium from Moscow to African countries has incrreased. Among the leaders in terms of growth and export volumes increase to African countries are the capital's radar equipment, IT products, machinery, equipment and electronics

The share of Moscow in Russian exports to African countries in 2018 amounted to 27.3%. Last year, Egypt, Algeria, Nigeria, Sudan, Libya, Tanzania, Ghana, Morocco, Ethiopia, Kenya entered the top 10 countries leading in the import of Moscow non-resource and non-energy exports (NNE). Since the beginning of this year Moscow has increased exports to Mali, Senegal and Congo, which replaced Libya, Tanzania and Kenya among the ten largest importers of Africa.

Some categories of metropolitan goods showed a significant increase in exports. In the first quarter of 2019, Algeria overtaking Egypt took the leading position in the ranking of importers of goods from Moscow. During this period, a sevenfold increase was recorded in import of Moscow made parts for computers and office equipment to this country.

Egypt in the first three months of 2019 started to import 99 times more of Moscow made liquid pumps compared to the same period in 2018. Last year Egypt imported from Moscow 6 times more of books, documentation and leaflets, 25 times more of radar equipment, 30 times more of turbo-engines and gas turbines compared to 2017, and as to data carriers the increase is 3,760 times.

33 thousand IEs registered in the capital in five months

“During five months of 2019, 33,000 new individual entrepreneurs were registered in the capital - this is 12.5% more than in January - May last year. The number of Moscow individual entrepreneurs as of June 1 of this year amounted to 336,900”, said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.

Small business is developing due to the overall growth of the capital's economy. Individual entrepreneurs successfully work in the service sector and catering, and also offer new formats of trade.

“Moscow government has created a system of preferences for individual entrepreneurs: direct financial support, benefits for renting city property, transparent access to public procurement, information support. Two-year tax holidays are stipulated for newly registered individual entrepreneurs,” said the Minister of Moscow Government, Head of the Department of Economic Policy and Development of Moscow Denis Tikhonov.


Moscow enterprises will be able to take easy loans for purchasing equipment

Industrial and scientific enterprises of the Capital will be able to get easy loans at Moscow Fund for Industrial and Enterprise Support. The offer can be used to purchase new equipment produced in Russia and for its installation and commissioning.

Companies will also be able to use the loan to replenish working capital, purchase industrial engineering services, software for industrial needs and refinance the balance of the main debt on targeted loans received for the purchase of new Russian equipment.

The size of easy loan can be from RUR 20 m to 100 m, the term - no more than five years. The loan rate can vary from three to five percent per annum.

The capital will provide incentives to investors creating jobs outside the Third Circle Road

Moscow will provide incentives to investors involved in the construction or reconstruction of commercial buildings outside the Third Circle Road.

In accordance with the established procedure, investors carrying out the construction or reconstruction of buildings in Moscow are required to amend the land lease agreement to change the purpose of provided land plot from “operation” to “construction / reconstruction”. Previously, after such amendment, it was mandatory to make an additional payment in the first year of the land lease provided for construction or reconstruction. The owners of land plots pay a similar fee. Its size depends on the density of future development and ranges from 5% to 80% of the cadastral value of the land.

The Moscow Government Decree cancels the levy of an additional increased payment in case the construction or reconstruction of commercial buildings is carried out outside the Third Circle Road (for example, in reorganized industrial zones or in adjoin territories).

The introduction of benefits will reduce the cost of construction or reconstruction of commercial buildings outside the Third Circle Road by 8-10%. According to experts, this will allow investors to implement many projects that were unprofitable under the previous conditions.

Moscow entrepreneurs received almost RUR 10 bn in loans during six months

About RUR 10 bn were received by Moscow companies in the banks during six months of this year thanks to state guarantee support. Metropolitan entrepreneurs get assistance from Moscow Small Business Lending Fund (Moscow Guarantee Fund).

According to the results of the second quarter, the volume of fund guarantees amounted to RUR 19.5 bn, which is 14% higher compared to the same period of the last year. And 58% of this amount of guarantees was issued to small businesses, 35% was received by micro-enterprises and 7% - medium-sized companies. The largest volume was accounted for by trade (54%), production and innovation (17%), and construction (8%). Among other businesses - the service sector, medicine, education.


More than RUR 500 m came to the Moscow budget from the sale of land in 2019

“During two quarters of 2019, the Department of Urban Property concluded with entrepreneurs and individuals 45 land plots sale and purchase contracts for the total area of 34.8 hectares. At the same time the amount of revenues to the city budget from the sale of land amounted to more than RUR 500 m. On land acquired from the city landowners can operate existing facilities, as well as improve the land, carry out new construction according to the type of permitted use and develop their business,” said Maxim Gaman, Head of the City Property Department.

Each year, the city provides land plots in the ownership of citizens following the results of the city tendering and through public services, and also concludes contracts with small and medium-sized businesses for sale and purchase of buildings alongside with the land plots on which they are located.

Since the beginning of the year, investors have acquired real estate from the city for almost RUR 2 bn

“There is a positive trend in the sale of urban premises: thus, in the first half of 2018, 139 urban real estate properties were sold at auction, while from the beginning of this year investors bought 214 premises with a total area of 29,300 square meters, and the total sum of concluded contracts amounted to RUR 1.83 bn. At the same time, the city offers entrepreneurs a pool of premises of various sizes taking into account the needs of business in all metropolitan districts,” said Maxim Gaman, head of the City Property Department.

During auctioning non-residential premises having area from 50 to 150 square meters and mainly located on the ground floors are of the greatest demand. The average price of 1 square meter of space for investors is RUR 76,700.

Moscow rented through tenders 9 hectares of land this year

According to the results of Moscow tendering since the beginning of 2019 investors and residents have rented 28 land plots from the city with a total area of 9 hectares for the amount of RUR 117.12 m, which is 34.6% higher compared to the last year figure of the same period. The plots are located mainly in the Eastern, Troitsk, Novomoskovsk and Southern administrative districts and are intended for the construction of public shopping facilities, individual residential buildings, garages, fitness centers, as well as cultural development sites. 10 are intended for the construction of social facilities and were leased to investors at a special initial rate of 1.5% of the cadastral value of the site.

Currently, tenders have been announced for the right to conclude lease agreements for 7 land plots intended for the construction of retail and service administrative buildings, as well as health and fitness centers. The total construction size of the plots is 48,750 square meters and the initial cost varies from RUR 0.51 m to 11.87 m.

Business rented 82,000 square meters m of real estate for six months

Within two quarters of 2019 the city rented to investors through tenders 429 objects more compared to the same period of the last year. Entrepreneurs rented 568 premises with a total area of 82,000 meters generating RUR 856.4 m for the city budget. For comparison: in the first half of 2018, 139 non-residential property facilities were sold at a tenant for a total of RUR 360.6 m.

According to the results of the city leasing premises the most popular districts were East (90 premises), South-West (89 premises) and South (84 premises) administrative districts.

Over the past year, the percentage of sales of urban real estate has grown significantly: thus in 2018 only 57% of the objects put up for sale were sold; now the percentage of sales of urban real estate is close to 80%. Currently the city announced a bid campaign in relation of 183 non-residential buildings with a total area of 30,900 square meters.

Investor will restore the estate of the XIXth century in Pyatnitskaya street

The former Chernetsov-Vargin-Baranov city estate built in 1820-1830s will be sold through an electronic auction. The plot and the building put up for auction in one lot are located near the Novokuznetskaya metro station. The estate is an object of cultural heritage. The winner of the auction will have to restore the building and adapt it for modern use.

“At present the building is in poor condition - the foundation and the main facade have been partially preserved. The winner of the electronic auction will have to carry out large-scale restoration works on the surviving fragments observing the requirements stipulated by the legislation on the protection of cultural heritage objects,” said Gennady Dyogtev, Head of the Moscow Competition Policy Department.

The initial contract price is RUR 141 m. Applications for participation in the auction are accepted until August 16 inclusive. Bidding will be held on August 22.

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