The Moscow Department of Investment and Industrial Policy and the Moscow Investment Agency present you the next digest of the main investment events in the Russian capital.
"According to the Rosstat, investments in fixed assets in Moscow amounted to RUB 4.84 trn in 2021, which is 18.9% higher than in the previous year. This is significantly more than in the whole country: in 2021, the growth of investment in the Russian Federation amounted to 7.7%. High growth rates are associated with the advanced development of the financial and insurance industries, scientific and technical activities, wholesale and retail trade, manufacturing enterprises. Positive changes were achieved, among other things, due to support measures to urban enterprises and companies," said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Thus, Moscow companies invested the most funds in machinery and equipment in 2021 – it is accounted for 37.4% of the total investment in fixed assets. The share of investments in the construction of buildings and structures and land improvement amounted to 31%, and the volume of investments in fixed assets of large and medium–sized organizations in Moscow amounted to RUB 3.5 trn, of which more than half (52.5%) of investments come from the company's own resources. The remaining 47.5% are borrowed funds.
Moscow signed the offset contract with the Gemamed at the end of 2019. According to it, the investor put RUB 1 bn into creation of a plant for the production of medical devices for ostomy patients on the territory of the special economic zone Technopolis Moscow.
"Today, the construction of the production complex is completed and industrial equipment for production is put into operation. Medical devices were tested in an authorized medical institution, it has already begun to be delivered to residents of the capital. Moscow will purchase products with a total value of RUB 8.6 bn for 8 years," said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Under the terms of the offset contract, the new company should provide Moscow patients with a sought-after range of competitive products manufactured in accordance with international standards.
The city approved the reconstruction project of the building for a new geriatric center on Bagritsky Street. The center will be put into operation in 2023, it will be designed for at least 100 places. This is the first social facility that will appear in the capital under a concession agreement.
"At the beginning of the year, the city handed over a building in Mozhaisk district to an investor, and recently agreed on a project for its reconstruction. The concessionaire will put the object in order and increase it by two floors. After that, the investor will fit out the geriatric center with the necessary equipment, taking into account the specifics of the life and health of the elderly and the high standards of service provision in the city. The project does not involve expenditures from the city budget, while the reconstructed five-storey facility will remain in the ownership of the capital. The total investments will exceed RUB 600 m," said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Last year, the concession agreement with the investor was signed for 20 years. According to its terms, the construction will take two years, and the company will provide patient care services in accordance with international standards for the next 18 years. Also, the concessionaire will operate the geriatric center, carry out current and major repairs during the term of the agreement.
In total, the capital signed seven concession agreements with investors. They were concluded in education, social services, healthcare, road construction, extracurricular transport and housing and communal services spheres. The total amount of investments under the concessions will be about to RUB 120 bn.
In July 2024, the investor plans to commission the Ostankino Business Park office building complex in the Butyrsky district of the capital. At this stage, the construction of the business park was completed by 40%.
"The agreement on the creation of an office complex was signed in 2020. Initially, the developer undertook to build the facilities with an area of 46,000 sq. m in exchange for a benefit for changing the site permitted use type for the residential complex construction in the 2nd Kotlyakovsky Lane. Later, the developer proposed to increase the building area almost twice – up to 88,400 sq. m. In this regard, additional agreements were signed. Investments in construction increased from RUB 2.2 bn, as originally planned, to RUB 6.1 bn," said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
The agreement on the construction of the Ostankino Business Park office complex was the first that Moscow signed with an investor as part of the program for the creation of workplace associated infrastructure (WAI). This project is not the only one: in total, three agreements were concluded with the Pioneer Group.
According to the director of the Moscow City Investment Agency Artem Barashev, a total of 17 agreements on the WAI program were signed by the city to date. According to it, developers will build various facilities with a total area of more than 1 million sq. m including schools and kindergartens, industrial technoparks, shopping and business centers, an industrial complex. 29,700 workplaces will be created at the new facilities. The total volume of investments in projects will amount to RUB 83.4 bn.
The SEZ resident received a license for the production of medicines and the EAEU GMP certificate confirming compliance with high production quality standards. By the end of 2022, the company plans to start manufacturing 20 medications for the treatment of HIV infection, cancer, renal failure, anticoagulants, chelators and insulins. The first batches of medications will be produced in an amount of more than 10,000 packages. After production reaches full capacity by 2024, the company will be ready to produce up to 2 m packages per year.
On an area of more than 5,000 sq. m of the site in the Pechatniki District of the special economic zone of the capital, there are workshops of liquid and solid dosage forms and a high-tech research and development center. The company's employees will test new medications that can improve the quality and life expectancy of patients needing therapy. In total, the resident has already developed more than 60 medications belonging to various pharmacological groups.
"The Republic of Kazakhstan is a long-standing business partner of Moscow. Recently, representatives of the Unified Distributor of Medicines and Medical Products, the Ministry of Healthcare of the Republic of Kazakhstan subordinate organization, visited the capital and acquainted with the Moscow experience in concluding life cycle contracts. Last year, Moscow signed 52 life cycle contracts with the business for RUB 64.2 bn. They provide for the purchase of ground public transport rolling stock and innovative medical equipment. Foreign manufacturers are among the suppliers of medical equipment," said Vladimir Yefimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations.
According to the latest data of the Bank of Russia, as of October 1, 2021, the accumulated volume of investments from Kazakhstan amounted to USD 1.6 bn. Over the past five years, investments from this country have increased 2.4 times, and over the past year – by 5%. Mainly, investors are interested in industry, logistics, finance and insurance.
Artyom Barashev, CEO of the Moscow Investment Agency, noted that the capital uses various mechanisms of public-private partnership to attract investments. In addition to life cycle contracts, these are concession agreements that allow investors to receive income from the operation of urban facilities, and offset contracts that guarantee companies the sale of products in exchange for production localization in Moscow. To date, the volume of PPP contracts in the capital has exceeded RUB 1.1 trn.
In 2021, the trade volume between Russia and China reached almost USD 141.4 bn, with 45.6% ensured by Moscow. At the end of last year, foreign trade between Moscow companies and Chinese partners increased by almost 34% and reach USD 64.47 bn,” said Vladimir Yefimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations.
Moscow is ramping up both exports to and imports from China. At the end of last year, these indicators surged by 43.5% and 26.4%, respectively. In 2021, Moscow boosted supplies of agricultural products to China by 73.3% up to USD 81.2 m. Moscow is also expanding supplies of some industrial goods. For example, exports of electrical devices and communications equipment grew by almost 17%, while supplies of mechanical equipment and machinery increased by 9%.
“Turkish business is an important partner of Moscow: as of October 1, 2021, the accumulated volume of investments from this country amounted to USD 1.4 bn. Over the past 5 years, it has increased by 3.8 times, over the past year - by 19%,” said Vladimir Yefimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations.
There is a representative office of a company engaged in construction and investment in real estate, as well as an organization developing projects for residential buildings, schools, offices, shopping centers, entertainment and industrial facilities, etc. in Moscow.
Another large construction and investment company operates throughout Russia. It took part in the construction and reconstruction of the Sinyaya Ptitsa Ice Arena, the Paramonovo bobsleigh complex, the Ritz Karlton Hotel, the Chekhov Moscow Art Theater, and the Bolshoi Theater.
In 2021, the trade turnover between Indonesia and Moscow exceeded USD 546 m, which is 20.1% more than in 2020. To date, the share of exports to Indonesia is about 1%. In 2021, it reached USD 9.16 m (+44.7% compared to 2020), most of which is occupied by the export of industrial goods.
The export of the Moscow products to other Southeast Asian countries in 2021 amounted to USD 907.23 m. It has more than quadrupled compared to 2020.
According to the Mosprom Center, in the near future, equipment for receiving, converting and transmitting information, statistical converters, high-voltage lightning rods and limiters, measuring and control devices, as well as electrodiagnostic equipment will be in special demand abroad.
Moscow Mayor Sergei Sobyanin announced a plan of priority measures aimed at supporting the capital’s business under sanctions. One of them involves the extension of offset contracts to all areas of urban economy: the capital will be able to sign them for the wide range of products necessary for state needs.
"Offset provides not only for the delivery of goods to the customer, but also supplier’s counter–investment obligations — the creation, modernization or development of these goods production in the city. As part of the announced business support measures, land plots for such productions’ construction will be provided at a preferential rate of RUB 1," said Vladimir Efimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations.
Moscow was the first Russian region that conclude offset contracts with investors. Today, the capital is the leader in their use: the city has signed five offsets. The total volume of private investments is RUB 12.9 bn. Moscow, in turn, will purchase products worth RUB 72.7 bn from manufacturers. Within the framework of the signed contracts, several investors have already completed the construction of factories and have begun to supply medicines and food for the city's dairy kitchens for the capital’s needs.
According to Artyom Barashev, CEO of the Moscow Investment Agency, now Moscow, together with the Ministry of Finance of the Russian Federation, is preparing a bill that will allow involving significantly more suppliers in the practice of concluding offset contracts. Thus, it is planned to reduce the minimum investment threshold under the offset contract to RUB 100 m. In addition, the capital may have the opportunity to sign offsets together with other regions – two or more subjects of the Russian Federation. In this case, the minimum investment amount will be RUB 400 m.
The Moscow Government has taken measures to support companies in new economic conditions. One of these measures will allow investors implementing projects under the program for the creation of workplace-associated infrastructure outside the TR to receive preferences when determining the size of a bank guarantee. The term of the guarantee has been extended from three to six months, and when determining its size, binding to the key rate of the Bank of Russia is excluded – it is fixed at 9.5% per annum. In addition, investors have the opportunity to extend the terms of execution for six months under some terms of the agreements, and the return of the bank guarantee previously provided when making installments on payments for changing the type of permitted use of the land plot is also provided.
Developers will also be able to save on renting land plots allocated for construction without bidding. The rental rate set within the progressive scale for the current year will remain the same next year. When changing the purpose of providing a land plot, the rate from the second year is 1.5% of the cadastral value, from the third year – 3%, from the fourth – 5%, from the fifth – 7%, from the sixth – 8%.
Tenants of urban land provided for construction without bidding can defer payments for installments for the second quarter of 2022 for 6 months. They can also count on the transfer of lease payments. Similarly, owners of land plots who change the type of permitted use have the right to apply for deferred payment by installments for the second quarter.
In 2022 it has been also introduced a moratorium on increasing the rental rates for land plots and non-residential facilities owned by the Moscow. Tenants of non-residential facilities will receive a deferral until December 31, 2022 for the payment of lease payments for the second quarter of 2022.
Due to the new support measures, it has become easier to develop and coordinate urban planning and construction documentation in the capital. In addition, the rent for land plots issued for the design and construction (reconstruction) of industrial facilities is set at RUB 1 per year.
Any Moscow enterprise from any branch of the economy will be able to receive a grant of up to RUB 100 m for the creation of import-substituting production. At the same time, 25% of the grant can be received in the form of an advance, which will allow launching new projects as soon as possible.
In addition, entrepreneurs will be able to participate in the preferential lending program. Loans at a preferential rate of 15% for replenishment of working capital and investment purposes can be obtained by organizations working in any branch of the economy. The term of subsidizing the interest rate will be 12 months, the maximum loan amount is RUB 50 m.
Entrepreneurs can purchase 88 non-residential premises with a total area of 15,100 sq. m. from the city. They can buy 60 premises, rent — 28 objects.
The objects are located in nine administrative districts of Moscow, most of the objects are located in the Northern and Central Administrative Districts (16 and 15 lots, respectively), in Western Administrative District there are 12 objects, in the Southern Administrative District – 11 premises, in Eastern Administrative District – 9 and in North-Eastern Administrative District – 8. Five objects are located in the Southern, North-Western Administrative District and Zelenograd, two more – in the South-Eastern Administrative District.
The total area of leased objects is 11,700 sq. m.; the area of premises varies from 26 to 632 sq. m. Among the objects offered for rent, 17 premises are implemented under a preferential program for representatives of SMEs, and another 11 objects are intended for entrepreneurs and citizens who do not qualify for the minimum rate.
This year, the initial minimum rental rate under the preferential program is RUB 5000 per sq. m. per year for rooms on the ground floor and above, and for basements – RUB 1000. The lease term of the premises under this program is 10 years.
Department of Investment and Industrial Policy of the City of Moscow
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Moscow Investment Agency
investmoscow.ru
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