MOSCOW INVESTMENT DIGEST. October 2020
The Moscow Department of Investment and Industrial Policy in cooperation with the Moscow City Investment Agency presents you the next digest of the main investment events in the capital.
NEW BUSINESS CENTER WILL APPEAR IN ROSTOKINO BY 2023
When constructing a shopping and office center in the Botanichesky Sad transfer hub, the investor will create office space of 36,800 square meters. The project will be implemented within the new city program to stimulate job creation.
“This program is aimed at developing areas outside the Third Ring Road and the Moscow Ring Road. The second agreement has been signed under this program within the last two months. New business centers will appear in the Butyrsky and Rostokino subdistricts. This is how investors create new jobs, and in return they receive benefits from the city - partial exemption from the fee for changing the permitted use type of land plots," Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Efimov said.
Office space in the Rostokino will be built within three years by RDK Pioneer LLC and will be located in the Wilhelm Peak Street in the Botanichesky Sad transfer hub. The developer has been assigned the status of an investment project on creating administrative and business facilities, which gives the right to partial exemption from the rent rate for the first year of construction and the fee for changing the permitted use type of land plots provided for the construction of residential complex in the Selskokhosaystvennaya Street.
"The apartment building developer shall be partially or fully exempt from the rent rate for the first year of construction and the fee for changing the permitted use type of land plot if he invests these funds in the construction of an industrial or office facility and additionally engages his own funds. Thus, the investor gets the ownership of an office or industrial facility having invested less money thanks to the benefit, and the created space can generate a revenue for him in the future," Head of the Department of Investment and Industrial Policy of Moscow Alexander Prokhorov noted.
"To obtain the status of an investment project for the creation of administrative and business facilities, companies should have the rights to the land plot for the construction of an apartment building as well as the rights and urban development plan of the land plot to create an industrial or office facility," CEO of the Moscow City Investment Agency Svetlana Ganeeva explained.
MOSCOW COMPANIES CAN OFFER THEIR INDUSTRIAL SITES FOR INVESTMENT PROJECTS
The Moscow Investment Portal has got new functions for owners of industrial sites. They can now submit an application to include their facilities in the register of real estate available for rent and sale to investors. Previously, the Moscow Investment Portal used to publish facilities owned by the city only. The new service will faster update the database of free industrial sites in Moscow and will expand the choice of locations.
"Selection of sites and land plots to locate production facilities in the capital is a popular service provided by the Moscow Industrial Development Agency. It annually processes 120+ such requests from manufacturers. Thus, 34 high-tech industrial facilities have been localized in Moscow with the support of the agency since 2017. Their total investments amounted to RUB 17 bn, and 3,200 jobs were created. The new functions will faster update the database of free industrial sites in Moscow and will expand the choice of locations," Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Efimov said.
Application for including in the register of industrial sites id enough to post an offer. Employees of the Moscow Industrial Development Agency will contact the applicant, verify and inspect the production unit. Facilities that meet the legal and engineering requirements will be included in the register.
HOUSING DEVELOPERS WERE OFFERED BENEFIT FOR CREATING BUSINESS SITES
On October 17, Moscow hosted a round table where developers were told about the new city program to stimulate job creation. The meeting was attended by representatives of the Moscow Government, the Moscow Investors' Club and key developers of the city.
When planning the program to stimulate job creation, a so-called digital map was created, which shows that the city center is overloaded with jobs, and there are not many jobs outside the Third Ring Road and the Moscow Ring Road (especially in New Moscow) . Therefore, the capital authorities are constantly working out new methods to stimulate investors by encouraging them to establish offices and production facilities outside the Third Ring Road. The essence of the new mechanism is as follows: the developer of an apartment building is partially or fully exempt from the fee for changing the permitted use type of the land plot, if he invests these funds in the construction of an industrial or office facility and create new jobs. This will help to reduce the commuting time of Muscovites, to unload roads and public transport.
"Last year we thought about how to stimulate the construction of industrial and office facilities. We worked a lot, in particular with the Investors' Club, with the largest Moscow developers and developed a mechanism that is already in use. The program gives every participating developer a chance to receive a privilege to change the permitted use, provided that the equivalent funds are invested in the construction of another facility - an office or industrial production outside the Thirg Ring Road. The facility will be owned by the investor, so it will be possible to get return from its sale in the future. It is important to note that developers who have already begun to implement projects of apartment building construction can enter this program as well," Head of the Department of Investment and Industrial Policy Alexander Prokhorov said.
"To participate in the program, companies should have the rights to the land plot for the construction of an apartment building and the rights and urban development plan of the land plot to create an industrial or office facility. The investor should have financial resources for the construction of facilities and no debts. The shareholders of the investor and the legal entity engaged to create jobs should coincide by at least 75%," First Deputy CEO of the Moscow City Investment Agency Alexandra Druzhinina explained.
A CITY FOR BUSINESS: NEW POSITIONS IN RANKINGS
In October, Moscow moved up from the 5th to the 4th place in the international World's 100 Best Cities ranking, a ranking of the best cities for life, work, investments and visits. The Russian capital is ahead of Tokyo, Madrid, Rome, Dubai, Singapore, Barcelona and other megacities.
Moscow ranked ranked 8th of 36 in the Overall Global Cities Innovation Index The research authors analyzed the level of urban environment development, technologies, innovations in the creative space in the largest megacities of the world. Moscow was # 1 in digital development.
Technopolis Moscow SEZ was awarded in six special categories of the annual Global Free Zones of the Year ranking by the fDi Magazine. The awards are for Cluster Development, Covid-19 Support, PPP, Broad Opportunities for Localization and Production Expansion, Red Tape Reduction and Workforce Amenities.
TYOPLY STAN INDUSTRIAL ZONE WILL RE-DEVELOPED IN MOSCOW
The next integrated area development project in South-West Moscow will be re-develop an industrial area of 16.78 hectares. It is currently accommodating warehouses and a car park, part of the territory is not being used. The will be replaced by industrial and public facilities of almost 205,000 square meters. Production development will occupy 56,000+ square meters, and the share of public facilities will be about 150,000 square meters.
"Moscow is actively implementing projects of integrated area development, which significantly transform the image of the city. New high-tech production facilities, business centers and modern infrastructure are replacing unclaimed industrial zones. The project investments will amount to RUB 13.6 bn. As a result, almost 4,000 jobs will be created, and the annual planned budgetary effect for the city will exceed RUB 1.4 bn," Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Efimovsaid.
LIFE CYCLE CONTRTS IN HEALTHCARE EXCEEDED RUR 31 BN
The city began to sign life cycle contracts (LCC) in healthcare at the end of 2019. During this time, contracts have been signed with world-renowned manufacturers to supply and service medical equipment for healthcare institutions for RUB 31+ bn.
Under the LLCs, the capital will get modern equipment with 10 years of service from manufacturers who have not only production facilities, but also relevant experience in service. Two to seven bids from different manufacturers of medical equipment were submitted for each lot at the tenders. Competition made it possible to significantly reduce the price of contracts. The maximum drop in the auction was 70%.
GROSS VALUE OF MANUFACTURING INDUSTRY ALMOST DOUBLED IN 10 YEARS
Since 2010, the gross added value of the Moscow manufacturing industry including inflation has almost doubled - from RUB 1.07 tn to RUB 2.9 tn. At the same time, the share of manufacturing industry in the structure of the gross regional product increased by 3.4 per cent and made 16.2%.
"The strongest growth in industrial production has been observed in the last three years. Thus, in 2017, it was almost 1.7% compared to the previous year, in 2018 - 6.1% and in 2019 - 5.6%. The eight months results showed a 5%-growth of industrial production compared to the same period of last year,” Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Efimov said.
The leading position is taken by the chemical industry - the production volume grew almost five times from the beginning of 2017 to August 2020. This is due to increased production of perfume and cosmetic products as well as disinfectants and hygiene products.
MOSCOW INCREASES NON-RESOURCE NON-ENERGY EXPORTS
Experts of the Moscow Export Center revealed the most interesting trends of the Moscow non-resource non-energy export in the first seven months of 2020. The top 10 markets by Moscow export dynamics were Mauritania, Namibia, Estonia, Iceland, Kuwait, Tanzania, Slovenia, New Zealand, Somalia and Switzerland. In just seven months of this year, the goods of Moscow companies were sent to 160 countries.
A significant share of exports is accounted for by supplies of industrial goods, and it accounts for almost 90% of regional exports. According to the results of seven months of 2020, the Moscow industrial exports increased by 35% in the first seven months of 2020 compared to the same period last year and amounted to USD 16.4 bn.
This year, foreign partners showed a special interest in Moscow pharmaceutical products.
TWO OTHER MOSCOW PLANTS GOT INDUSTRIAL COMPLEX STATUS
"Research and Production Academician-N.A.Pilyugin-Center of Automation and Instrumentation and Moscow Machine-Building Forward Plant received the industrial complex status. It will help the companies to be able to save about RUB 104.8 min 2021 and to direct these funds to the development of production and other priority tasks. In total, 58 enterprises have the industrial complex status in Moscow," Vladimir Efimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations, said
Along with other preferences, enterprises with the industrial complex status enjoy a reduced rate of the regional profit tax - 12.5% instead of the standard 17%.
MOSCOW WILL SUPPORT AREA DEVELOPMENT INVESTMENT PROJECTS OUTSIDE THIRD RING ROAD
SergeI Sobyanin signed a decree that sets a new scale of rent rates for land plots outside the Third Ring Road provided for the implementation of large-scale investment projects in development of urban areas (except for residential buildings and hotels).
This decision will help to attract investments and to create additional guarantees for the implementation of large-scale projects related to the infrastructural development of urban areas outside the TTK, the increasing number of jobs in non-central areas, the creation of new points of attraction for local residents, sports, social and cultural facilities.
MOSCOW HELPED BUSINESSES TO OBTAIN RUB 16 BN OF LOANS
The Moscow Small Business Credit Assistance Fund summed up the activity in three quarters of 2020. Small and medium-sized businesses received RUB 16+ bn of loans with the Fund’s guaranteed support in nine months of 2020. 60% of the guarantee volume was issued for small enterprises, 24% - for micro-enterprises, and 16% - for medium-sized businesses.
Half of the support was given to wholesalers and retailers, 20% - to manufacturing and innovation enterprises, and 9% - to construction companies. Other 21% were distributed among companies in transport, healthcare, education, services and others. Most of the guarantees provided are aimed at securing loans for working capital replenishment.
MOSCOW INDUSTRIAL COMPLEXES AND CREATIVE TECHNOPARKS CAN GET UP TO RUB 300 M FOR DEVELOPMENT
Moscow extended the list of organizations entitled to receive subsidies to reimburse interests paid on property development loans. The list includes industrial complexes and organizations implementing investment priority projects to create industrial complexes, innovative research and technological centers and creative technoparks. The support volume may reach up to RUB 300 m a year.
The list of recipients entitled to receive subsidies to reimburse grid connection costs has also been extended. Now any industrial legal entities operating can get this subsidy. It will be to up to RUB 100 m and can cover up to 50% of this kind of company’s costs.
CITYT PROPERTY SALES INCREASED ON AVERAGE BY 5% IN 2020
1,300+ Moscow premises for the total amount of RUB 4.8 bn were sold at the land auctions in nine months of 2020 which is by 5.6% and 4.6% accordingly more than these indicators in the similar period last year.
651 non-residential premises including 332 car places have been sold at the city auction since the beginning of the year. A total of 552 non-residential units have been rented out, 471 of them - at a reduced rate to small and medium-sized businesses. The city has also sold 102 land plots since the beginning of the year, which is almost 3 times more than in the same period last year.
SMALL BUSINESS CAN RENT 5 UNITS IN CENTRAL MOSCOW CENTER AT DISCOUNTED RATE
The city will rent out non-residential premises located in the Central Administrative District at a reduced rate. Two premises are in the Basmanny subdistrict, one each in Khamovniki, Zamoskvorechye and Presnensky. Units of 71.9 to 144.7 square meters will be rented out through open e-auctions. The rental time for each of the units is 10 years. Only small and medium-sized businesses can rent them.
An application campaign is running for all lots: three lots have the application deadline on November 20, one lot - on November 27 and one more lot - on December 11.
‘BABY’ LOT IN CENTRAL DISTRICT IS UP FOR AUCTION
A unit of 8.8 square meters is waiting for its buyer at the auction. The unit is free in use. The auction winner will be able to place one compact business - vending, photo booth, kiosk, small services such as repair and manufacture of keys, etc.
The main advantage of the lot is its location in the ground floor of a multi-storey residential building in the Tverskoy subdistrict, five minutes away from the Dostoevskaya metro station.
The starting price is RUB 787,000. Applications are to be submitted by November 12, the auction will be held on November 18.