MOSCOW INVESTMENT DIGEST. July 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.
Moscow Investment Climate Ranked First among Russian Regions
Moscow once again topped the National Investment Climate Rating among the Russian regions by the Agency for Strategic Initiatives. in 2019, the investment in fixed assets in Moscow amounted to RUR 2.9 tn, which is 8.9% higher than in 2018. In the first quarter of this year, the investment in fixed assets in Moscow grew by 14.9% against the same period of last year and amounted to RUR 452.4 bn. Today, Moscow accounts for 15% of the total Russian investments in fixed assets and about half of the direct foreign investment in Russia.
The highest ranking was obtained in terms of the investment legislation quality, investors and businesses information support, public-private partnership development, the regional organization's effectiveness in attracting investment and working with investors.
"The growth of fixed capital investments in Moscow has been largely caused by the business support measures provided by the city government. The actively investing companies granted the statuses of a technopark, an industrial complex, and a technopark anchor resident can reduce the regional tax burden by 17–25%. A similar mechanism is applied to new investment projects. To date, 120 companies are already receiving various benefits from the city, their investments amounting to RUR 98 bn over the past five years", head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.
Svetlana Ganeeva Appointed New CEO of Moscow City Investment Agency
Alexander Prokhorov, Head of the Moscow Department of Investment and Industrial Policy appointed Svetlana Ganeeva as CEO of the Moscow City Investment Agency (MCIAI) on 24 July. She already held this position from 2012 to 2014, then she worked as Deputy Head of the Analytical Center under the Russian Government.
Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Yefimov noted that Svetlana Ganeyeva had a considerable experience in attracting investments and supporting investment projects. Under her leadership, the Agency was ranked among Russia's three best practices in the Regional Investment Agency category in 2014. He believes that her experience will strengthen the activity in attracting investors to Moscow.
"We are resolving a serious issue - how to promote Moscow investment opportunities. All these years the capital has been among the leaders not only in Russian but also in the world ratings. And this is a great merit of the Moscow City Investment Agency team, which accompanies investment projects from scratch til completion. Therefore, we will continue the course taken 8 years ago to transform Moscow into a city that is comfortable for living and doing business, We will also respond to new challenges of the time by introducing systematic measures to improve the investment climate," CEO of MCIA Svetlana Ganeyeva said .
Leonid Kostroma, former CEO of the Moscow City Investment Agency, was appointed Deputy Head of the Moscow Department of Economic Policy and Development.
Industrial Production in Moscow Grew by Almost Four Percent
The production volume of Moscow manufacturing industry increased by 3.6% from January to June 2020 and exceeded the level of the same period last year.
"Moscow companies were able to adapt to changes and reshape their logistics, taking into account the border crossing rules and the operation of factories in other cities and countries. Moreover, the availability of high-tech production facilities and qualified personnel allowed the capital's enterprises to show production growth despite temporary restrictions in the first half of the year", Deputy Mayor of Moscow for Economic Policy and Property and Land Relations Vladimir Yefimov said.
Compared to June last year, the production of clothing increased most noticeably - by 7.9%, drugs and medical materials - by 54.7%, chemicals and chemical products - by more than three times, and the production of machinery and equipment - more than two times.
The manufacturing industry began to actively recover after a period of temporary restrictions. As compared to May, the June production volume of all manufacturing industries of Moscow increased by 2.5%. Some areas showed a significant growth,for instance the production of beverages - by more than 47%, automotive vehicles - by 32.3%, other transport vehicles and equipment - by 42.4.
Technopark Will Appear in ZIL by 2023
The investor will invest RUR 3+ bn in setting-up the ZIL technopark, and will create 1,100 jobs. The new project is aimed at developing the Moscow industrial potential.
The Technopark will become a site for production of innovative technologies and products, it will produce microelectronics, car components, develop security information technologies, conduct scientific researches.
In the near future, this project will get the investment priority project status (IPP), which will allow the investor to reduce the overall regional tax burden by 25% and direct these funds to the technopark development. The IPP status will reduce the regional profit tax by 26% - 12.5% instead of 17%, the property tax rate will be zeroed, the land plot rent rate will be only 0.01% of the cadaster value.
According to Svetlana Ganeyeva, CEO of the Moscow City Investment Agency, today the IPP status has been assigned to 14 investment projects with the total investments exceeding RUR 30 bn. They will create for example an industrial park, food productions, an car part plant, an art facility, etc.
First Russia’ Agreement on Integrated Development of Industrial Areas Concluded in Moscow
Technopark, housing, two kindergartens, a school and an out-patient clinic will appear in Oktyabrskoye Pole, a former industrial zone in North-West Moscow. The total built-up area will be almost six hectares. The project is being implemented under Russia's first Integrated Area Development Agreement (IAD). It was concluded between the Moscow Department of Investment and Industrial Policy and the Investor on July 8.
Projects of complex area development allow to give new life to unused spaces and to create a modern urban environment convenient for life and work. The investor will invest RUR 14 bn in the integrated area development of Oktyabrskoye Pole under this agreement and will build facilities with a total area of almost 174,000 square meters.
Today the project has already been partially implemented: phase 1 was commissioned in 2017. Construction phase 2 is planned to be completed next year, phase 3 will be commissioned step-by-step. The project time is six years, but the investor plans to complete the construction earlier - until 2024.
Investor Will Invest about RUR 1.5 bn in Construction of Innovation Technology Center
The construction of the innovation center for technology transfer and training at the MIET site in Zelenograd will begin in July and be completed by April 2022. The project will combine various sites - from basic research laboratories to engineering companies and technology start-ups. 2,000 new jobs will be created in the innovation center.
The construction of the facility will be undertaken by JSC Zelenograd Innovation and Technology Center - a Technopolis Moscow Special Economic Zone resident. A five-storey production building of total 5,500 square meters will be built at stage 1, it will be used by development and design departments of multifunctional electronics. It is also planned to build an 11-storey office building of 20,500 square meters. It will host engineering, technology transfer and specialized training centers.
Moscow Industrial Products Exported to 150+ Countries
The Moscow non-resource, non-energy export (NRE) amounted to RUR 12.81 bn from January to May 22020, it is 43.5% more than during the same period last year.
"Most of the products were manufactured and supplied by industrial companies. Industrial exports amounted to USD 11.4 bn, while agro-industrial exports - to USD 1.41 bn. The most significant increase in exports compared to last year - 20.4% was shown in the chemical industry, these product were supplied for USD 1.22 bn. Engineering products were sold abroad for USD 2.28 bn, this sector accounts for 20% of the total Moscow industrial export. The main export groups also include mechanical equipment, machinery, computers, automotive equipment", Vladimir Yefimov, Deputy Moscow Mayor for Economic Policy and Property and Land Relations said.
Moscow exports its industrial and agricultural products to 151 countries. Most of the supplies were made to the UK - for USD 3.34 bn, to the U.S. - for USD 1.15 bn, Belarus - for USD 900 m and Kazakhstan - for USD 880 m. Kazakhstan also became a major consumer of chemical products. Moscow companies supplied chemical products of USD 160 m to this country what is 8.3% more than in January - May last year.
Technopolis Moscow SEZ Residents Increased Hi-Tech Product Export in One Year
The volume of high-tech products exported by Technopolis Moscow Special Economic Zone residents in 2019 amounted to RUR 326 m what is 32 percent more than in 2018.
Manufacturers of microelectronics received the highest export largest revenue last year - their volume amounted to RUR 163.93 m. The residents exported hi-tech products for RUR 615+ m over the entire period of SEZ existence. Innovative products of Technopolis residents were most demanded in the last two years, microelectronics, nanotechnological and optical products and educational equipment go for export most of all.
Moscow manufacturers of innovative products from the Technopolis Moscow SEZ export most of all to China, Kazakhstan, Germany, Belarus and Switzerland. The Technopolis Moscow SEZ residents expanded the geography of distribution in 2019 and began to export optical elements to Bulgaria, Mongolia, Japan, Mauritius and educational kits to Azerbaijan and Israel.
Moscow Bakery Plant Got Loan for Production Development
Moscow Cheryomushki bakery plant has received RUR 100 m from the Moscow Government for production development.
A large investment project to create a new 6,000-square-meter shop is being implemented at the plant. This spring, Cheryomushki put into operation two bread production lines with capacity of 50 tons per day. The allocated funds will allow to use new high-tech lines at full capacity.
A preferential loan was granted to the enterprise by the Moscow Fund for Industry and Entrepreneurship Support as part of the Development - Working Capital product. The loan term is 2 years, preferential rate is 2% per annum.
In 2016, the Moscow Government awarded the industrial complex status to Cheryomushki. This allowed the bread plant to receive significant benefits from the property, profit and land taxes and other mandatory payments.
Moscow Simplified Procedure for Property Payment Grants
The city has simplified the conditions for giving grants to owners of retail, catering, household services and hotels to compensate for property and land payments. This was announced by Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Yefimov.
"The procedure for giving grants to owners of commercial real estate to compensate property tax and land payments was approved in May. Now we received 300+ applications, and while their consideration it became clear that many owners did not meet the established criteria for receiving grants. That's why we decided to soften a number of requirements for applicants to allow more companies to take advantage of this support measure," he said.
6,500 organizations - owners and landlords of real estate - can apply for grants. The city plans to allocate RUR 15.6 bn for this purpose. Applications can be submitted until the end of the year. “Previous applications, which have not yet been considered, will be considered in the light of new softened conditions for giving grants,” Kirill Purtov, Minister of the Moscow Government, Head of the Moscow Department of Economic Policy and Development, said.
2,900 Landlords Will Be Able to Get Property Tax Deferrals
Moscow has approved the list of retail landlords, who will be able to get a deferral in property tax in 2020.
"We have formed the list of potential recipients of tis deferral, it included 2,900 owners of premises. These are both organizations and individual entrepreneurs renting out their premises as the main activity, and whose premises are for use by retail facilities. The total volume of such deferred property payments will amount to RUR 15.4 bn", Deputy Moscow Mayor for Economic Policy and Property and Land Relations Vladimir Yefimov said.
Owners of premises classified in the cadaster as retail, catering or household services can count on relief. They should also be taxed upon the cadaster value and located on land plots purposed for retail, catering and household services.
In order to receive a deferral in tax payment, you should apply to the tax authorities at least one month before the tax payment deadline. The grace period may vary from three months to one year depending on the applicant’s financial state.
400+ Moscow Property Sale Contracts Concluded This Year
405 purchase and sale contract for Moscow non-residential premises were concluded at auctions in H1 2020. That's twice as much as in the same period last year.
The area of the facilities amounted to about 45,000 square meters, and the total amount of transactions was RUR 2.7 bn. This is one and a half times more than in the first half of 2019. The premises in South Moscow were most demanded, 32 premises were sold here since the beginning of the year.
The number of bidders also increased despite the pandemic. The competition at city property sale auctions grew up by 14.7% compared to last year, making this year almost nine bidders per lot. The average price per square meter in the first half of the year was RUR 61,000.
Since the beginning of this year, all city property sale agreements have been concluded electronically through the buyer's account: now investors can remotely sign the agreement, the act of acceptance and apply for state registration.
Technopolis Moscow Will Rent Out 5,000+ Square Meters of Office Space
“Office units of total 5,055 square meters can be rented in the Alabushevo office and business center in the Technopolis Moscow Special Economic Zone at RUR 5,300 to 11,800 per square meter”, head of the Department of Investment and Industrial Policy of Moscow Alexander Prokhorov said.
"Due to the location on the Alabushevo site the companies will get access to the majority of services of Technopolis Moscow SEZ, first of all, to communication and security systems. The units are located in a nine-storey office building of the office and business center, have a free layout and allow tenants to adapt the space to their own needs," the head of the ministry added.
The rent rate includes costs for building use utility services. The minimum office space that can be rented is 355.67 square meters. The rent rate for for catering outlets or shops starts from RUR 9,770 per square meter.
Unit in Baskakov’s Revenue House Listed for Auction
The city rents a commercial unit with a separate entrance in the Arbat area. It is located on the ground floor of house 26 in the Povarskaya street. The unit space is 29.1 square meters.
The house is located between the Boulevard and Garden Rings, not far from the New Arbat street. The house was constructed in 1912 in the neoclassical style by architect Algerd Piotrovic for Moscow landlord Ivan Baskakov, and is a regional cultural heritage site.
The auction is organized by the Moscow Department of Competition Policy. The applications can be submitted by August 28, and the auction will be held on September 3. Detailed information about other lots is available on the Moscow Investment Portal.
4,000+ items for city property sale and rent auctions are presented on the Moscow Investment Portal https://en.investmoscow.ru/.