Since morning the stand of Russian Regions has been hosting several presentations of representatives of regional governments who told about investment opportunities in their regions. For example, Igor Perepelitsa, Head of Economic Development and Trade Ministry of Stavropol Region noted that these days the region is boasting the highest level of the buying power compared to other regions in the South of Russia. This predetermines the opportunities for commercial real estate development. The region is also planning to develop logistics centers. One of the planned projects is to construct two logistics centers 50 hectares each near Mineralnye Vody.
Vladimir Slepnev, Head of Regional Development Management of Tver Region said that the so called One Window Stop system is in operation. That means that an investor now only applies at one municipal organization and receives a complete set of project approvals there.
Tyumen Region representative told that the local government provides investors with state support. The investors are entitled to tax relief, budget crediting, etc. Main investment projects of the region are currently businesses related to oil processing industry. There are more then 30 big businesses of this type and the authorities estimate their investment appeal at more then 7 billion Euros. According to the representative of Tyumen administration, in the future the region can become a key development region in Russia due to the volumes of planned projects.
A representative from Kaluga region reported that nowadays industrial property development is prioritized. In particular, he mentioned seven projects of industrial parks located 80 km away from MKAD: Grabtsevo, Vorsino, Kaluga-south, City Park, and others. One of the main investment projects of Ivanovo region is a complex development of the embankment in the center of the city. This is a 400 USD worth project that provides building both housing and shopping and business centers.
The Governor of Saratov Region Pavel Ipatov told in detail about the region development. He said that these days the total volume of investments in the region is 500 million rubles. Today the biggest investment flow is directed into industries - building factories - agriculture and animal industry. Evrazia Logistics, Megalogistics and MLP are now investing into construction of large commercial property projects of logistics terminal in Saratov region.
How did the world liquidity crisis affect the Russian market? How long will it last? What is to happen to credit rates? These and many other questions were discussed at a panel discussion Investments into commercial property in Russia and world liquidity crisis – a quiet harbor in the storm sea? organized by GUD. The name of the discussion generated a flow of metaphors given by the participants who sometimes had very different opinions. Cameron Sawyer, Chairman of Board of Directors at GVA Sawyer and General Directors of Rutley Russia Property Asset Management believes that there is no quiet harbor. If the sea is rough, the harbor cannot be quiet and peaceful; there will also be rough waters with waves of smaller size but still waves. Maria Golovanova, Investment Director of Investment Management Group believes that for the Russian market the consequences of the liquidity crisis are not severe as all key indexes are stable. The demand and supply are still out of balance, capitalization rates are high and growth of prosperity is ongoing. Though, according to Golovanova, there are some difficulties with debt financing, bank rates increase and IPO has not been able to prove itself as an investment tool. Development companies realizing a lot of projects at the earliest stage can feel this especially.
Arthur Makaryan, General Directors of Glavstroy continued the IPO topic and said that partly the reason why IPO is not so successful is in the way the information is presented. In this context he thinks that the crisis will prove useful to the Russian participants of the market because one needs to learn how to attract money. “A storm is a test to see how strong the sails are. Providing the ship is managed by a good team, no surge will overflow it,” says Makaryan.
Lack of long term plans with institutional investors entering the Russian market is a real problem that was noticed by Lev Pukshansky from Marine Façade. “We have been waiting for foreign investors to enter the Russian market. This is such a pitiful coincidence that now they are here, and they are overwhelmed by the crisis,” notes Pukshansky. Alexander Olkhovsky, the President of GUD mentioned that last fall the bank had a sharp increase in project finance rates from 12 to 18%. Later having reassessed the risks, the bank decreased the rate to 13-4%. Today the rate is 15%.
At lunchtime Moscow Region districts were presented by their heads. Vassily Golubev, Head of Leninsky district of the Moscow region is convinced that if the tax law had been amended, Leninsky district would have become the richest. Today around 40% of the residents commute to the capital where they also pay taxes. Yet Golubev has optimistic estimation of the district’s investment capacity stating that the district is open for all kind of offers from investors.
Moscow stand has seen several presentations today as well. One of them is a complex development Metropolia located at Volgogradsky prospect presented by Metropol Development. Alexander Vagin, President of OTKRYTIE-Nedvizhimost (Realty-Open) introduced a project called Paveletskaya. This is not the first time the project is sent in to MIPIM. Evocom brought several projects: a multifunctional center hosting a hotel (150, 000 sqm), projects at Kashirskoe Highway plot 63 and Generala Belova Street plot 28.
This day has been quite busy for other Russian participants with signing agreements of intentions, making project presentations, holding meetings. For example, at Mirax Group stand a strategic partnership agreement was signed with the government of Montenegro following by a presentation of the project Astra Montenegro. Later that day another project called Paradise Living by a Japanese architect Kiyonori Kikutake was presented.
Once again Russian regions were in the news. Renova-StroyGroup organized a conference: Russian regions in the center of business activity, while at the stand of the Krasnodar Region Aleksei Shepel, Head of S-Holding reported that they had singed an agreement with Konti Group on construction of a cement plant in the region.
Valery Shantsev participated in quite a few events out of many happening at the stand of Nizhniy Novgorod. One of them was a presentation of a new big project with investments worth from 20 billion to 100 billion US dollars (depending on various estimations). Planned by an Italian architect Dante Benini, this Globe Town will contain both housing and commercial property. It is a multifunctional project of complex development. Also, Valery Shantsev signed an agreement of intentions with Alcatel which is planning to become a key tenant of the commercial space of the new project.
Another objective presented at Nizhniy Novgorod exhibition is a multifunctional complex Island (island Pecherskie Peski). It consists of several parts integrated into a complex development. The project contains a shopping and entertainment center, a multimedia center of scientific discoveries, a water part, a seaquarium, a 4 star hotel complex, a yacht club, art-hotels, etc. The presentation was made by the following companies: Capital-NN (investor and client), HACM (architect), S.A.Ricci / King Sturge (consulting). Total investments of the project are estimated at around 400 million US dollars.
Primorsky Region held a dynamic presentation of their projects with speeches given by Dmitry Kozak, Minister of Regional Development and trade of the Russian Federation, and Sergey Darkin, the Governor of Primorsky Region. They spoke of reorganizing the area of Russky island by developing island’s infrastructure and constructing a lot of buildings. The island is to host gambling zone, one of the four allowed in Russia, that will attract a lot of investments. Besides, there is a political function of this territory. The Island will present the cultural and business area of ATEC summit. The government alone plans to invest around 150 billion rubles into developing this territory. Currently there are negotiations with two major investors that would take care of the project yet the authorities’ representatives would not give the names. “The winner of the tender will offer the best conditions,” summarized Mikhail Grudinin, Head of Giprogor.
The stand of RussianLand (previously known as STT Group) was overcrowded as after lunch Sir Norman Foster made a presentation. He gave a lot of details of the projects he is doing for Zhalva Tchigirinsky.
Inteko Group was also in the news today as Elena Baturina herself made a presentation of the company projects.