Crisis Response Measures

13.04.2016

A roundtable discussion with a great name “Has it become easier to build in Moscow?” was held in the city. City officials, business representatives, developers, architects and urbanists discussed innovations in the Moscow system of approval of construction projects.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Today we are talking about the Moscow construction sector. Let us speak not in the usual terms of new builds, prices, supply and demand, but in the context of relations between the municipal authorities and developers. Has it become more difficult or easier to build in Moscow today? Let us examine the issue in the program “RBC Real Estate”.

Sergey Levkin, Head of the Moscow Department of Urban Planning Policy:
The theme of today’s roundtable discussion of the Moscow authorities, federal agencies and investors was formulated the following way: whether it is easier to build in Moscow? I’ve got a clear-cut answer – yes!

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Moscow authorities claim to support the construction industry with crisis response measures of facilitation of approval procedures. The officials said that nowadays you need minimum of time and documents in order to get a construction permit in Moscow. This fact speeds up the building process, and hence reduces the cost.

Sergey Levkin, Head of the Moscow Department of Urban Planning Policy:
As late as in 2013 we have cancelled a number of procedures which had no real effect and obstructed construction activities. Among other things I mean approvals of prefectures and district councils, approvals of project documentation. The next key field of work is conversion of state services in electronic format. 12 of them are already provided online. In this regard Moscow is the leader in the Russian Federation. In 2015, 73% of applications for state services were submitted online via the portal of state services.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Representatives of the Moscow Construction Complex told us about the provision of e-services from their side; let us imagine that we are developers, housebuilders. So we are opening a website, what should we do?

Andrey Kurilov, head of the office of information management & analysis of the Moscow Department of Urban Planning Policy:
We open the website PGU.MOS.RU, select the section of land use and construction, then among the services of the State Construction Supervision Committee we select “construction permit” and press the button to get the service. The applicant’s details are filled in automatically. Once I filled in the application, I click “send” and sign it with my electronic signature. The application goes to the corresponding government agency. The applicant has the opportunity to track the processing of his application. When the application is submitted via the portal and registered by the certain government agency, the result will be obtained. This result can be obtained even without visiting the department; it is issued in electronic format and signed with the electronic signature of the employee of Mosgorstroynadzor (State Construction Supervision Committee).

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
How long are the documents usually pending before the government agencies?

Andrey Kurilov, head of the office of information management & analysis of the Moscow Department of Urban Planning Policy:
Routine term of provision of the service amounts to 10 days. But as a rule the term of the service depends on the time of receipt of the documents. Documents held by the Moscow government are requested in less than 4 hours.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
12 state services are currently available online for business in Moscow. It includes approvals of GPZU (development plans of a land plot), construction permits, architectural and urban planning solutions (AGR), approvals of design projects of placing signboards.

Sergey Levkin, Head of the Moscow Department of Urban Planning Policy:
This year, we converted issuing an excavation permit to electronic format; moreover the procedure was revised and facilitated for developers. I can say that 13 unnecessary stages of the procedure have been abolished because they duplicated each other, or were of no importance in terms of safety and comfort of implementing works on any territory.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Developers at large appreciate the liberal approach of the Moscow government to support the construction industry.

Leonid Kazinets, President of the National Association of Property Developers:
It became easier to build in Moscow. Maybe it is more difficult to build due to the fact that we do not have enough funding, or we face a drop in demand of square meters, or the lack of free sites for construction. But it is evident that in terms of procedures it became easier to build. The procedures have become clearer, more predictable, including their terms.

Artemy Krylov, CEO of PJSC OPIN:
Today Moscow makes efforts for shortening the terms of approval of documents. This work started in 2012, and it was continued at an accelerated pace in the framework of the adoption of anti-crisis measures by the Government of Moscow, which were presented 2 years ago. As part of these measures, terms of many approval procedures have been reduced, for certain ones a simplified protocol was adopted.

Dmitry Volkov, Public official of the Agency for Strategic Initiatives in Moscow:
The first benefit is that developers are finally able to predict the timing of their project implementation with high accuracy. Previously the process of building in Moscow resembled an equation with many unknowns. Entering a project, we never know what will happen at the end, what will be the production cost, will we be able to make profit or not. Now, given the fact that the process is almost regulated, it is possible to calculate. The second benefit is that the investor is able to minimize the costs due to the fact that he understands the procedures in detail.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Besides the profit of developers, lowering of administrative barriers should also affect the final cost of square meter for buyers.

Dmitry Volkov, Public official of the Agency for Strategic Initiatives in Moscow:
The policy that Moscow is now undertaking has two direct benefits for the end user. The first is that it helps to reduce the production cost. It is not a great amount, it consists of wages, which the builder is saving, of the cost of infrastructure maintenance due to reducing the duration of the project implementation, of the fact that the construction works can be done faster and cheaper as a result. It surely affects the cost of a square meter. Will the developers be able to give this margin to final consumers, or they use it for their own development – it depends on the situation on the market, on the difference between supply and demand, and on individual policy of each developer.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Here we are with you on this construction site. Tell me, how much time you spent on the whole bureaucratic procedure to build this house?

Igor Yudovsky, Vice-President of the Leader-Invest Company:
As you can see this is not a picture, but a real object. Designing the building of the area of 20 thousand sq. meters takes us 4-5 months. Obtaining of expert examination conclusion takes six weeks, another six weeks is needed for getting a construction permit. If we take this building, we received a positive conclusion of the state examination committee in November, and in January, 2015 we got a construction permit, so we started construction works in February – March of 2015. Now the building is almost ready, and we plan to put it into operation in June.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
Tell me, does the reduction of approval regulations somehow affect the self-cost of construction?

Igor Yudovsky, Vice-President of the Leader-Invest Company:
These procedures themselves are not expensive, but the increase of their efficiency means tremendous savings for us. It reduces the time for designing and passing through administrative procedures, so it obviously makes the project more effective. And the cost of housing for future inhabitants is becoming more advantageous.

Host: Ignat Bushukhin, editor in chief of RBC Real Estate:
What conclusions can be made out of the current conversation? Building in Moscow became indeed simpler, easier and cheaper, so the crisis is a real opportunity for a qualitative change in the whole real estate market of the capital.

RBC.ru

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