Improvement of investment climate in construction was discussed on round table in Moscow
In Moscow, an Urban Talks round table expert discussion was held, the topic of it was “Investment climate in construction industry. Challenges and New Solutions “. It was organized by the Moscow Urban Forum together with the Department of urban planning policy of Moscow. The round table was attended by representatives of the city government, members and experts of construction and financial markets.
Panelists noted that today the situation in investment and construction sectors cannot be considered as favorable. For developers, it is characterized by a combination of three factors: limited access to financial resources, the high cost of loans and drastic lessening of demand for certain types of real estate, primarily for offices and retail facilities. Profitability of a number of high-quality objects of Moscow real estate remains high (about 10-11% annually), but part of the office and retail space is empty.
According to the head of research department of Cushman and Wakefield, Denis Sokolov, 20% of Moscow office sector and about 10% of retail facilities are vacant now.
According to their forecasts, annual volumes of commissioning of office facilities do not exceed 30-50% comparing to the volume of 2014. Moreover, the market is experiencing repricing, said Sokolov. “In this regard, today we face the question of how to revive the market, how to ensure the flow of investments, regardless of any geopolitical challenges,” he said.
As Sergey Levkin, the Head of Urban Policy Department noted in his speech, Moscow addresses the task posed by the Mayor: to find a balance between the interests of three parties ¬– Muscovites, investors and the city. A clue for successful development of the city is to rely on human capital assets, he stressed. If a person is at the forefront and every effort is aimed at his comfortable life, investments must meet these requirements.
Construction is one of the most important trends in development of the city. Being a major city Moscow cannot live and develop without the involvement of private investment, said Levkin.
Levkin also said that the city has issued construction permits for a total area of more than 31 million square meters of real estate. The targeted investment program for the next three years is also approved; more than 500 objects will be built in its framework. In addition, over the last 5 years, town planning solutions for potential construction of 150 million square meters were adopted.
One of important fields of work to improve the investment climate is to implement administrative reform in construction industry, said the Head of the Moscow Department of Urban Policy. Since 2013, the Moscow Construction Complex has done a lot in this field: the process is optimized and the term of obtaining permits is reduced. The transparency of the entire process is ensured by transfer of state services to electronic format.
The growth of real estate prices in Russia will be explosive. The moment the demand exceeds supply, prices will rocket up. The state should perform the regulator function. And today, when there is a decline in demand, the state should support it. The state acts as a regulator, keeping the stable volume of construction, in order not to suffer from the lack of supply when real estate prices start to rise.
At the meeting the participants exchanged views on how the business climate of the capital has changed in recent years, how the crisis has affected the expectations of investors, and what sort of interest have foreign investors in the Russian real estate, etc.