Less red tape is seen in construction
16.06.2016
“Moscow was not built in a day” – this line of a famous song does not correspond to the today’s Moscow. Construction of many buildings is in progress in Moscow, so it is not easy to recall the former appearance in the city. In five years, there was built 10% of all urban real estate fund, in other words 40 million square meters. However, developers proved to be very vulnerable in the period of protracted economic crisis.
The city authorities are making efforts to minimize the red tape problems, and this work cannot be stopped in order to support the construction business. This is the only way to keep the term of construction and price rate per square meter for consumers.
According to him, builders still do not have any feedback to the authorities that issue permits and approvals. For example, in order to get a development plan of a land plot (GPZU), you have to apply for in on Gosuslugi.ru website. Government agencies request other documents via interdepartmental interaction. 10 days are assigned for consideration; as a result a developer can get a refusal due to the lack of certain papers or the presence of inaccurate data.
However, changes in construction industry have made the market more civilized. The thesis is confirmed by the fact that Russia has risen from 92nd to 54th position in the World Bank Doing Business ranking, which reflects the ease of doing business in different countries. Due to improving the transparency of game rules for developers, a two-fold reduction of chargers for administrative procedures was achieved. In 2016, the average terms for obtaining permits reached 244 days.
Despite the decline of business activity due to the crisis, the interest of foreign investors in real estate in Moscow is steady. One of the reasons is depreciation of the ruble and assets. Experts agree that in such a situation, the focus should be put on large infrastructure projects and adjacent commercial real estate. For example, representatives of investment and development company Eagle Hills Properties (UAE) announced their intention to fund the construction of several transport hubs (TPU) in Moscow. This is the TPU “Alma-Atinskaya”, “Novokosino”, “Seligerskaya” and “Rasskazovka”.
According the Chairman of Moskomstroyinvest Konstantin Timofeev, foreign investors are satisfied with the profitability of projects (it amounts to 20% per annum), but they need to be proprietors of land plots. Another important aspect outlined by foreign businessmen is the possibility to accurately estimate the cost and timing of the project at the initial stage. From an investor’s perspective, the most important point is the price predictability.
The second point is the process of project implementation and the possibility of its evaluation in time, which makes possible to calculate the final amount of project cost. All these intentions can turn into real money, square meters, kilometers of new roads only if the city authorities continue maintaining the integrated approach to the urban development of the city, including minimization of red tape problems for developers, development of tools for co-investment and firm guarantees from the state for decades to come.