Mikhail Yakubov: Moscow is the leader among other regions which have to follow its lead
Our company operates in the Moscow real estate market more than a decade, and certainly we see the progress that has occurred in reducing administrative barriers in construction sector. Nationwide, Moscow is the leader among other regions which have to follow its lead.
Thus in our view the main criterion of success should be considered not so much procedural aspects as transparency and predictability in terms of costing and timing of the passage of procedures – I mean a change in the permitted land use, technical conditions, pre-design works stage. It is very important for a developer to know how much time and money he will spend on this or that approval. Going global (being an international company we are working around the world), Moscow is actively improving its position in comparison with other cities not only in absolute but also in relative terms.
We work a lot with the assessment of projects so we can stress another important aspect. Transparency and predictability of project approval procedures directly affect the capitalization of development companies. The cost of square meters in projects at an early stage of implementation is lower than in the projects that have passed GZK (Urban Planning and Land Commission) and received GPZU (development plan of a land plot). The difference can be 5% for ordinary plots, which fully conform to all regulations, the City Master Plan and limitations of a land plot, or it can be even 20-30% in case of complex plots with a large volume of limitations.
The size of this discount is just a reflection of the risk level that the professional market players are introducing for administrative procedures. The more transparent and predictable the procedures are, the lower the discount and higher is capitalization of a company. Higher capitalization means an opportunity to attract more credit resources and develop more dynamically.