There is enough land in Moscow for new construction, but it should be used sensibly.
A business brunch entitled “Is there space in Moscow’s reserve for new construction?” held by the “Kommersant” PH took place in the Russian capital. The issue is acute, as many developers complain of a deficit of possible construction sites, but it has turned out that there are lots of potential places for construction in the city.
There cannot be too much housing
Moscow’s Chief Architect, Sergei Kuznetsov, thinks that any concerns that territory for development is shrinking to nothing in Moscow are unjustified. According to him, there are great opportunities in the capital for further construction, and not only on adjacent land but within old Moscow.
80% of all construction in Moscow is for housing. It is the most profitable segment of the construction business. 97% of residential realty is erected with private money – according to co-investment contracts, 600 bln roubles have recently been invested.
More than 20m square meters are on offer on the market at present, and 14 m square meters of them have already been sold. For the last five years, the Urban Development Committee has adopted the construction of 118m square meters of realty, mostly residential. 26m square meters have been commissioned, and investors have started to implement projects for 95m square meters. In the first half of 2016 permits for the construction of 10m square meters have been issued, 63% of with are for residential buildings.
However, the construction process is changing from relatively simple projects to more sophisticated structures and both authorities and developers must take this into account. The situation has been complicated by the fall in demand for real estate, but, from the chief architect’s standpoint, this should not stop the construction conveyor belt. Demand is always prone to fluctuations – it either falls or rises.
It is more important to take long-term factors into account. The population of Moscow is growing constantly, mainly due to newcomers who need housing. Besides this, “old” Muscovites also need new housing and Moscow is significantly lagging behind other world metropolises as to the number of square meters per person.
Consequently, the demand for residential real estate and the need for social and commercial realty will only grow.
There are a lot of examples of large-scale urban development project implementation. One of the largest is the reconstruction of the former ZIL industrial area.
Another huge project is the construction of the Central Ring Road. A large number of transportation hubs will be built there, and around each both residential and commercial infrastructure will be developed. The task is to make citizens’ commutes from home to work or to recreation facilities as short as possible.
One of the largest and most long-term urban development projects is the reconstruction of the embankments on the Moscow River, a giant territory of 10,000 hectares.
For many centuries the land along the river was not adequately developed as the river was not mush used economically. In this regard Moscow differs greatly from, for example, Istanbul or Amsterdam, where waterways are the most important component of the city’s infrastructure and economic development. This has resulted in the development of the riverside as a mere outskirt, with various negative consequences.
Today, the Moscow authorities have worked out a project for 108-km long embankment development in the city, 60% of the river’s total length within the city. A decision on the construction of 10m square meters of housing in the area has already been taken, and 30m square meters of housing may potentially be constructed along the river.
As Sergei Kuznetsov admits, it is a very complicated project as there are too many different owners on the territory. It is necessary to consider their interests, to negotiate and come to agreements with them and to form a unified concept.
The process is labour-intensive but it is proceeding. In two or three years much will have changed, and in 10 years the Moscow embankments will look quite different from today.
To present oneself well
The Moscow authorities understand that they will manage the reconstruction of the riverside areas only with the help of business’s active participation. According to Konstantin Timofeev, Chair of the Moscow Committee for investment projects support in construction and co-investment construction, to make investors interested in the embankment’s development they should be granted the right to build commercial objects there. Besides, the better and more beautiful a place is, the better the realty sold there
Alexander Khrustalev, Chairman of the Board of the NDV Group, thinks that the city’s authorities are conducting a reasonable urban development policy. The growth of flat purchases in the center of the city proves this, as living conditions in the center are improving.
Developers are showing important signs of paying attention to improvement and the city’s authorities are actively creating a modern city environment. Even children’s playgrounds in courtyards have become real architectural projects. Developers support such undertakings — otherwise it will be difficult for them to find success on such a demanding realty market as Moscow’s. The situation itself forces them to present themselves well, and it adds to the quality of the objects to be commissioned.
There are places for construction in Moscow, but it does not mean that anyone can enter the capital market. The competitiveness among developers and their choices are very serious. After the adoption of the new edition of the 214-FL they have become even more strict.
According to Konstantin Timofeev, construction is a risky business, which is proven by a large number of bankruptcies. If a developer intends to continue building in Moscow, he must continually improve the quality of construction.
At least, this is our hope.