Cisco buys in to Skolkovo

“Cisco buys in to Skolkovo” (“Cisco vlozhitsya v Skolkovo”), Ekspert Online, 24 June 2010. 24 June 2010

Announcement of Cisco’s plans to invest 1 mil. dollars in Russian technological development.  Cisco will furnish its own material and intellectual capital.  No mention was made regarding land capital.

State of industrial-use land market in the capital

“State of industrial-use land market in the capital” (“Sostoyanie rynka zemli promyshlennogo ispolzovaniya v stolitse”), Russian Real Estate, 23 June 2010.  23 July 2010

Less than 500 hectares of Moscow suburban (less than 15 km outside of MKAD) lands zoned for industrial use are being sold this year, which is half as much as before the crisis.  A large portion of the lands in the 10-15 km zone had been sold before the crisis: they were often bought to be resold, and were always taken as collateral for loans.  Before the crisis, about 10% (100 ha) of the land area on the market would have been purchased, though this year, that figure could go as high as 60% (300 ha), as capital-holding investors will purchase the land to sell it after the crisis is over.  The most attractive plots are those on which it will be easy to begin construction, or otherwise are already built-up (i.e. business parks).  Moderate price increases are forecasted.  The average cost for 100 m2 of land (usually purchased in 2.5-5.0 ha plots) 15 kilometers from the MKAD is $6,000-7,000; before the crisis, land was sold in plots larger than 5 hectares for at least $20,000 per m2.

Also: “Amount of transacted land on industrial market will rise to 300 hectares,” Commercial Real Estate, 22 June 2010. 26 July 2010  Analysts of Management Company “Absolute Management” predict that sales of lands located in the 30-kilometer zone from the MKAD could rise to 300 hectares this year. Before the crisis, 500 hectares were annually put up on the market; this number decreased to 100 during the crisis.

President names a head of Skolkovo

Meshcherskaya, Elizabeta. “President names a head of Skolkovo” (“Prezident vozglavil Skolkovo”), Chastnii Korrespondent, 19 June 2010. 15 July 2010

Report on Medvedev’s formation of the management company of Skolkovo.  It was also mentioned that in addition the preparatory legislation for Skolkovo’s creation, now going through the federal Duma, that plans have been made to formulate the participating investing companies’ rights to land nearer to September.

Industrial parks

Koshcheyev, Sergey. “Ravil Muratov: Why dirty Moscow? Why don’t you build here?” (“Ravil Muratov: Zachem zagryaznyat’ Moskvu, luchshe davayte stroit’ u nas”), BiznesOnline, 3 June 2010. 22 July 2010

Article discusses different regions’ systems of industrial parks: Moscow Oblast doesn’t invest a kopek in them, but leaves their construction up to investors; Leningradskaya and Kaluzhskaya Oblasts rent land with infrastructures; and Tatarstan offers ready-to-operate facilities.  This can serve to lessen concerns of entrepreneurs that new niches in markets will disappear before necessary capital is gathered to begin production: this way, the government takes on the obstacles of land registration and re-zoning, often a two-year process.  In Moscow, however, the returns on industrial parks in 2009 reached 5 trillion rubles.  Both the Republic of Tatarstan and Moscow Oblasts have programs for bargain mortgages on residential spaces in these parks.

GUZR calls for restructuring of permanent use

Panteleev, Aleksey.  “GUZR [Head administration of land resources] calls for restructuring of permanent use” (“GUZR prizyvaet pereoformit’ ‘bessrochku’”), Kommercheskie Vesti, 2 June 2010. 15 July 2010

Update on restructuring of permanent (perpetual) use lands: 30% of Omsk enterprises [mostly small industrial enterprises] hold lands under permanent use.  Adds that in Omskaya Oblast until January 1, 2012, enterprises using land on which they own facilities, equipment, etc. can buy-out the land at a rate of 2.5% of its Cadastral value.  After that date, fines of 20 to 100 thousands rubles can be imposed, though at the federal level, considerations are being made to tighten these measures.

Also: “Perpetual use coming to an end.” Russian Real Estate, 9 August 2010. 16 July 2010  On publication date, 80% of Omsk Oblast’s permanent (perpetual) users had been either been restructured as proprietors or renters, according to the GUZR of Omsk.

Field of dreams in a country of innovators

Ozerova, Marina. “Field of dreams in a country of innovators” (“Pole chudes v strane innovatorov”), Moskovskiy Komsomolets, 25366, 2 June 2010. 15 July 2010

Summary of legislation introduced to Duma by Medvedev regarding the management organization of Skolkovo.  The now state-owned lands of the new “technopolis” will be handed over into the ownership of a president-appointed “management company;” however, the company will not be allowed to sell the land, only rent it to participating investors.  These investors (tech giants like Google, Microsoft, Nokia, Siemens, etc.) are expected to receive huge tax breaks and which will not be expected to pay any taxes for their first ten years of operations if certain profit levels are not met.  These exemptions will also include exemptions from property and land taxes.

Diesel – with a plan

Binkov, Andrey and Vera Krasnova. “Dizel krupnym planom,” Ekspert 21 (706), 30 May 2010, 52-61. 24 June 2010

Highlights of the success of overhauls that OAO Avtodizel’ has made to its production and infrastructure during the economic crisis. The changes have not affected the company’s maximum production capabilities, according to Viktor Kadylkin, general director.  Apart from deep cuts to salaries and manpower, the factory has also moved a portion of its manufacturing plants to a freed-up location in Yaroslavl.  When added to the firm’s outsourcing of its transport services, decreased transport expenditures due to these changes have added 2 million rubles a month to the company’s live funds.  Further, a significant decrease of the land area occupied by production facilities was made possible through efficacious changes and modifications made to the factory’s internal organization: new conveyor systems requiring less space, along with more compact assembly-line technologies demanding less manpower, all based on the Toyota model, have been installed.  Kadylkin says these changes would only have been considered in a time of economic crisis. Decreased transportation losses enabled Avtodizel’ to lower the number of works in progress by 60% in 2009.

Changing land into electronic form

Gorelik, Olga. “Changing land into electronic form” (“Zemlyu perevodyat v elektronnii vid”), Ekspert Online, 21 May 2010. 1 July 2010

Information about and maps of land properties and regarding their ownership rights can now be obtained online at the Federal State Registration Services for Registrations, Cadastre, and Cartography (Rosreyester) website at (link shortened). Operating in 12 pilot regions since its start, and 22 since June, the register has received over 20,000 queries, the Ministry of Economic Development (Minekonomrazvitie) created the site at a cost of 20 million rubles with the goal of shortening and simplifying the procedures for obtaining such information.

Russian administration plans to nullify land category divisions

“Administration of Russia plans to introduce nullification of land category divisions” (“Pravitel’stvo Rossii planiruet provesti otmenu deleniya zemel’ na kategorii”), World Heritage Sites, 2 March 2010. 27 July 2010

Explication of new legislative reforms, which will most notably end land classifications (i.e. agricultural; urban; industrial; special reservations; forest reserves; water reserves; land reservoir).  The goal of the new law is to decrease the pressure of bureaucratic corruption in land transactions and rezoning processes.  The 52 items amending current legislation should go into action in 2011.  In place of the complicated system of land categories, a Ministry of Economic Development representative says, the structure of allocated use for land plots will be strengthened through renewed territorial planning and city zoning plans.  The law will also impose penal tax rates for enterprises sitting on unused state lands, which administrators hope will push these enterprises to either use or dispose of the lands, removing the burden of “blocked lands,” which otherwise would be well utilized.

Another aim of the legislation is to increase transparency of land transactions and accessibility: information about available plots will be posted on the land Cadastre’s new online database, and all land will be required to be sold at auction.  The distribution of permissions to build on land should be simplified, and will be overseen by the administration.

Helping developers

“Helping developers” (“Zastroyshchiku pomogli”), Ekspert Ural 6 (408), 15 February 2010. 1 July 2010

Report on the Ekaterinburg city Duma’s decreasing the rates on yearly taxes paid by developers owning land plots occupied by multi-story buildings, from 0.1% to 0.06% of the land’s Cadastral value. This will affect 108 privately-owned land plots in the city (the largest portion of which are held by development firm “Renova-Stroygrupp”), including many in the sizable Akademicheskii region (9,000 m2) under development now. This will free up vast amounts of money for many firms: taxes incurred by Akademicheskii developers will drop from 52 to 31 million rubles, for instance; small firms will benefit, too. Some are raising their voices against the “privileges” (e.g. special buy-out prices) being afforded to large developers, mistrusting Duma deputies’ claims that the Akademicheskii region is primarily being built for accessible, low-cost housing, or alternately, that it will catalyst greater economic growth in the region.

Note: Other various articles (since February) have reported the general success of the first Akademicheskii regions to open.