Tag Archives: land transactions

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 http://www.1rre.ru/news/doc/40071/.

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 http://www.cre.ru/rus/archivnews/0/0/14568/.  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.

Russians buy up lands, look to Kashir

“Russians buy up lands, look to Kashir” (“Rossiyane skupayut zemli po Kashirskomu napravleniyu”). Finam.info, 1 July 2009.  22 July 2010 http://finam.info/news/article2028000001/default.asp.

Update on land market demand structure.  Pre-crisis levels of speculation have dropped off, especially by manufacturers, retailers, logistical operations, developers, etc., which now prefer the system of renting built-to-suit land plots.  From 2008 to 2009, a decrease (5-10 ha to 3-5 ha) in the average and median size of land plots sought by individuals has been observed, which can be explained by an increase in small-scale private projects, and the aforementioned decrease in speculation.

Moscow fiddles with its land

Stupin, Ilya. “Moscow fiddles with its land” (“Moskva khimichit s zemlëy”), Ekspert 25, 29 June 2009, 47. 28 June 2010 http://dlib.eastview.com.ezproxy.middlebury.edu/browse/doc/20287329.

Announcement of a new state land asset company, “Moszemsintez,” and reporting on initial transactions.  Moscow vice-mayor Aleksandr Ryabinin will head the company, formed in order to “manage building projects, mixing the functions of a land bank and of developers, including attracting loans for land assets and real-estate to carry out the company’s goals.”  A few dozen acres in southwest Moscow may be transferred to “Moszemsintez” from Moscow-administration-run OAO “Stroitel’no-sberegatel’naya kassa.”  The lands of jewelry factory “Krasnaya Presnya,” bought out by the city, will now be used as a residential area for resettled residents of Kamushka near Moscow City.  Developers are wary of the new organization, as its role in seizures has yet to be defined.

Land seized from Ekaterinburg developers

“Land seized from Ekaterinburg developers,” (“U ekaterinburgskikh zastroyschikov otobrali zemlyu”), Ekspert Ural 26 (382), 6 June 2009. 1 July 2010 http://www.expert.ru/printissues/ural/2009/26/news_nash_dom/.

Report on ZAO Nash Dom losing two land plots that Sverdlovskii arbitration courts ruled had been improperly divided up by the city administration.  The land, nearly 42,000 m2 now returned to the city, was transferred in spring of 2007 by decision of the Ekaterinburg mayor; the courts noted that by law, after October 1, 2005, transfer of land was only legal through an auction.  Although the Land Code does provide that lands included in contracts drawn-up before the 2005 cut-off could be transferred no later than March 1, 2007, since the actual lease agreement had been signed neither by Nash Dom nor by the city, the agreement made by both parties in 2005 did not hold up against the general prosecutor.

Nash Dom must now return the 79 million rubles to investors in the projects planned for the land’s development, as well as face the lost 130 million rubles already spent in the preparation of the land.  Representatives of the company say they will file for compensation of these monies if the lands are returned to the city.  In Ekaterinburg, there are 200 other property transactions that could be disputed by the general prosecutor in the same way; these are the seventh/eighth substantial plots seized as such.

Profit spot: Land races

Terent’yev, Ilya. “Profitable spot: Land races” (“Dokhodnoe mesto: zemel’nye gonki”), Vedomosti 199 (1973), 22 October 2007.  23 July 2010 http://www.vedomosti.ru/newspaper/article.shtml?2007/10/22/134777.

Informative cataloguing of recent changes to the land market of the region up to 30 kilometers outside the Moscow ring road (MKAD), as a need for infrastructure to support growing numbers of suburban dwellers attracts commercial and industrial land buyers.

In the demand structure of the Moscow suburban land market, pre-crisis buying-up of land by speculators for cottage (individual house) construction has been replaced with developers and investors buying land zoned for industrial use, intending to launch manufacturing and building infrastructure; large retail firms and foreign logistic operators are especially active.  Since the completion of new residential complexes and houses, prices on industrially-zoned lands have gone up in anticipation of developers’ seizing on the opportunity to cater to new suburban residents: 50 kilometers from the MKAD, industry land costs $9000 per 100m2, and 10 kilometers from the MKAD, it can be $30,000 to $35,000 per 100m2.  These prices seem to scare foreign companies the least, as they often invest in these land with long-term plans in mind.  Competition among supermarkets and commercial chains (Auchan, Perekrëstok, IKEA, etc.) is expected to increase.

Side note: French chain Auchan purchases the land used under its supermarkets.  Although standard Auchan stores are 12,000-14,000 m2, the most recently opened Russian store in Petersburg was 9,000.  In Petersburg, Auchon representatives say the opening of new branches is in question due to the lack of desirable land available for purchase.  Additionally, the company has begun to experiment with different formats for new garden and bargain supermarket chains across Russia, the sizes of which range from 3,000 to 5,000-7,000 m2 (see http://www.bn.ru/articles/2009/10/14/49745.html and http://realty.lenta.ru/news/2009/12/11/raduga/).

Administration has little reason to block the increased purchases of land, as the population increase in the Moscow suburbs strains financial resources on the region budget for developing infrastructure.  However, difficulties remain in the process of land acquisition.  In the opinion of one commercial real estate specialist, those companies that have already successfully bought land in the region have less difficulty in obtaining more land for their enterprises than others; they have the necessary experience, and presumably, the capital and credit, to purchase non-agricultural land and to apply for the land’s rezoning as industrial land, taking on the risk that this back-door purchase strategy might not work.  However, forecasters speculate that landlords will next year see and fill the empty hole in the supply-side of the market. Accordingly, it seems administration will be less inclined to fulfill rezoning requests of this sort, and that prices will continue to grow.  Swiss cosmetics company Oriflame decided to buy a 40-hectare plot in an under-construction industrial park for 175 million euro, though investors expect a quick profit turnover once the factory begins work in 2013 (http://rus.ruvr.ru/2010/02/27/4878971.html).

“Many proprietors simply hold back their land, waiting until it becomes more expensive (i.e. private landowners holding property rights to 5-10 plots in the most in-demand areas of Moscow Oblast).  This way, a tacit agreement about the regulation of the market is in effect: a limited quantity of land goes up for sale in order to not saturate the market and to preserve the deficit of liquid land.”  In some cases, it is necessary to be personal acquaintances with sellers: “Sales [in these regions] carry a political character.”

Also: “Industrial lands towards Kiev Highway get expensive,” Arendator.ru: Commercial Real-Estate, 23 April 2008.  26 July 2010 http://www.arendator.ru/articles/1/art/21122/.  The 30-40% growth rate of land prices along the Kiev Highway outside of Moscow went up to 58% between 2007 and 2008.

Note: This falling of prices is an interesting fulfillment of a favor, with which the RSPP came to Medvedev in 2005, asking to lower prices for industrial land (Kommersant, 46.3130, http://www.kommersant.ru/doc-y.aspx?DocsID=555248).  It is conceivable that the barriers to land purchases (i.e. “political character,” etc.) are now what should be dealt with.

The Surveyor

Belykh, Anton.  “The Surveyor” (“Zemlemer”), Biznes-Zhurnal 7, 10 April 2007. 15 July 2010 http://www.business-magazine.ru/trends/government/pub282369.

Survey of Moscow land reform.  Article discusses the unwillingness of the Moscow bureaucracy to let go of land ownership, despite the April 2006 passage of No 431-PP “On the transfer of land plots in the city of Moscow to private ownership,” which was aimed at bringing Moscow land legislation and procedures in line with the federal Land Code.  More precisely, it was to change what had been, for all intents and purposes, a non-existent procedure for land privatization into its first existence.  For the law firm Vegas Lex, despite the significant number of land buy-out applications filed with the firm in the first nine months of the new law being in effect, no more than 10 privatization transactions have been successful.  Oleg Ryzhkov and his officers promise that the number of unsuccessful privatizations will soon start to come down.  In addition the bureaucracy’s grasping onto its land rights as a power control, the article also points out that lease payments from land tenants (mostly developers) generate more revenue than would land taxes (i.e., than they did in 2007 at publication).