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.