Developers were given a discount – Newspaper Kommersant No. 201 (7402) of 10/28/2022

Against the background of the crisis, rising costs and falling profitability of the development business, the Moscow authorities decided to give relief to the industry. Now the capital’s housing developers, who, in order to receive benefits for changing the type of permitted use (CRI) of land, are building commercial real estate with partners, can reduce their stake in such joint ventures from 75% to 51%. Thus, the authorities expect to support the demand for the purchase of a building site, which stimulates the process of changing the VRI to replenish the city budget, experts do not exclude.

Kommersant got acquainted with the Decree of the Moscow Government No. 2274-PP of October 18, signed by Moscow Mayor Sergei Sobyanin. In one of the paragraphs of the document, it is written that the share of housing developers in joint investment projects with other companies to create new jobs beyond the Third Transport Ring (TTK) is reduced from 75% to 51%. The Department of Investment and Industrial Policy (DIPP) of Moscow told Kommersant that the mayor’s office is in constant dialogue with developers and, based on feedback, improves conditions.

In November 2020, the mayor’s office increased the fee for changing the type of permitted land use, which makes it possible to transfer land plots for other purposes for housing construction, by two to eight times, depending on the districts of Moscow and taking into account the cadastral value of the sites. The authorities raised fees after the imbalance in favor of housing formed for the TTC with a shortage of places to apply work. At the same time, the mayor’s office promised developers benefits when changing VRI plots in case of construction in partnership with other companies of commercial real estate and infrastructure facilities, where, according to the plan of the mayor’s office, new jobs are created.

A number of developers actively use the preference. Thus, Capital Group is building technoparks within Moscow in exchange for land benefits as part of the Badaevsky project in the center of Moscow. And since 2020, Pioneer Group of Companies has been selling the Ostankino Business Park business center in exchange for benefits for VRI at the site near Paveletsky Station, where the developer is building housing. According to DIPP, the mayor’s office has already signed 25 similar agreements with investors, providing for the construction of 53 infrastructure facilities.

The intention of the Moscow City Hall amendments is to allow the developer to involve other companies in the construction, explains Vyacheslav Klimov, a lawyer at the Asterisk Law Office.

Not all housing developers want to participate in the construction of commercial facilities on their own and are looking for partners to do this. So, in May 2021, Samolet planned to invest in the construction of a technopark in Zelenograd with Motek-Ts, and Kommersant’s sources also talked about the demand for similar projects from Akvilon and Sminex (see “Kommersant” dated May 28, 2021). Samolet and Motek-Ts did not comment on whether the companies agreed on cooperation. According to the same principle, the interlocutors of Kommersant do not exclude, the office developer Stone Hedge at the beginning of 2022 became a partner of the PIK group in the project for the construction of a business center for 140 thousand square meters. m in the southwest of Moscow.

A decrease in the share of participation of housing developers in joint projects will simplify the issues of structuring transactions between developers and land owners, says Nikolai Goryunov, director of the capital markets and investments department at IBC Real Estate. In addition, Vladislav Preobrazhensky, executive director of the Moscow Investors Club, adds that the new rules will allow site owners to attract a large number of partners to their development. This will significantly increase the number of joint projects between developers of the residential and non-residential sector in the next couple of years, agrees Sergey Pshenichnikov, director of commercial real estate development at FGC Group of Companies.

The new rules for obtaining benefits for the transfer of land, according to the chairman of the board of directors of Best Novostroy, Irina Dobrokhotova, look like a “quite natural discount for developers” against the background of the crisis, rising costs and falling profitability of the development business. The expert does not rule out that the changes are also designed to replenish the city budget: they imply maintaining demand for building sites and stimulating the non-stop process of changing the VRI.

Daria Andrianova