“The money ran out – it’s time to start thinking”

02.03.2014

Speaker says at the financial forum on Commercial Property

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At the forum organized by the information-analytical portal Arendator.ru the people mostly talked about investing and how to attract investors, especially foreign ones. People with money primarily need understandable terms of cooperation and the ability to calculate the return on their project investments.

What generally can attract investors to Russia? According to the managing partner of Capital Global Partners Svetlana Kara, “the positive point is that our market is at that stage which allows investors to earn as much money as it is impossible to do at the Western markets”.

Agency for investors

In order to simplify the work of new foreign players on the Russian market special tools are created. For example, the National Investment Agency “Invest in Russia”, which becomes a kind of “one-stop shop for investors”. The Agency was presented by its Chief Executive Officer Yury Voicehovsky.

Such agencies first appeared at the regional level and now the new agency is created at the Federal level in order to bring together all the regional associations. One of the founders of the Agency is the Ministry of the Regional Development of the Russian Federation.

At present the site of the Agency is already in operation. It is planned to launch “the portal where regions will see applications of investors, their interest in investing in certain sectors and regions”, – informed Yury Voicehovsky.

The working group set up jointly with the Ministry of the Regional Development starts to involve the state banks in financing specific projects on a priority basis. Last year this funding amounted to 19 billion rubles. Among the interesting projects Yury Voicehovsky mentioned the creation of new capacities in the regions for the production of building materials, because “one of the important tasks is a reduction of construction costs”. Such projects will be supported in the first place. “It’s exciting for us, and our foreign partners with whom we are now actively working”, – said the speaker.

Tatarstan Investment Development Agency was created in 2011, and the first industrial park – in 2004.

Now, according to the Head of the Investment Promotion Agency of the Republic of Tatarstan Linar Yakupov , “active industrial sites are constructed at the municipal level, where foreign investors are invited to in order to build premises for further giving for rent to small and medium businesses”.

“Tatarstan is one of the most advanced regions in terms of industrialization.  During the Second World War there were many existing productions transferred and new productions created and afterwards they had been maintained to become a key factor for economic development. Now private investment started coming here”- said Linar Yakupov.

It is easier to raise capital in the special economic zones. For example, in 2012 60 % of the investments were raised in the SEZ “Alabuga”. This trend continues today.

The so-called “human factor” is also important. “We use persuasion “tools”, “tools” of personal guaranties – that we guarantee to the investor in case something does not work, we will respond in a certain way” – said the speaker.

On the outskirts of Moscow

The Moscow Region has its own problems and prospects.

“There is a problem of outflow of manpower in Moscow that deprives the area of tax revenues. We need to create jobs and infrastructure. Just to build offices is not the solution”,- said the Minister of Investment and Innovation of Moscow Region Denis Butsayev.

Moscow Region is a leader in terms of commercial real estate, its construction, as well as in the volume of housing constructed. One of the largest financial projects is implemented with Sberbank. In particular, on the day of this Forum it was scheduled to sign an agreement on the allocation of 40 billion rubles for housing projects.

Number of investment projects launched in the past six months is several times bigger in comparison to what was done in the past three years. Many successful investments are in warehousing. Although it is not such a lucrative market as residential real estate, but already at the construction phase occupancy of class A warehouses is close to 100%.

“But we want to see an equal partnership with investors and the latter should take not only profitable, but also important objects for the region”, – said the speaker.

According to Andrey Karasev (Sberbank), the main difficulty for the lender is the legislattion. The bank must have a clear understanding of the game rules. The lender wants to be sure of the performance of obligations by the municipality. Otherwise, it would increase the risk and reduces the possibility of financing projects.

Particular laws on governing public-private partnership do work. For example, St. Petersburg has a “local law”, which facilitated start of several projects. Similar laws have been adopted at the local level in most subjects of the Russian Federation, but many questions regarding work under PPP have not yet been clarified.

Perhaps the law on public-private partnership will appear at the Federal level. Now such opportunity is being discussed.

One more problem mentioned by Andrey Karasev was “lack of projects properly structured”.

“Often they bring “raw” projects, and we lose time together with initiators and authorities in order to bring the project to a proper format. Sberbank is ready to act as a mediator who helps initiators to structure projects properly so that to understand in advance what we can fund”, – he said.

What do investors want?

In general, investment in commercial real estate in Russia amounted to $ 8 billion and only 700 million of which were received by the regions, the rest was “settled” in Moscow.

What are the prospects?

“We want to attract new players to the Russian market, we see interest in the Russian commercial real estate from their side. Currently we are talking to very large companies in Asia-Pacific region, trying to reach an agreement that they structure their transactions through our foundation, “- said Svetlana Kara.

According to the observations of the expert, before the crisis Europe has been more active than it is now. Currently Europeans are skeptical of the Russian market, but “we see the positive dynamics, we see that they are considering investment in Russia in the near future”.

Of course, investors are waiting for large and long-term profits. But it is equally important to give them the opportunity to analyze the appropriateness of these investments in advance, to help them understand what costs they will have to bear and why, when they will get the “pay off” as well as estimate the dates of putting projects into operation.