Which objects under the city program are most beneficial to developers?

The opportunity to reduce costs for changing the type of permitted use of land for housing construction motivates capital developers to participate in the program to create places of employment. According to the city department of investment and industrial policy, more than 80 agreements on the creation of commercial, industrial and social facilities have already been signed with investors, and demand for the program from developers continues to grow. According to experts, in the coming years, the most in demand within the program will be office facilities, as well as industrial space in the light industrial format, the shortage of which is especially acute today in Moscow.

The volume of investments from developers under the program for creating job placements (MPT) more than doubled over the year, exceeding 1.2 trillion rubles. against 518 billion rubles. at the beginning of 2023, Kommersant was told in the Moscow Department of Investment and Industrial Policy (DIPP).

The program for creating job opportunities was launched in 2020; its goal is to stimulate the creation of new jobs in different areas of Moscow and, as a result, reduce the burden on the city center. Then residential real estate developers had the opportunity to reduce fees for changing the type of permitted use of land for residential construction when selling commercial, social or industrial facilities outside the Third Transport Ring.

“Any investor who builds housing in Moscow receives a significant burden in the form of a fairly high fee for changing the type of permitted use of the land. The MPT program allows you to reduce its size. Moreover, the more non-residential properties a developer builds where jobs will be created, the less he will pay for the construction of residential real estate,” explains Vladislav Ovchinsky, Minister of the Moscow Government, Head of the Department of Investment and Industrial Policy of Moscow.

Over four years, according to the department, Moscow authorities have concluded more than 80 agreements with investors on the construction of more than 3.8 million square meters. m of commercial and social real estate.

Growing demand

Today, the vast majority (about 60) of the facilities being built under the program are social infrastructure: kindergartens, schools, clinics, sports complexes, as well as multifunctional business and office complexes (38 buildings) and industrial facilities (14 projects). The Department of Investment and Industrial Policy of Moscow clarifies that in total, at least 147 objects will be built in the city under the “Places of Employment” program in the city. As Vladislav Ovchinsky adds, the most convenient and profitable sites for creating places of employment are determined by the Moscow authorities with the help of urban planning regulations.

At the same time, recently the interest of developers in the program has increased significantly against the backdrop of a strengthening policy towards import substitution and growing demand for industrial facilities from business, they say in DIPP.

Investors are increasingly investing in the creation of modern production facilities where businesses can locate quickly and without additional costs.

Thus, Capital Group, as one of the first developers participating in the city program to create employment opportunities, focused on the construction of technology parks, says Vladimir Galaktionov, Director of Legal Affairs and member of the board of Capital Group. In particular, the company’s portfolio now includes two production sites – in Krekshino and Alabushevo.

Sergei Pshenichnikov, Director for Commercial Real Estate Development at GC FSK, notes that the developer is implementing eight projects under the program, including social infrastructure facilities, an office center, and production sites, with a total investment of more than 17 billion rubles. According to Mr. Pshenichnikov, as a rule, developers build such facilities as part of integrated development projects for territories.

New workplaces

Initially, the program to create places of employment extended exclusively to the construction of industrial and office complexes. Already at the end of December 2021, hotels were included in it, and in the spring of 2022, facilities for providing comprehensive logistics services. Today, developers have the opportunity to receive benefits when constructing scientific and educational facilities, healthcare and social security, sports and culture, public catering, shopping centers and other multifunctional facilities, note the Moscow Department of Investment and Industrial Policy.

Since the main idea of ​​stimulating the construction of new places of employment is to reduce the level of commuting, it is important to create jobs both in new areas and in existing development areas, the department believes. The number of jobs that will be created under already concluded agreements currently exceeds 170 thousand.

“The program solves several problems at once, both from the point of view of the development business and from the point of view of the competent development of urban space. We receive tax benefits, and the city receives well-thought-out territories and new jobs,” says Mr. Pshenichnikov.

Vladimir Galaktionov adds that thanks to the program, new points of economic growth appear, which generate jobs. For example, industrial parks will allow tenants to locate and scale high-tech production, attract qualified personnel; specialists can work close to home thanks to the thoughtful location of such facilities.

Cost reduction

In conditions when payments for changing the type of permitted use of land (WRI) amount to significant amounts for developers in their already significant budgets, the program gives them a good tool to improve their financial models, says Dmitry, head of land assets and development at IBC Real Estate Shelkovsky.

According to Sergei Pshenichnikov’s calculations, the program allows developers to reduce up to 95% of the costs of replacing VRI.

Vladimir Galaktionov reminds that the amount of the benefit is set individually for each project, and by creating new places of employment, developers not only optimize costs in terms of changes in fees for VRI, but also replenish the portfolio with commercially profitable projects from other areas of real estate.

“When considering a potential site, we take into account not only the level of shortage of jobs in the location, which allows us to determine the amount of benefits for residential projects, but also directly assess the commercial attractiveness of the future facility. Thus, industrial complexes not only allow you to get the highest benefit coefficient, but are also extremely in demand among metropolitan companies that are ready to locate their own production there,” notes Vladimir Galaktionov.

Any developer taking part in this program, in addition to the tax exemption, expects additional profit from the project he is implementing, be it an office, a shopping center, a cultural or sports facility, agrees Dmitry Shelkovsky. According to him, some companies, for example PIK, have already created a separate direction, which is focused on the construction of relevant facilities. Real estate market players are also considering collaboration mechanisms: for some developers it is easier to build partnerships with a professional who has such a product in their portfolio, says Mr. Shelkovsky.

In addition, as noted in DIPP, after the adoption of a number of innovations, developers who build housing as part of integrated development projects can also apply for benefits. Also, from 2024, the location coefficient of the place where labor will be used in the construction of cultural facilities has increased from 0.3 to 0.8, which will allow developers to receive significant benefits in the construction of theaters, museums, philharmonic societies, cinemas, art galleries, libraries, cultural centers, exhibitions and concerts halls, planetariums and create new points of attraction in residential areas, the department expects.

Vacant properties

According to experts, in the coming years the most popular areas of the MPT program will be logistics and office facilities. Director of the land projects department of NF Group Maxim Chernyadyev says that warehouse real estate is one of the most attractive segments for investment, taking into account the increased demand and the minimum amount of vacant space.

According to NF Group, at the end of 2023, the share of free space in high-quality warehouse facilities in the Moscow region fell below 0.1%, which led to the highest rental rates in the history of observations.

In addition, Maxim Chernyadyev points to the growing market interest in the light industrial format. According to the expert, more than half of such areas are filled during the construction stage, and the existing supply is almost 100% contracted. Mr. Galaktionov confirms that interest in modern production facilities is only growing against the backdrop of increasing business activity in the country. According to him, Capital Group plans to build new facilities as part of the MPT program, including, for example, an office complex.

Maxim Chernyadyev points out the lack of quality office space in Moscow. According to NF Group, at the end of 2023, the vacancy level in the office real estate market was 8.6%. IBC Real Estate predicts that by the end of 2024 the vacancy level in the warehouse real estate market will be 0.3% versus 0.5% at the beginning of the year, and for office real estate – 7.5% versus 7.7%.

In general, the program for creating places of employment can lead to an increase in the supply of high-quality commercial and industrial facilities, Mr. Chernyadyev believes. It is already noticeable today that, thanks to the program, the Moscow commercial real estate market is being transformed: office buildings are increasingly appearing in locations that previously did not qualify for this functionality, adds Dmitry Shelkovsky.

Alina Savitskaya