Moscow's Deindustrialization
|
 |
 16.09.2011 |
The Glavstroy Corporation, owned by OLeg Deripaska, is reviving a project to build its own industrial zones. In late August, the Corporation's management decided to relocate the production areas of its Moscow enterprises outside the Moscow Ring Road, and to build 1.5 million sqm of residential and commercial property on this territory.
This will significantly strengthen the position of the corporation in the capital city's development market Experts say that the company's plans are reasonable, though they warn of the need to be very selective about design solutions.
The development business in Moscow will soon have a new large player entering its market. The Glavstroy Corporation intends to relocate its production capacities outside the city, and to build residential apartments and offices in their place.
The corporation owns 13 enterprises that manufacture concrete products, dry mixes, construction chemicals and equipment, as well as a woodworking plant. Mr. Deripaska plans to start developing industrial areas located in three zones - a 16-ha area on Beregovoy Lane, 7.3-ha area on Chernyakhovsky Street and 22.3-ha area on Ryazansky Avenue. The production capacity will first be transferred from these sites to other sites owned by Glavstroy in Moscow, and laterthey will be moved into the Moscow Oblast. Glavstroy will build, respectively, 200,000 sqm, 125,000 sqm and 375,000 sqm of real estate properties in each of the zones. Glavstroy's investment portfolio in Moscow currently includes 60,000 sqm of real estate. According to Igor Yevtushevsky, deputy general director of Glavstroy Management, the total investment in active projects comes to about 30 billion rubles. The withdrawal of industrial areas out of Moscow itself will take 10-15 years, and require about 100 billion rubles in investments.
The announced volume of construction is rather significant - for reference, Moscow authorities intend to build 2.5 million sqm annually in the nearest future.
Zones
According to the Department of Economic Policy and Development of the City of Moscow, there are 209 industrial areas in the capital, which occupy 7,700 ha. There has been a lot of talk aboutthe need to move the industrial enterprises outside the city's boundaries. In fact, this deindustrialization has partially taken place already. For instance, let us recall the candy factory Red October on Bersenevskaya Embankment -bars and restaurants are operating there now. Then there is the Red Rose on Timur Frunze Street - the garment factory has been turned into a business center, the winery on Kurskaya Street - given up for the needs of contemporary art, and in the Danilovskaya Manufaktura Lofts you will find offices and residential apartments today.
Denis Kolokolnikov, general manager of the RRG Consulting Company, notes that the idea of removing industrial areas and construction of commercial and residential real estate in their place has been going on, in one form or another, for more than ten years.
Thus, the Glavstroy decision is another step in this process. "There is no doubt that it is useful not only in terms of the real estate market but also in the context of Moscow's urban development future. The industrial areas are often artificial barriers that isolate clusters and even mega-clusters. The reorganization of these areas and the construction of commercialand residential real estate will ensure the development of transport and road infrastructure. This should improve overall communications between districts. Moscow itself is no longer an industrial city," says the expert.
Moskomarkhitektura will be developing design projects for 42 industrial areas in the nearest future. Some of them will retain their current functionality, while others will be restructured for a different function.
Development projects have already been submitted to the city planning commission. However, experts do not rule out that Glavstroy will have to adjust its plans - the current 700,000 sqm of real estate property may decrease, because of changes in regulations on housing density. According to Polina Medelyanovskaya, executive director at Kalinka Realty, it is not clear at the moment what the developer's calculations are based on. "As we have learned from developers, today city officials are not approving projects with high-density development or adjusting it downwards. If Glavstroy plans have been developed without taking this factor into consideration, they will then, inevitably, have to be revised," she says.
In case the parameters are not sweep-ingly adjusted, Glavstroy plans are a serious bid for entry into the capital city's development market in the capacity of one of the most powerful players.
Timeliness
Market experts say that the current statements of Glavstroy are reviving the company's four-year-old plans. According to Polina Medelyanovskaya, Glavstroy was planning to redevelop its Moscow territories even before the recession. "In 2007, Kalinka Realty and Glavstroy signed an agreement on developing a building concept for two territories -on Beregovoy Lane and in Govorovo - a section of Borovskoe highway just outside the Moscow Ring Road. The site in Govorovo was sold to the company during the recession. As for Beregovoy Lane, they planned to build residential real estate of the high 'Class B' there. On the basis of the agreement to develop a concept, we addressed a number of architectural bureaus, both local and foreign, and asked them to develop the design project. The project of a UK company, PRP, won the contest. Later, during the recession, Glavstroy stopped all the work on this project. I think now they will take those project ideas as a basis, and update them to reflect the current situation and the current vision of the market," says Ms. Medelyanovskaya.
According to the analysts, the Glavstroy decision is rather well-balanced. According to Denis Kolokolnikov, despite the fact that the announced volume is quite large, we cannot say that it will "blow" the market. "First and foremost this will be residential real estate in the affordable segment. Moreover, all areas will gradually enter the market and will be gradually absorbed under the progressive economic development" says Mr. Kolokolnikov.
Evelina Pavlovskaya, vice president of consulting at GVA Sawyer, agrees with him, and suggests that it is never too late to construct residential buildings in Moscow. Moscow is still in need of residential real estate, but it should be well-placed on the territory, moved into according to plan, taking into account the transport and other infrastructure.
Even better, these sites are quite good, though she questions the timeliness of their development. "The territories have been predominantly set aside for housing. Besides this, all of them are located in rather difficult places from transportation perspectives (we are talking here about territories that are planned for development in the first five years). For example, the construction of 240,000 sqm on Beregovoy Lane, taking into account the fact that the Fourth Ring Road will not be constructed, will cause additional congestion in the section Bol. Filevskaya Street - Shmitovsky Avenue - Third Ring Road, which is over congested near the Moscow-City anyway," she says.
Positioning
Glavstroy currently plans to build both residential and commercial real estate, yet residential properties will occupy most of the space, "If we talk about these sites (16 ha on Beregovoy Lane, 7.3 ha on Chernyakhovsky Street, 22.3 ha on Ryazansky Avenue), all of them are perfectly suited for the construction of residential buildings. Ryazansky Avenue is in the economy class pigeonhole, but it is in high demand. Higher classes can be built in the airport region and near Bol. Filevskaya Street. Although the economy class housing will provide good results there as well. Commercial real estate may also be built within an integrated development plan of the district. Therefore, 70-80% of the total space is likely to be residential real estate," says Denis Kolokolnikov. According to Mr. Kolokolnikov, the demand for residential properties, at the moment, exceeds that for office space, since a shortage of office spaces is observed only in the center. The total of 1.5 million 'Class A' offices are empty in Moscow today.
As to Beregovoy Lane, Polina Medelyanovskaya suggests that on the one hand the place is promising, since it is adjacent to Moscow-City, but on the other hand, a number of industrial areas are still located in the neighborhood, where other developers are going to implement their projects. Thus Donstroy plans to develop Shelepikhinskaya Embankment, with Central Properties and MR-Group also showing interest in this area. All this makes it necessary for Glavstroy to position the property it is going to build as precisely as possible.
Note that many developers, even those who have always positioned themselves as developers of commercial real estate, are reorienting themselves to residential property. Forexample,in late August,the Ekoofis Group of Companies declared that it was going to build about 1 million sqm of residential housing. The MR Group made a similar decision a little bit earlier, and it is possible that Promsvyaznedvizhimost will follow them. The Ekoofis Group is going to redevelop the 24,000-sqm Derbenevsky Business Park near the Paveletskaya Subway Station. The company plans to build a business class residential quarter as large as 150,000 sqm in its place within the next few years. The company also plans to redevelop other territories owned by the Group - on Derbenevskaya and Polyarnaya Streets, as well as on Otkrytoe Highway. The total volume of construction on these sites will be about 800,000 sqm.
Commercial Real Estate
<< previous
back to the news archive
|
