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13.03.2013 Developers formulated new approaches to public-private partnerships at the MIPIM-2013

The Developer's Lunch “Government incentives to attract investment into the real estate development sector”, organized by the Ministry of Regional Development of the RF, the daily business newspaper RBC Daily and the KORTROS GCwas held today as part of the MIPIM 2013.


More than 80 real estate market experts, including representatives of government agencies, heads of real estate development, construction, investment and financial companies, as well as leading consultants and journalists discussed the most pressing issues that the industry faces today. Despite the relaxed atmosphere, set by the format of the event, the participants raised a number of controversial issues that impede the development of the Russian real estate market. In his welcoming address, the meeting moderator Veniamin Golubitsky (President of the KORTROS GC) directed the participants to a serious, detailed discussion – the proof of which was the introduction of en efficient pool of presenters.

The tone of the discussion was setby the presentations, delivered by Vladimir Tokarev (Deputy Minister of Regional Development of the RF, Acting Director of the Federal Agency for Construction, Housing and Communal Services), Elena Nikolayeva (First Deputy Chair of the Russian State Duma Committee for Housing Policy and Communal Services), Sergey Kuznetsov (Chief Architect of Moscow), Leonid Kazinets (Chairman of the Board of Directors of Barkley Corporation), Georgiy Dzagurov (General Director of Penny Lane Realty), Olga Arkhangelskaya (Head of Real Estate Consulting at Ernst & Young), and Andrey Monosov (General Director of Monarch Development). They not only expressed their views on market prospects, but also made recommendations to address the barriers that exist today in the implementation of complex development projects.

In an emotional speech, Leonid Kazinets said that if the government wants to increase the pace of housing construction in the country, it must “have the will to define a policyregarding market participants, and as soon as the political line becomes voiced, this should be implemented.” This statement was supported by Elena Nikolayeva, whospoke about the measures, taken by the Governmentto solve the problem: “The 600th Presidential Decree has been released, it provided for the creation of the President's Council for the Development of Housing Policy. We understand that a comprehensive development of economy-class housing – and if we talk about government support, then we talk about economy-class housing and about the rental housing sector – is possible only withlegislative support.”The deputy does not share the opinion of participants, that Russia has no available construction sites, presenting the statistics of built-up areas –“at the moment only 1% of the country’s territory is built up”.To which her opponents, in particular, Olga Arkhangelskaya noted that the main problem is not the lack of land, but a lack of sites with developed infrastructure.

There were some concernsabout the growing influence of the state on the development of the housing market: “In Moscow,ofthe 2 millionsquare meterscommissioned last year, 500,000 areby state order. Another third was built by state-owned banks. This means that theMoscow market is virtually nationalized by the state and state-owned banks, and in the future, plans of the state will only increase,” said the head of Barkley Corporation.

This topic was continued by Veniamin Golubitsky, who explained what in reality happens to the business and end users,in case of such an active involvement of the state. He said: “Only projects, implemented in partnerships between business and government, giving the developer a leading hand, can be successful. It is impossible to implement such big projects as the Olympics in Sochi and the Football (Soccer) World Cup, based only on the state-owned banks and other state agencies. All the same, the state will have to seek private investments. The state is responsible for the rules and support measures.The PPP is a business project, and it has to be implemented bybusiness, by the developer, to avoid dragging the project into afinancial hole later on.

Georgiy Dzagurov told the attendees many interesting “stories”aboutlives of officials and developers, most of which were connected with Sochi. In particular, he said that in Russia: “The PPP is formed at the level of real estate development, and there is positive growth there, but Sochi is a resort, you cannot sell square meters there. There you need to sell a way of life, and for this it is necessary to organize the PPP in the field of leisure.” Concluding his speech, the general director of Penny Lane Realty wished that KORTROS would “succeed in implementing its resort complex in the Imereti lowland,because no one knows what can happen to construction in Imereti without a PPP.”

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