Moscow now outpacing New York and London in construction volumes
The last time Moscow experienced an outsized jump in real estate prices, rentals and housing starts was in 2003. International service industry conglomerates and oil companies such as BP and ExxonMobil helped the city live up to its nickname of the Third Rome. The market is poised for another boom, as the politics and economics stars are aligned once again for frontier investors with the capital to invest.
The Russian government is fully backing efforts to attract foreign investment in the country’s infrastructure, with a special eye on investors in the US. As Moscow’s mayor since 2010, Sergei Sobyanin has prioritized the construction of development in the downtown area, new transportation centers, industrial zone rehab, population mobility and Moscow River embankment projects. The overwhelming majority of this construction has been financed by private investment; only 11% of these projects were financed with city funds.
PriceWaterhouseCoopers estimates there is 1.74 square meters of new construction per capita in Moscow at the moment, putting the Russian capital in the top three cities in the world in terms of construction, because of its investments into the subway system. The period between 2011 and 2015 saw more than 34km of new subway built including the addition of 18 new metro stations. Ten new metro stations will be built per year starting in 2016, a feat rivaled only by Shanghai and Beijing in China.
The area known as the Moscow Rust Belt is also reshaping itself with more than 1.2mn square meters of commercial and residential real estate construction currently underway. Moscow is reaching out to new investors with a media campaign that includes adverts in well known international publications such as the Washington Post, to attract more foreign investment. In particular it is interested in attracting financing for the approximately 900km of roads that it wants to build by the year 2035.
Skipping the Bureaucracy
There is a revitalization of foreign interest in Russia that is being driven by the unprecedented reforms to regional level bureaucracy; foreign investors can literally invest in Moscow with nine web clicks, according to the chairwoman of the Moscow Investors Association, Lubov Tsvetkova. Russia has reintroduced itself to the world construction community as a willing partner, and the world has responded by making the country a partner in many new developments and regulatory matters.