BRICKS & MORTAR: Moscow's future - a wish list

By bne IntelliNews November 23, 2010

Tim Gosling in Moscow -

One of the first orders from Moscow's new mayor, Sergei Sobyanin, when he assumed office in November was for a revamp of the development plan for the city to 2025. What do the people who will actually be implementing the plan - architects, developers and real estate consultants - hope to see in this document when it lands on the mayor's desk in March?

It's no surprise in a city with some of the worst traffic jams in the world that transport is top of the list for most. With President Dmitry Medvedev having directed the new mayor to relieve commuters' misery, Sobyanin has already called for more roads. According to Maxim Perov, vice-president of the Union of Russian Architects, he should be aiming to practically double the volume of tarmac. "At the moment, no more than 8% of Moscow's land is used for roads, whilst the European average is around 15%," Perov says.

Clearing the multitude of parked cars that block so many traffic lanes is also a popular suggestion, although there's a vicious circle at play. With few car parks in the city, the authorities treat drivers who litter the roads and pavements with their vehicles leniently. At the same time, private investment to build parking facilities is unlikely to arrive as long as drivers face little motivation to pay to park. That's why commentators say that the city or federal government must make the running at first by building public car parks. Meanwhile, Petr Isaev of developer Capital Group says that permitting should make new projects pull their weight. "There's not enough control at the moment. We aim for the European average of one parking space for every 50-60 [square metres], but the average in Moscow is around one space for every 100 sqm."

However, as Tim Millard, head of real estate consultants Cushman and Wakefield in Russia, points out, "European cities are now restricting the amount of parking attached to new developments in an attempt to push people onto public transport."

This is a prime example of an assertion from Yuri Moiseev, professor of city planning at the Moscow Institute of Architecture, that due to different levels of political and social development, the plan can't just import models from one city to another. That's why few commentators believe a congestion charge restricting access to the city centre would work in the Russian capital. For a start, Moscow's ageing public transport is already under great strain. Perov points out that the metro needs not just large-scale expansion, but also an upgrade from the "80-year-old technology" that it runs on to make it more efficient.

Millard, meanwhile, points out that there's a huge volume of surface railway that could contribute a great deal more to reducing the gridlock on the roads.

Bringing the mountain to Mohammed

However, whilst getting more people into the city centre more easily is a vital goal in the short term, commentators say that in the longer run the city should be trying to decentralize. Perov claims that "90% of activity in Moscow takes place on just 10% of its territory."

The mayor has already said he wants to ban major new commercial developments inside the Third Ring Road. Millard warns that a total ban would be "the quickest route to damage Moscow's competitiveness. Leases would become even more expensive, and it would derail ambitions such as making Moscow an international financial centre."

However, everyone agrees that large business hubs should be established towards the edges of the city, as is the model throughout Europe. Tigran Hovhannisyan, a real estate analyst at Uralsib Financial, suggests there's "plenty of older buildings that could be renovated and converted to satisfy demand for office in the centre."

"Both distant business hubs and renovation projects would help cut costs and therefore leasing costs," points out Isaev. "But there would be added bonuses. It would help raise the aesthetics of the centre, and also help stimulate the investment market - more product and smaller projects would help bring international investment funds back."

A bigger challenge for the plan is to encourage more affordable, higher-quality residential between the Third Ring Road and MKAD ring road that marks the city boundary. Currently, this vast realm is populated by Soviet-era schemes, but as Hovhannisyan points out, many people avoid living there due to the poor quality not only of the housing stock, but the retail and social infrastructure also. "You can't overestimate the importance of affordable, quality housing," says Millard. "If you want the economy to grow, then you need a pool of affordable labour that can get into work in the centre."

At the same time, he notes, it would also help with traffic issues, as people would move into the city from the surrounding Moscow Region, and could therefore use public transport instead of their cars to get to work.

Hovhannisyan says that a better property tax system could help persuade the

city to zone more land for lower-cost residential schemes in the plan. A

cadastre that values properties according to market rates is being built

(the current one is based on cost rates), and that will boost city revenues, possibly by 2013. Meanwhile, Finance Minister Alexei Kudrin proposed raising property taxes and cutting exemptions on November 19. With property City Hall's major source of income, higher taxes will allow it to offer cheaper land to developers.

It's not just the city itself that needs decentralizing though, suggests Moiseev. Planning authorities also need structural reform to implement and police zoning and permitting. "There's not enough power given to planners at the local level," he claims - something which has also played into the antagonistic relationship between Moscow City and the surrounding Moscow Region, from where millions commute into the city every day.

Every single commentator highlights improving the relationship - which has often been soured by bickering over real estate under previous Moscow mayor Yuri Luzhkov - as key to successfully developing the Russian capital, and also its surroundings. It's a two-way road.

However, with Sobyanin now in City Hall, it's hoped that the two sides can start to cooperate. They are making efforts now, having already held official meetings since Sobyanin took office, "but it's disappointing that they haven't for the last few years," says Isaev.

Meanwhile, both Perov and Moiseev complain that the new development plan misses a fundamental base. "I think we need to take a step back," says Perov. "We lack a full set of development goals; we need to ask what is the future of Moscow. At the moment, the only guiding principle is to maximize revenue from each square metre - quality of life, or environmental concerns are not really taken into account."

At the same time, the new development plan can't direct Moscow's future on its own. As each commentator mentions at some point, if corruption continues to allow developers to sidestep zoning or drains funds for public schemes, then there'll be little progress, whatever ends up on Sobyanin's desk. As Moiseev points out, "you need local authorities to enforce any plan that is developed."

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