From Theory to Practice

The first capital developer to sign an agreement on the integrated development of industrial areas was the RG-Development group of companies. The PromMoscow magazine talked to Tatyana Tikhonova, CEO of the company, about whether it is difficult to work with former industrial zones, how the situation with environmental protection actually develops in such areas and what Muscovites can expect from the development of abandoned districts.
Tatyana Tikhonova
CEO RG-Development
- Tatiana, RG-Development has been in the market for 7 years. How many homes have you built as a developer in this time?

- The company was incorporated in 2013, but the first three projects were launched in 2016. It turns out that we have put into operation five residential complexes in Moscow in four years. There are several more sites in completion phase: Petrovsky Park Residential Complex in Savelovsky, Fonvizinsky Residential Complex in Butyrsky and two buildings of Oktyabrskoye Pole residential quarter in Shchukino. I would also like to note that this year we have entered the top 5 developers in terms of commission housing volume in Moscow and are preparing to launch four more promising new projects, which will bring the total portfolio of the company to 1.2+ m square meters of real estate.

- Is it difficult to find sites for development projects in the capital?

- Due to the lack of vacant land plots for development within the "old" borders of Moscow, the reorganization of industrial areas is often the only opportunity for a developer to implement a project in an attractive location, and for buyers - to buy an apartment in an existing district with a good transport and social infrastructure. This experience is followed by all European countries. If you look at the land plots of former industrial enterprises within the city boundaries, they are usually located in blocks with already established transport and social infrastructure, and have not been used for a long time, are rented out or getting destroyed. I think that the residents of the districts themselves, where the so-called rusty belt lies, are tired of such neighborhood. For example, in the case of Oktyabrskoye Pole, the IAD project is being implemented on the site of a former reinforced concrete products plant. It used to be a thriving enterprise, today it has abandoned, dilapidated workshops and lots and lots of garbage.

As a result of redevelopment instead of empty, unattractive areas the city gets comfortable modern zones for life, work and rest.

The scale of further development of industrial zones in Moscow certainly depends on the market situation and the availability of solvent demand from buyers. But as long as there is a high demand for real estate in the capital, there will be more and more complex development projects on the territories of old industrial enterprises.

- Are there specifics of dealing with former industrial areas?

- Large industrial zones are usually dozens or hundreds of land plots with buildings. Everyone of them has its own owner or land user, which of course delays the redevelopment process. From my experience, I can say that it's easier to negotiate with major owners. They understand that sooner or later these land plots will be built up and sell the existing enterprise or participate in the development project as co-investors. It's harder with small owners. The IAD mechanism should help to find a common win-win path of development.

Another issue that a developer has to solve when working on this kind of site is land reclamation. In Moscow, all required hygienic standards and rules for soil replacement is strictly monitored. By the way, I want to say that bad environmental conditions in former industrial zones are a myth in many ways. The concentration of harmful substances in most industrial areas in Moscow is not higher than in other metropolitan areas. Warehouses and office buildings have long been located in such areas, and if existing enterprises are left, they often belong to innovative industries, so they do not harm the environment.

- What do you consider as the benefits of IAD? How do the game rules change for developers?

- In simply words, the IAD first of all guarantees the interests of the city, investors and, most importantly, the Muscovites. The investor needs a good land plot for development, the city needs new jobs, investments and some kind of budget effect, and the Muscovites - housing and the opportunity to walk comfortably near the house, to take a child to kindergarten or school, to get medical care, to get from home to work it in a convenient way.

So, the IAD mechanism allows not only to solve a number of problems faced by a developer when working on the former industrial territory, but also to think over the entire ecosystem of the cluster, so that the industrial zone is built up not only with housing, but also with necessary social infrastructure facilities, new jobs, recreation areas and squares.

The IAD assumes strict compliance with the agreement terms and the construction deadlines, if the developer does not fulfill any conditions or delays with the commissioning of facilities, it results in serious penalties. If we talk about our project, we are not afraid of penalties: although the contract was signed for 6 years, we plan to complete the construction in 2024.

- How long did you develop the project in the Oktyabrskoye Pole industrial zone?

- We started to develop our pilot project at this site back in 2015. At that time it hosted less than ten companies doing working in other areas than pre-defined for the industrial zone. We purchased several land plots and made a planning project for the entire industrial zone, which was approved by the Moscow Government. Four buildings with underground parking, kindergarten and commercial infrastructure were commissioned in 2017. Then we bought a neighboring land plot. Our goal was to turn the former industrial zone into a full-fledged city quarter. Now the construction of residential buildings of stage 2 is in full swing. I think we'll finish on time - this is Q2 2021 as planned.

A logical continuation of the project was the agreement on integrated area development we signed with the Moscow Department of Investment and Industrial Policy. The site that came under the IAD will be stage 3 of our big project: it will occupy six hectares and will be put into commissioned in several phases. In total, about 200,000 square meters of real estate will be erected there. In addition to residential buildings, there will be a kindergarten, school and an outpatient care center.

- The project provides for the construction of a technopark. What industries did you focus on during the project concept development and what is its advantage?

- The technopark building will be constructed as ordered by the Moscow Department of Industry and Innovation Policy. It will be managed by another company specializing in this type of business. I can say based on approved documents, that it will be a 10-storey building with its own underground and surface guest parking. Anchor tenants of the technopark's premises have not been determined yet, but it is obvious that they will be companies in R&D and hi-tech. Anyway, it'll give the area 500 more jobs.
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