tatarstan service industry & tourism (dec 2013)
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Service Industry in Tatarstan: Current State and Future Prospects December 2013
Why Tatarstan? Tatarstan in different...
Good governance
Low costs
The best business
environment
• Good governance • Low corrupCon and red tape • Skilled and affordable labor • Low costs • ExcepConal living condiCons • Outstanding business environment
Business Environment Benchmarking: Tatarstan versus Moscow and Saint Petersburg
Methodology • Ernst & Young survey
comparing 10 Russian regions based on World Bank methodology
• Businessmen assessed to what extent the given criteria pose an obstacle to doing business
• Used scale is from 0 to 4 where 0 means no obstacle and 4 stands for very serious, harmful obstacle
Indicators • Infrastructure – Electric Power Supply • Custom Rules and Regulation of Import and
Export • Dealing with Authorities: State Inspections • Dealing with Authorities: Obtaining of Official
Certificates • Tax Rates • Corruption • Security Situation • Shadow Economy • Judicial System • Access to Financing • Labor Law • Insufficient Qualification of Workforce • Transport
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Infrastructure – Electric Power Supply
1.7
3
0.6
0 0.5 1 1.5 2 2.5 3 3.5
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Custom Rules and Regulation of Import and Export
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Dealing with Authorities: State Inspections
0 0.5 1 1.5 2 2.5
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Dealing with Authorities: Obtaining of Official Certificates
0 0.5 1 1.5 2 2.5
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Tax Rates
0 0.5 1 1.5 2 2.5 3
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Corruption
0 0.5 1 1.5 2 2.5 3
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Security Situation
0 0.5 1 1.5 2 2.5 3
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Shadow Economy
1.85 1.9 1.95 2 2.05 2.1 2.15 2.2 2.25 2.3 2.35
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Judicial System
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Access to Financing
0 0.5 1 1.5 2 2.5 3
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Labor Law
0 0.2 0.4 0.6 0.8 1 1.2 1.4
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в
российских регионах, 2011 February.
Insufficient Qualification of Workforce
0 0.5 1 1.5 2 2.5 3
Saint Petersbrug
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в российских регионах, 2011 February.
Transport
0 0.5 1 1.5 2 2.5 3 3.5
Saint Petersburg
Moscow
Tatarstan
Scale 0 -‐ 4 where 0 = no obstacle at all, 4 = serious obstacle
Source: Ernst & Young. Измерение условий ведения бизнеса в
российских регионах, 2011 February.
Yandex: Kazan is Russia’s least congested city
Source: Yandex.ru, hip://company.yandex.ru/researches/reports/2013/city_jams/city_jams_2013.xml
Doing Business in Russia 2012 Benchmarks 30 Russian cities 4 areas of regulation • Starting a business • Dealing with construction permits • Getting electricity • Registering property These indicators were selected because they cover areas of local jurisdiction or practice. Measures the impact of the indicators from the perspective of domestic small and medium-size enterprises.
Top 10
Ulyanovsk
Saransk
Vladikavkaz
Rostov-‐on-‐Don
Kazan
Kaluga
Stavropol
Yaroslav
Surgut
Irkutsk Source: Doing Business in Russia 2012, hip://www.doingbusiness.org/reports/subnaConal-‐reports/russia
Ease of starting a business
1.7
21
9
2.1
30
9
2.1
17
7
0
5
10
15
20
25
30
35
Cost (% of income per capita)
Time (days) Procedure (number)
Kazan
Moscow
Saint Petersburg
Source: Doing Business in Russia 2012, hip://www.doingbusiness.org/reports/subnaConal-‐reports/russia
Ease of dealing with construction permits
40
223
32
172
392
47 51
361
18 0 50
100 150 200 250 300 350 400 450
Cost (% of income per capita)
Time (days) Procedures (number)
Kazan
Moscow
Saint Petersburg
Source: Doing Business in Russia 2012, hip://www.doingbusiness.org/reports/subnaConal-‐reports/russia
Ease of getting electricity
930
186 9
1852
281
10
1080
238
9 0
200 400 600 800
1000 1200 1400 1600 1800 2000
Cost (% of income per capita)
Time (days) Procedures (number)
Kazan
Moscow
Saint Petersburg
Source: Doing Business in Russia 2012, hip://www.doingbusiness.org/reports/subnaConal-‐reports/russia
Ease of registering property
0.2
33
3 0.2
43
5 0.2
44
5
0 5 10 15 20 25 30 35 40 45 50
Cost (% of property value)
Time (days) Procedures (number)
Kazan
Moscow
Saint Petersburg
Source: Doing Business in Russia 2012, hip://www.doingbusiness.org/reports/subnaConal-‐reports/russia
Average Wages (2013, in rubles)
21,200
50,400
33,500 27,000
18,900
39,300
29,900
21,300
0
10,000
20,000
30,000
40,000
50,000
60,000
Kazan Moscow Saint Petersburg
Russia
average wage
median wage
Source: РИА Рейтинг, hip://riaraCng.ru/regions_study/20131029/610592758.html and Ministry of the Economic Development of the Russian FederaCon.
Education Local Government Spending on Education (2012)
• 40bn rubles • 22% of Tatarstan Expenditures
Number of University Students per 10,000 people
Tatarstan 526
Moscow 886
Saint Petersburg 809
Source: Federal State StaCsCcs Service and Ministry of EducaCon and Science of the Republic of Tatarstan.
Kazan Federal University • Founded in 1804; the second
oldest university in Russia • Parnership relation with more
than 80 universities fom about 30 countries
• Listed among top 10 institutions of higher education in Russia
• Over 47,000 students, who follow 300 degree programs – the main education center in Volga region
Tatarstan– Safe location where innovation thrives
Source: Federal State StaCsCcs Service.
• One of the most prosperous and innovative regions in Russia
• Tatarstan has effectively coped with the crisis given to its sound and sustainable business environment
• Safe and laid-back environment provides exceptional conditions for living and working
• Short distances and absence of traffic congestions facilitate regional transport
208
491
312
Kazan Moscow St Petersburg
Murders or a@empted murders (2011)
Innovative Economy
Kazan Moscow Saint Petersburg
Output of innovaIte goods, services and operaIons (millions
rubles)
195,968 158,892 131,899
Share of innovaIve output in economic
turnover 15% 4% 9%
Expenditures on technological
innovaIon (millions rubles)
44,166 171,476 38,290
Share of organizaIon engaged in innovaIon 18.1% 18.6% 18.9%
Source: Federal State StaCsCcs Service, 2011.
Affordable prices for office rental & purchase
• Office rental rates are 11 times lower than in Moscow and 5 times lower than in Saint Petersburg
• Kazan is also one of the cheapest place among the millionniki cities
• Spectacular increase of office space supply since 2000 Source: Jones Lang LaSalle. Oбзор рынка коммерческой
недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study.
Kazan versus “Millionniki” cities
Source: Jones Lang LaSalle. Feasibility Study.
Kazan – one of the lowest office rent prices among the millionniki cities
Rental Rates Comparison
410
4500
2000
0
1000
2000
3000
4000
5000
Kazan Moscow Saint Petersburg
USD/year for m2
Kazan
Moscow
Saint Petersburg
Source: Jones Lang LaSalle. Oбзор рынка коммерческой недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study and Jones Lang LaSalle. Feasibility Study.
Comparing the highest rates available
Selling Prices
69,803
63,242 61,487
65,370
56,000 58,000 60,000 62,000 64,000 66,000 68,000 70,000 72,000
2009 2010 2011 2012
Selling prices (Class B) RUB per sq.m (excluding VAT)
• There are no Class A offices for sale. • Purchasing price is sCll lower to pre-‐crisis levels.
Source: Jones Lang LaSalle. Feasibility Study.
Kazan Office Market
• Current supply volume of speculaCve office stock is esCmated at 132,000 sq m of Class A , B and C.
• Class C offices consist of: -‐ mulCfuncConal complexes -‐ redeveloped buildings -‐ offices on ground floor of
residenCal buildings
16%
33% 51%
Type of Office
Class A
Class B
Class C
Source: Jones Lang LaSalle. Oбзор рынка коммерческой недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study.
Profile of Tenants • Majority of quality offices (Classes A, B) are
rented or bought by federal or international companies
• Local companies prefer to rent Class C offices • More than half of space is leased to smaller
tenants who occupied less then 100 sq m
The largest tenants in Kazan
Area (sq.m)
GE Money Bank 4,000
PwC 1,800
BTA -‐ KAZAN 2,200
VimpelCom 1,200
Lebedyansky 600
36%
42%
22%
Type of Company
Local
Federal
InternaConal
53% 26%
21%
Size of Offices
< 100 sq.m
100 -‐ 300 sq.m
> 300 sq.m Source: Jones Lang LaSalle. Oбзор рынка коммерческой недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study.
Supply of Office Space • Total amount of modern speculaCve office premises is about 64,000 sq.m. • Almost 67% of the modern office stock in Kazan is Class B • Most A Class offices were built a�er 2006 • There are 113 sq. m per 1,000 individuals
Source: Jones Lang LaSalle. Oбзор рынка коммерческой недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study.
Major Office Buildings in Kazan Name Class Developer Leasable office area (sq. m)
Korston A Korston Kazan 11,140
Suvar Plaza A Suvar Estate 11,000
BC BULAK A Bulak Investment 6,500
Park Pobedy A n/a 2,800
BC TATARIA B Benk 10,740
Business Park Idea B Idea Capital 10,300
Paraviia B n/a 6,200
RELITA B n/a 5,700
BC PUSHKIN B n/a 4,260
BC IBRAGIMOVSKIY B Eifel 2,600
Ruslan-‐office B Astor 2,100
Source: Jones Lang LaSalle. Oбзор рынка коммерческой недвижимости, 2013 and Jones Lang LaSalle. Feasibility Study.
Major Foreign Tenants in Kazan Name Sector Country of Origin
GE Money Bank financial services United Kingdom
PwC consulCng United Kingdom
DHL logisCcs Germany
Sanyo electronics Japan
Credit Europe Bank financial services Netherlands
Siemens engineering and electronics Germany
Lu�hansa airlines Germany
AIG insurance company USA
Ernst&Young consulCng United Kingdom
Schneider Electric electricity distribuCon and management France
Cushman & Wakefield Real estate services USA
Major Russian and Local Companies in Kazan
Name Sector Property Status
Sberbank financial services owner
TAIF various owner
Transne�’ oil & gas owner
MTS telecommunicaCons tenant
Beeline telecommunicaCons tenant
Megafon telecommunicaCons tenant
Alfa Bank financial services tenant
VTB financial services tenant
Sogaz insurance company tenant
Soglasie insurance company tenant
Major Russian and Local Companies in Kazan – Part 2
Name Sector Property Status
MDM Bank financial services tenant
Kit Finance financial services tenant
Rosbank financial services tenant
Russkiy Standart financial services tenant
TGT oil & gas tenant
Alfastrakhovanie insurance company tenant
Nasta insurance company tenant
Rosgosstrakh insurance company tenant
Rosno insurance company tenant
Ingosstrakh insurance company tenant
Success Stories: Credit Europe Bank and PwC
In Tatarstan since 2002. In Tatarstan since 2007.
Success Stories: Credit Europe Bank and PwC
In Tatarstan since 2002. In Tatarstan since 2007.
VISION TRANSFORMATION
“A Transformation - Kazan International Business Hub Gateway To Russia”
ECONOMIC DRIVERS & DEVELOPMENT PRECINCT
Central
Business
Precinct
CBP is envisage to be the next commercial hub
after Kazan City Center. With the master plan in
place, it will create a catalytic impact to
businesses and provide an international business
platform for the MNC’s within the region.
Special Economic
Zone Precinct
A major catalytic precinct for attracting clean-
technology-oriented industry, investment and
research to Kazan ensuring that the local business
community is benefited along the way.
Metropolitan
Park
Precinct
By preserving the existing river corridor and
vegetation, the metropolitan park is designed to
provide a platform for social integration for
Kazan region, cultural experience and
environmental sustainability.
Knowledge &
Education
Precinct
A visionary precinct that will transform Tatarstan
into one of Russia’s premier destinations for
education, research and related industry over
the next 10 years. These activities shall allow a
platform to retain and nurture talents.
Central Business Precinct A Vibrant Aerotropolis where Great Businesses Converge
ECONOMIC DRIVERS & DEVELOPMENT PRECINCT
QUICK FACTS Precinct Area: 225.07 ha Developable Area: 146 ha (65%) Gross Density (FAR) : 3.55 Estimated GFA: 5.3 M sq.m. Estimated Dwelling Units: 10,000 Estimated Population: 39,000 Transient Population: 15,000 Population Density: 175 / ha Building Height: 8 – 40 levels
Regional Shopping Mall
Business Park District Park
Central Commercial Core
Convention & Exhibition Centre
Transit Oriented Neighborhood
Transit Hotel Aero Express Station
KNOWLEDGE & EDUCATION PRECINCT The Best of Kazan Talent Pool
ECONOMIC DRIVERS & DEVELOPMENT PRECINCT
QUICK FACTS Precinct Area: 228.11 ha Developable Area: 158 ha (75%) Gross Density (FAR): 3.0 Estimated GFA: 4.8 M sq.m. Estimated Dwelling Units: 13,800 Estimated Population: 56,600 Transient Population: 11,000 Population density: 270 / ha Building Height: 4 – 18 storey
Purpose Built Office
Town Center
Natural Preservation
Campus
Transit Oriented Neighborhood
Business Park
Neighborhood
Science Park
Hospitality School
METROPOLITAN PARK PRECINCT Experience Nature in an Urban area
QUICK FACTS Precinct Area: 35.85 ha Components: Parkland and park amenities, Religious facilities, Arts & Cultural Facilities, Green Infrastructure
Natural Trail
Cultural Complex
Plaza
METROPOLITAN PARK
KSC SUSTAINABILITY GLOBAL POSITIONING
.
Location, Country
Bedzed, London
Kronsberg, Hannover
Dongtan, China
KLIFD, Kuala Lumpur
Songdo, Incheon
KAZAN SMART CITY Russia
Masdar, Abu Dhabi
Status Established Established Progressive Planning + Design Progressive Planning + Design Progressive
Size
1.7 Hectares 82 houses
160 hectares 3,000 houses
8,600 hectares 50,000 houses
30 hectares 600 hectares 598.30 hectares 600 hectares 50,000 houses
Type Housing development
Township Township Urban Development Mixed Use
Urban Development Mixed Use
Urban Development Mixed Use
Township
Transport
No use of fossil fuels Green Transport – pedestrian & cycling
Green Transport – pedestrian, cycling, zero GHG emission transit
Green Transport – pedestrian, cycling, zero GHG emission transit
100% of the site is within 800m from transit stations
26km Bicycle lanes Electric Car charging stations
Bicycle Lanes 250 walking distance fr Transit Public Transport – Rail and Bus
Car Free City Zero carbon emission
Waste Waste recycled
Reduce household waste by 50%:
80% solid waste recycled
70% of waste is diverted from landfill
Waste collected by vaccum, 100% incinerator
Waste collected by central system
Zero Waste
Energy 100% renewable energy use
Reduce household energy consumption by 60-80%
Reduce energy consumption by 66%
40% reduction in carbon emmision
30% reduction in carbon emission PV and Wind Power
Reduce energy consumption by 60%
Waste to Energy Solar panels for renewable energy source
Water Reduce treated potable water demand by 50%
Rainwater Harvesting & Recycled water
Water consumption down by 43%
Potable water consumption reduced by 40%
Waste water recycling
Waste water recyling for irrigation
80% recycled water (desalinated water)
Neighourhood Size NA
500m walking catchment
800m walking catchment
400m walking catchment
Smart + Connected 250m to 400m Walking Neighbourhood
200m walking catchment
I D E A L G O O D B E S T
Golden Opportunity is Here Right Now
Outperform your Moscow-‐
based CompeCtors
Set Up Headquarters or Branch In
Kazan
Capitalize on Low Costs, Talent, and LocaCon
Global Trends in Tourism
Number ofInternaConal
Tourist
2012 1,035 million
2030 1,800 million
Market Share of Emerging Countries
2012 47%
2030 57%
Experienced travellers are looking for new desCnaCons, and developing countries could offer airacCve alternaCves
demand is increasingly orientated towards new types of experiences – parCcularly cultural and environmental.
Increase of demand of medical tourism (aging of populaCon)
Source: UNWTO Tourism Highlights, 2013 and UNCTAD, PromoCng Foreign Investment in Tourism, 2010.
Russia – Highest Increase of Inbound Tourism Amongst the Main Tourist Destinations
Country Arrivals (in millions) 2012 Change (%) in regard to 2011
1. France 83 1.8
2. United States 67 6.8
3. China 57.7 0.3
4. Spain 57.7 2.7
5. Italy 46.4 0.5
6. Turkey 35.7 3.0
7. Germany 30.4 7.3
8. United Kingdom 29.3 -‐ 0.1
9. Russian FederaIon 25.7 13.4
10. Malaysia 25 1.3
Source: World Tourism OrganizaCon (UNWTO)
9th Most Favorite DesInaIon for InternaIonal Tourists
Tourist Arrivals to Tatarstan
2012 1.480
2011 1.277
2010 1.113
2009 977
2008 908
2007 896
2006 732
2005 638
Growth from 2011 to 2012 16% Growth from 2005 132%
Type of Tourism
Number (thousands) %
All 1.480 100%
RecreaConal 611 41%
Business 553 38%
Medical 134 9%
Other 182 12%
Source: Ministry of Youth Affairs, Sports and Tourism of the Republic of Tatarstan.
Development of Tourism in Tatarstan by Segments
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012
Business
RecreaConal
Medical (in thousands)
Source: Ministry of Youth Affairs, Sports and Tourism of the Republic of Tatarstan.
Hotels
• Passenger flow doubled 2008-2013, 20% per annum growth
• 2 terminals - 3rd to be added in 5 years
• Over 2 bln rub. invested in renovation
• Capacity: 3.2 mln à by 2025: 5 mln
• Cargo capacity untapped: ~ 5k tons(2012) – 3 k tons outgoing / 1.8 k incoming
Kazan International Airport – a rising star
752 676 959
1227 1487 1578
2008 2009 2010 2011 2012 2013*
Kazan International Airport Passenger Flow (thousands)
*2013 figure Jan-Oct.
Kazan International Airport Growth
*2013 figure Jan-Oct.
Dynamique of passenger flow in the OJSC
“Kazan international airport”
2008-2012 During 2000 – 2012 number of pax at Kazan international airport has been constantly increasing at the During 2000 – 2012 number of pax at Kazan international airport has been constantly increasing at the
average for more than 38% per year. At the period of the maximal increase in 2012 the airport serviced more average for more than 38% per year. At the period of the maximal increase in 2012 the airport serviced more
than 1 486 837 pax., at the same time increase was 21% in comparison with 2011 when the passenger flow than 1 486 837 pax., at the same time increase was 21% in comparison with 2011 when the passenger flow
was fixed at the rate of 1 226 800 pax. Increase is related to growth of demand for air transportation on was fixed at the rate of 1 226 800 pax. Increase is related to growth of demand for air transportation on
domestic and international directions. Main part of air transportation in Kazan falls on business trips and domestic and international directions. Main part of air transportation in Kazan falls on business trips and
touristic sphere. touristic sphere.
2000
г.
2001
г.
2002
г.
2003
г.
2004
г.
2005
г.
2006
г.
2007
г.
2008
г.
2009
г.
2010
г.
2011
г.
2012
г.
0
200
400
600
800
1000
1200
1400
1600
211,6 207,8 215,5 238,7309,9
393,6445,7
616,4
751,5
675,7
958,5
1226,8
1486,9
Airlines
• Russian Railways constructing new high-speed train Moscow-Kazan-Alabuga, further to Siberia
• Kazan-Moscow cut from 14 hrs to 3.5 hrs
• Investment: 855 bln rub
• Completion date: 2018
Moscow – Kazan by rail in 3.5 hours
Kazan River Port
Connected to Moscow, Saint Petersburg, the White Sea, the Caspian Sea and the Black Sea. 10 cruise companies registered in Tatarstan. Sails to Moscow, Saint Petersburg, Yelabuga, Samara, Nizhniy Novgorod, Cheboksary, Volgograd, Yaroslavl, Astrakhan, Tolyatti, Perm, Rostov-on-Don.
Year 2008 2009 2010 2011 2012 2013
Passengers (thousands) 139 114 133 105 71 115
Source: Ministry of Youth Affairs, Sports and Tourism of the Republic of Tatarstan.
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