time to invest in moscow!

Time to Invest in Moscow

investmoscow.info

1. Moscow todaySocial and economic status

2. Why Moscow?Competitive advantages for doing businessin Moscow

3. Where to invest?Promising areas for investment

4. Who to contact?Information resources, development institutions and executive authorities

5. A city for comfortable livingUrban environment

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Time to Invest in Moscow

Contents:

An address from the Mayor of Moscow,

Sergei Sobyanin

Moscow is one of the world’s largest business and financial centres. It is a megalopo-lis on a global scale, which is carrying out a major infrastructure development programme and offers wide range of opportunities to investors from all over the world.

Information and communication technology, banking, finance and insurance, construction and real estate, transport and trade, science, education and health care — these are the main industries that are driving Moscow’s rapid economic development. The industrial sector plays an important role which accounts for one sixth of the capital’s gross regional product.

In 2015, capital investments in Moscow amounted to EUR 23.7 bn. The amount is impres-sive, but there are reserves for increase.

An address from the Mayor of Moscow, Sergey Sobyanin

Moscow has gained additional competitive advantages in the new economic context. While maintaining the superb quality of its investment environment, the capital has become one of the world’s most attractive investment destinations in terms of many types of costs.

In recent years we have implemented a number of measures to reduce operating expenses, simplify administrative procedures and improve tax and tariff policies.

The city is actively promoting public–private partnership mechanisms, including concessions, life cycle contracts and property lease with mutual obligations.

We are opening new technoparks and technopolises to cater to high-tech production lines.

All these factors will only ensure that Moscow will become more and more attractive to investors.

Our main goal is to transform the capital of Russia into a modern, successful megalopo-lis which is comfortable to live in and where it is easy to do business. To achieve this goal, we strive for a mutually beneficial and fruitful partnership with the investment community. The result of such a partnership will be exciting new ideas and projects for the benefit of Moscow and Muscovites.

Mayor of Moscow Sergei Sobyanin

Social and economic situation

Moscow today1

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Moscow has one of the world’s largest economies among cities

One of the largest consumer markets in Europe

Moscow’s diversified post-industrial GRP structure is as follows:

Moscow is one of the Top-10 largest megalopolises by gross regional product (GRP) in the world

of gross added value of all Russian regions

Industrial production

Business services, including R&D Trade sector

Other areas:Construction;

Transport and communication;Social sphere;

Public sector etc.

18.7%26.1%

35.4% 19.8%

The total population of the Moscow metropolitan area:

the point of entry to the Russian and CIS markets

20

1/5

200

m people

m people

14%of Russia’s overall population

1. Moscow today I Social and economic situation

7

Five-year growth in fixed capital investments:

Stable consumer demand:

of Russia’s retail turnover in 2015

of total fixed capital investments in Russia

in real terms since 2010

EUR

149

EUR 23.7

bnconsumer spending in 2015, ranks third among European cities

bnfixed capital investments in 2015

Consistent growth in public spending of 10% annually in 2011–2015.

Relatively low public loan debt burden — ratio of loan debt to bank deposits by individuals — 15% as of 1st of September 2016 (28% in Saint Petersburg and 46% nationwide).

17%

11%

61.3%

Stable growth in investments

8

bnworth of public-private partnership contracts concluded:in 2013-2016, including:

of all incoming foreign direct investments in Russia

m m2 of real estate built in 6 years

concessions — EUR 1 bn

life cycle contracts for supply and maintenance of Metro rolling stock and above ground urban transport — EUR 4.5 bn

long-term contracts with an investment component — EUR 2.9 bn

10% of the real estate fund updated, including about 20m m2 of housing

10% of all Russia’s real estate is built in Moscow

50%

EUR 8.5

51

st place in«public-private partnership development in Russia»rating in 2015


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MoscowFrankfurt(-2)

Beijing(+5)

New Delhi(+2,5)

London(-3)

A Top-10 global business hub — over 60% of leading international companies have offices in Moscow.

Home to 90% of the headquarters of foreign banks and international financial organ-isations operating in the Russian market.

Focal point for almost all of the nation’s securities exchange.

About 1.0 m legal entities, over 250 thousands of sole traders or (in total) 15% of the total number of companies registered in Russia.

Around 25% of companies in Moscow specialize in business and financial services.

The core of the Moscow metropolitan area, strategic centre of the Eurasian Economic Union's Customs Union and free trade area of the Commonwealth of Independent States (CIS).

Convenient time zone for working with European and Asian commercial and financial markets.

International business, trade and investment centre

Favourable geographic location

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Stable position in international ratings

Proximity to key consumer markets in Russia, Eastern Europe, CIS, and Baltic states.

Flights to European and Asian financial centres

Investment attractiveness of Moscow based on Financial Times fDi Markets:

1st place among Eastern European cities;

12th place among European cities;

In the Top-25 of 130 cities worldwide.

In the Top-25 of the world’s most economically powerful cities — CITYLAB: 25 Most Economically Powerful Cities of the World.

18th place among global cities Global Cities Index A.T. Kearney.

New Delhi6 hours

London4 hours

Frankfurt3,5 hours

Zurich3,5 hours

Dubai5 hours

Hong Kong9 hours

Beijing7,5 hours

Moscow RUSSIA


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Competitive advantages for doing business in Moscow

Why Moscow?2

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Quality of labour force

High potential for science and R&D

A magnet for competitive and qualified staff from other regions of Russia and the CIS.

High level of education: 50% of the employed population have a higher education degree.

Average monthly salaries (2016 estimate for all categories of the employed): EUR 850.

m people thousand peopleeconomically active population in Moscow

graduating professionals with diploma of higher education annually

11 200

There are over 200 public and private higher education institutions (universi-ties, institutes, academies, etc.) in Moscow.

Six of Russia’s Top-10 higher education providers according to the QS rating (Quacquarelli Symonds) are located in Moscow.

More than 20% of Russia’s research and development organizations are based in Moscow.

of research and academic staff in Russia

technoparks and technopolises

30% 27

2. Why Moscow? I Competitive advantages for doing business in Moscow

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Moscow’s commercial property pool:

office spaces in Moscow, including 3.9 mn sqm — class A office spaces

available office spaces

Average price for class A office space rent (Results for Q3 2016)

for office spaces

for industrial site

Average price for rent of space in technoparks:

per sqm per year

per sqm per year

per sqm per year

m sqmtotal floor area

m sqm %

thousandbuildings 200

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75

Developed real estate market

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EUR 361

EUR 96

33% of all useful model and invention patents issued in Russia.

Moscow occupies the 45th place among 500 cities of the world in the Innova-tive Cities rating 2thinknow, +147 positions since 2011.

Extensive infrastructure for innovative manufacturing and R&D facilities:

– 27 technoparks and technopolises;– Special economic zone Zelenograd;– Innovative territorial clusters Troitsk and Zelenograd.

EUR163

14

6.7

of heat supply capacity reserves

50%50%

EUR 0.52

Spare capacity of public utility infrastructure

Advanced information and communication technologies

Utility costs for businesses (as of September 2016):

4G network covers over 99% of the city’s territory

of households have broadband Internet with an average speed of 20 Mbps

over 30 thousand publicWi-Fi connection points

Electricity — EUR 0.06 per kW;Heat — EUR 20.2 per Gcal;Water supply (including drainage) — EUR 0.72 per cubic meter.

of energy supply capacity reserves

spare water supply and drainage capacity

80%

50%thousand MW

per Mbps

аverage price of broadbandInternet services

spare capacity for new power consumers in Moscow


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federal highways leading out of the city

The Moscow rail hub includes 2 ring railways and 9 radial railways

transit freight (around 4 bn tonnes)

export and import products

river ports

Advanced transport infrastructure

international airports: Sheremetyevo, Domodedovo, Vnukovo, Zhukovskiy and Ostafyevo business airport

5

17 3

m passengers in 2015 — passenger turnover of the Moscow air hub

kmtrack length

78

2 ,700

40% 60%

per litre

petrol price

EUR 0.54

for industrial companies

These price benefits over peer cities are expected to hold strong in the mid-term.

In recent years Moscow has significantly simplified the administrative procedures for set-ting up and conducting business.

for high-tech export-oriented companies

Establishing a company

3 steps,3 working days.

Property registration

1 procedure,5 working days.

for particular kinds of expenditures (wages, property rent)

Price competitiveness

Simple and transparent administrative procedures

30% 40% 50%

The rouble’s decline since late 2014 has led to substantial growth of Moscow’s price competitiveness compared to other big cities.

Business expenditures in EUR have dropped:

Connection to electricity grids:

80 days and 0 visits for facilities with a capacity of 15–150 kW;380 days and 3 visits for facilities with a capacity of 150–670 kW.

In the Doing Business-2017 dating, Moscow has risen 84 positions compared to 2010 and is now in 40th place.


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Stable fiscal policy

— a balanced budget, substantial investments in the development of munici-pal infrastructure (primarily transport) and an increase in the transparency of government contracting.

Support from the Moscow City Government

Ample financial capacity

bnMoscow’s budget in 2016

% of GRPLow regional debt

EUR 22.31.0

Reasonable tariff policy

Active investment policy

— restrained tariff growth and the restriction of cross-subsidies. The growth in tariffs for business in Moscow in 2014–2016 was significantly lower than the inflation rate.

— a favourable environment to attract investments from a variety of sources, ‘one-stop shop’ project administration, the mobilization of projects from industry leaders and international companies as well as the encouragement of public-private partnerships in the development of municipal infrastructure.

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117

EUR 24.9

Investment focused budget:

bn

value of the Targeted Investment Programme (TIP) 2016–2019

bn

value of the city contracts with 20% of all purchases coming from small and medium businesses

EUR 8.1

TIP costs — transport infrastructure development

of new roads metro stations

km of lines stops

km &of new lines

478 km

54 31

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investment expenditures

25% 70%

Over 4 years (2016-2019), Moscow is to build:

Annual passenger traffic — 250 m passengers;

An average of 260 thousand journeys a day

134 — modern electric trains;

Integration with public transport (underground, ground transport);

15% reduction in the load on the Koltsevaya Metro line, 20% reduction

in the load at central stations;

Transport coverage of Moscow’s industrial areas.

In September 2016, the Moscow Central Ring was opened

new property units

engineering structures

pedestrian underpasses

800 103 59


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Promising areas for investment

Where to invest?3

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The Moscow City Government’s key goal is to attract industry leaders and investors to the city’s real economy.

Moscow is interested in attracting investments to:

Sectors and projects that focus on phasing out imports and meeting domestic demand in Russia and the Customs Union nations;

Export-oriented high value added sectors and projects;

Public-private partnership projects in transport and social infrastructure and the development of the New Moscow area.

Moscow offers beneficial tax rates and support to sectoral investors, industrial developers as well as investment funds and companies that finance transport and social infrastructure development projects, including public-private partnerships.

3. Where to invest? I Promising areas for investment

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The goal of the Moscow City Government is to attract investments into the real economy, construction and extensive renovation of existing industrial enterprises and innovative infrastructure facilities.

New investment projects

New projects with an investment amount of at least EUR 14,8 m.

Investment phase — maximum 5 years.

* Including but not limited to

Pharmaceuticals and biotechnologies

Medical equipment and tools

Foods and beverages

Research and development

Construction materials

Microelectronics and computer engineering

Information technologies

Electrical equipment Transport vehicles and car parts

Priority sectors*:

3.1. For industrial investors

Beneficiaries:

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Support mechanisms:

Support measures:

Projects are implemented under special investment contracts with the Moscow City Government.

Tax exemptions:

Additional support measures:

Profit tax payable to Moscow reduced by 26% (12.5% instead of 17%);

Property tax reduced by 100%;

Land use tax reduced by 99% (0.7% of the sum of calculated tax);

Ground rent reduced by up to 99%.

Up to 25% — reduction of the total tax burden, including:

Up to 60% — reduction of tax per 1 sqm of property.

Guaranteed security from non-commercial risks;

Potential allocation of land without tenders;

Special terms for utility connections.


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Out-of-court compensation from the budget of Moscow

Nationalization and seizure of property;

Termination of land title or other prop-erty rights due to the actions of the Moscow authorities;

Unfavourable changes in Moscow leg-islation;

Unlawful actions (lack of action) by Moscow officials.

Investor is incapable to deliver the investment project;

Investor incurs a major loss:increase in implementation period by more than 18 months and/or cost increase of over 20%.

Impact of such circumstances for investor

Guaranteed risks

Guaranteed protection against non-commercial risks:

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Land plots for industrial production

Technoparks and technopolises

More than 50 hectares of available land for new industrial property units with connections to public utilities.

Ready-to-use spaces and business infrastructure for R&D projects and innovative manufacturing:

22 land plots for industrial enterprises in open tendering or under elaboration

Investment sites

technoparks and technopolises

residents work places

total space

thousand sqm 27

1,436 38,000

1,866

* map of land plots location


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Industrial specialization:

Advantages of technoparks in Moscow:

Information and telecommunication technologies;

Microelectronics;

Lighting solutions;

Innovative materials, composites and coatings;

ready to use premises for the projects;

reduced rental rates;

availability of land plots for construction;

* map of technoparks location

Laser technologies;

Biomedical technologies;

Pharmaceuticals and medical tools, etc.

preferential connection to utilities;

access to shared centres (prototyping, certification, etc.).

All information about technoparks and technopolises is available at the portal investmoscow.info

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Special economic zone Zelenograd

Activities in the field of research and development, manufacturing of high-tech products.

Special economic zone mode

Free of charge connection to utilities

Innovative regional cluster Zelenograd:micro- and nano-electronics, electronic devices and equipment, IT.

Property tax

Profit tax (instead of 20%)

Contribution to social security funds (instead of 30%)

Preferential terms of lease and possibility of land acquisition

Land tax

Transporttax

total area available for construction

ha ha

%

%

160 15.7

12.5

14%0

Without customs duty and VAT on imported foreign materials and equipment

Administrative and business centre (16 thous. sq.m.): 4 thousand rentable spaces, innovative business centre, personnel training and further training centre – technical university, collective use centre (R&D-centre), customs terminal.


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Transport and social infrastructure

Moscow has vast experience in public-private partnership projects.

Projected construction of

Transfer hubs include service and commercial areas;

Investors install all transfer hub property units and hand over the service areas to the city;

Return of investments through the lease and sale of commercial space (retail property units, offices, etc.);

The distribution right is competed for within the open auctions.

Key areas of private investments:

Construction of transfer hubs on new lines and at existing metro and city railway stations.

transfer hubs junction hubs

main hubs271 96

175

bn— expected volume of investments in the development of transfer hubs

EUR 17.7

3.2. For investment companies and funds

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bn— expected volume of investments in the development of transfer hubs

Private investments in the development of social in-frastructure — childcare centres, schools, healthcare centres, and cultural heritage sites.

Reduced rent of space for children’s educational centres and healthcare centres within walking distance of city residents’ study and work places (“1 RUB per 1 sq. m.”, “Doctor nearby”).

Reduced rental cost of cultural heritage sites for reconstruction and preser-vation projects (“1 RUB per 1 sq. m.” programme).


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Development of New Moscow

The main development driver for Moscow today is the utilization of new territories.

The area of the Russian capital grew by 148,000 hectares in 2012 (2.5 times) due to the integration of the Novomoskovsky and Troitsky administrative districts.

New Moscow has:

Over a dozen major business and economic clusters

Construction of 600 km of roads and 40 km of metro lines

m people— expected populationby 2035

m — new jobs will be created1.5 1

were added to Moscow in 2012

Territory of Moscow before 2012

Territory of New Moscow

thousand ha148

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Support measures

The Moscow City Government offers preferential terms for investors who implement their projects on the territory of New Moscow:

Unique opportunities for investment projects in a variety of areas — from new innova-tive industrial enterprises to transport and social infrastructure facilities.

‘One-stop shop’ administration principle;

Tax benefits and reduced ground rent for priority investment projects;

The active development of New Moscow’s basic infrastructure based on national programmes;

Consistent demand from city residents and public sector;

Additional guarantees to investors and coverage of non-commercial risks.


Information resources, development institutions and executive authorities

Who to contact?4

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English German Spanish Arabic Chinese

The Portal is avalible in 5 languages:

Multifunctional platform for investors who do or would like to start a business in Moscow:

Access to the united electronic market place of Moscow:

Prompt and personalized interaction with the Moscow City Government.

Point of entry for a new project in Moscow;

List of ongoing and planned investment projects.

Up-to-date statistics and analytics;

Information on how to set up and do business;

Government support measures;

Industrial and innovative infrastructure.

Information about all the property units listed for auctions (lease, sale, etc.);

Interactive map of property units listed for auctions;

Auction documentation and auction calendar;

Preview of property units listed for auctions.

Investor’s personal account;

Direct line.

4. Who to contact? I Information resources, development institutions and executive authorities

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Development institutions

The Moscow city has a number of effective institutions that engage with investors. Their mission is to coordinate investors’ interests with the city’s development priorities and offer the business community profitable projects and transparent mechanisms of engagement with the city.

Moscow City Investment Agency

www.en.investmoscow.ru/agency

The Moscow City Investment Agency is the authorized provider of invest-ment projects support services based on the ‘one-stop shop’ principle in the Moscow City.

The Agency promotes investment opportunities, advantages and achieve-ments of Moscow; creating greater investment appeal of the city’s infrastructure and improvement of investment procedures; and project administration.

The Agency seeks to introduce new forms of engagement with both domestic and foreign investors, builds effective cooperation among the public authorities, business and citizens.

Moscow City Innovations Agency

www.inno.msk.ru

The mission of the Moscow City Innovations Agency is to draft and imple-ment development programmes for the city’s high-tech sectors.

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Executive authorities of Moscow

Moscow City Governmentwww.mos.ru

Department of Economic Policy and Development of Moscowwww.depr.mos.ru

Department of Science, Industrial Policy and Entrepreneurship of Moscowwww.dnpp.mos.ru

Urban Development and Construction Complexwww.stroi.mos.ru

Department of Transport and Road Infrastructure Developmentwww.dt.mos.ru

Department of Competition Policy of Moscowwww.tender.mos.ru

Department of City Propertywww.dgi.mos.ru

Department of Foreign Economic Activity and International Relations www.dvms.mos.ru

4. Who to contact? I Information resources, development institutions and executive authorities

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Urban environment

A city for comfortable living

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Moscow is a modern megalopolis that offers comfortable living conditions and is attractive for businesses.

Convenient transport infrastructure

Advanced retail and food & beverage infrastructure

Educational capital of Russia:

55,000 licensed taxis

shops, including more than 1,500 hypermarkets and supermarkets

cafes and restaurants

30,000 11,000

There are over 200 public and private higher education institutions (universities, institutes, academies, etc.) in Moscow.

1 m students.

Specialized programmes of international schools:9 institutions for international Bachelor degrees;8 institutions of DSD (Deutsches Sprachdiplom);4 institutions for Spanish Bachelor degrees;14 bilingual educational institutions.

Europe’s newest bus fleet. Average vehicle age: 1 year.

Unified, integrated city public transport network

14 lines and 203 Metro stations, 31 MCR stations

Over

5. A city for comfortable living I Urban environment

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World-class cultural and historic sites

144 cinemas

thousand cultural heritage sites(10% restored over 6 years)

World culture monuments and Russian national landmarks:Kremlin of Moscow;Bolshoi Theatre;Tretyakovskaya Gallery;Moscow Conservatory, etc.

An attractive tourist destination

rise in tourism since 2010

250theatres and concert organisations

1,500 libraries

450museums and exhibition halls

8

40%

17 mtourists visit Moscow every year

hotels and mini–hotels

750

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Information portal for Russian and foreign guests who come to Moscow is available in 6 languages.

OfficialMoscowguide

With Moscow City Government support, Moscow Seasons festival events were held in 2016

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Trip to Christmas

Fish Week

Moscow Jam

Our Product

Back to School

Moscow Spring

City Day 869

mparticipants

Active development of event tourism:

2018 FIFA World Cup

International military music festival Spasskaya Tower

Moscow International Festival Circle of Light

Moscow Cinema

Golden Autumn

Moscow Ice-cream


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health and sports facilities

+273 schools and kindergartens 100

Purchased:over 1,600 carriages, more than 7,000 buses

>500 +156

+21

More than

Social infrastructure development:

Transport infrastructure development

of new roads (12.5% increase in the length of main roads)

overpasses and motorway junctions(25% increase in the number of engineering structures)

km

Building a comfortable urban environment is an absolute priority for the Moscow City Gov-ernment. Over the past six years a number of programmes designed to improve the city’s infrastructure were implemented in Moscow:

stations were built (metro stations networkis increased by 10%)

>15.5thousand

facilities equipped with additional exterior lighting

Improved quality of public spaces

437green areas created and landscaped

+212 new parks were created

203streets beautified

>6,000 buildings facades were renovated

High level of security

142 thousandvideo surveillance cameras are functioning

In terms of safety, Moscow is similar to European cities such as Stockholm, Barcelona, and Hamburg.


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Notes

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time to invest in moscow!

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