SUBMISSION OF THE INVESTMENT OPERATION FOR CONSIDERATION
- PROJECT:
The construction of the multifunctional building (hereafter referred to as – Object) is planned in the territory of the town Dzerzhinsky, Moscow Region, exit road to the Moscow Ring Road.
A plot of land with the total area of 11619 m² is situated near the interchange of the Moscow Ring Road “Kapotnya-Dzerzhinsky” (outer side) 16 km. To the North, the land lot follows the contours of the Moscow Ring Road, which runs parallel to it. The building can be accessed from the Moscow Ring Road. The project foresees an additional ramp on the Moscow Ring Road.
Object is an eight-storey building with three underground levels. It has a shape of two oval blocks connected with each other by the transparent atrium from 4th storey to the 8th
The Objectconsistsof:
- two underground stores for parking with 108 parking places;
- atechnicalundergroundstorey;
- ground open storey with an area for access to the underground parking, entrance group for lift to the office space, entrance groups to the trade center and showrooms;
- on the 2nd, 3rd and 4th floor trade and show centers are situated;
- from the 5th to the 7th office space is situated. The 8th floor is technical-maintaining.
The construction of the object is a combined system of a steel and solid-cast reinforced concrete framing. The floor structure is solid-cast reinforced concrete. Roofcoatingisflatinclining. Spandrelwalls – compositepanelwithexteriorcladding. Stained glass and windows are made of the aluminum shape with infill of 2-chamber panes.
The project allows for the design and the construction of a parking, exit ramp from the Moscow Ring Road, mounting of the casing for the main gas pipeline Ø1200, replacement of the steam pipeline Ø600, installation of the outer utility connections (heating network, water pipe, sewerage system, power supply cable lines).
- TOTAL ESTIMATED PROJECT SCOPE: (for the date of document submission for the receipt of planning permission and below too) -$ 18,3 Mio
(493831 3000 RUR.)
- COMPOSITION OF INVESTMENT:
- Land lot value (11619 м²): - $ 1.69 Mio (45871928,19 RUR) - data of the state cadastral valuation of the land lots (Annex 1);
- Value of DESIGN AND ENGINEERING WORKS:- $ 1,3 Mio; (35334933,60 RUR) data of the design costs calculation (Annex 2);
- Cost of equipment (inside engineering and life-support system):- $ 3,7 Mio (102 400000,00 RUR)– data of the equipment suppliers;
- Estimated value of CONSTRUCTION AND ASSEMBLY WORKS: $ 10, 8 Mio (293 597600 RUR)– data of the summary financial calculation (Annex 3);
- Project management:- $ 0,8 Mio (22 400000 RUR), (Annex 3);
- Investment lead time:- 24months
- INVESTMENT DISBURSEMENT PLAN (Annex 4)
4. SALES VALUE OF INVESTMENT PROJECT (130000000 RUR + VAT), consisting of:
4.1Land lot value (11619 m²): - 45871 928,19 RUR – data of the state cadastral valuation of the land lots;
4.2Value of DESIGN AND ENGINEERING WORKS
4.3Estimated costs of PERFORMED CONSTRUCTION AND ASSEMBLY WORKS:
Planning works;
30% of parking places and exit ramp from the Moscow Ring Road to the area;
Mounting of the casing for the main gas pipeline;
The re-location of existing steam pipeline beyond boundaries of the construction site.
4.4Project management:
Receipt of technical specification and approvals;
Execution of planning permissions;
5PROJECT STATUS:
At the present time the project of traffic management for the period of construction and running of the multifunctional building and the working project for the arrangement of the ramp exit from the Moscow Ring Road are approved by the STSI Administration of Moscow and by the STSI of Department of Internal Affairs in Luberecky district of Moscow.
At the present moment the following works are executed:
30% of parking places and exit ramp from the Moscow Ring Road to the area,
Planning works,
The casing for the main gas pipeline is mounted;
Existing steam pipeline is relocated beyond the boundaries of the construction site
Geotechnical and topographical surveys.
Technical specifications for canalization, water supply, heat supply and installation of telecommunications network of the building are received.
There is a resolution of the Dzerzhinsky town Executive about the approval of the minutes of the Dzerzhinsky town Town-planning counsel where the draft design of the construction of the building was approved.; (Annex 5)
The mounting of the casing for the main gas pipeline (All-Russia Scientific Research Institute of the patent information “Promtechnologiya”) and the re-location of existing steam pipeline beyond boundaries of the construction site (Institute “Mosenergoproject”) are designed.
6MARKET CONDITIONS:
Trade property market research
Trade property market in the last 5 years is the most dynamic segment of the commercial real estate market in Moscow. Trade property costs are ones of the highest among the European cities. According to the international rating of the investment attraction for foreigner investors the Russian retail trade comes first. The market is being saturated gradually due to the active construction of trade centers between the Garden Ring Road and the Third Hoist Ring and near the Moscow Ring Road. The demand for trade space in well located professional trade centers is stably high. As estimated by the specialists, there will be certain slow decrease in the lease payment rates in the medium-term because of the gradual market saturation.
There are round 600 organized trade areas at the present moment in Moscow. But the amount of shopping space per capita in Moscow is still very low in comparison with European countries. The average performance in those countries amounts to 185,4 m² of sales area per 1000 citizens. In Moscow this performance is round 71 m² per 1000 citizens. According to the specialists’ research Russia falls behind the western countries for 10 years in amount of outlets per capita. It means that office property market is developing and the number of players on the market and the amount of trade space respectively will increase in the next some years.
The increase of supply with trade centers of high quality leads to the fact, that the tenants have become more particular about trade centers. Pricesplaylessandlessrolewhilechoosingspaces. Tenants give more and more attention to proper organization and concept of trade property – location, planning, division of spaces between tenants, organization of buyers flow, efficient government. Using principles which for a long time are being applied in Western countries and are just being introduced onto the market in Russia.
Trade centers with high flow of people, which can be provided by proper trade center concept, are in great demand among the tenants. Demand for trade spaces in high-quality trade centers is sufficient, space occupancy in such centers is 98-100%.
Characteristic features of the current situation on the market are:
-construction of shopping centers on the model of Western shopping centers with efficient concept;
-developers are ready to concern longer term of investments payback;
-limited number of international developers;
-Russian operators develop due to the opening of new large outlets both in the capital and in the regions;
-international store operators choose rather to be represented in Russia be companies – franchisee. Onlysomeinternationaloperatorswork directlyinthecountry;
-Rent rates in the trade centers situated in suburbs are stabilizing; rent rates in old and inefficient trade centers will decrease.
In the first half year of 2005 professional trade space offers increased by 10800 m² and reached 1,1 million m². They continue to implement other big projects, which are to be accomplished in the current year. Lease rate level is stable for trade spaces in professional trade centers in spite of growing cost of project implementation. Insufficient level of competition among trade centers allows achieving good level of income for investors and is the highest in Moscow commercial real estate property market. It is proved by increasing quality of new objects of commercial real estate property (trade space annual growth is about 20%).
Regions of new trade centers construction:
-The Moscow Ring Road and intersection of the main transport highways;
-Along the main traffic highways and the Third hoist ring;
-near metro stations;
-populous residential areas (suburb) with good transport accessibility and planning;
-underground objects in the centre of Moscow.
Office property market research
On the whole volume of deals in the first half-year of 2005 exceeded merged space volumes, which indicates stable market tendency – closing deals by prior lease. Merging volume came to about 450000 m². Spaces of classes “A” and “B” in comparison with introduced space volumes, where merging volume stays high are in the greatest demand.
In spite of serious volumes of construction, demand for space lease and purchase in business-centers is very high and exceeds supply by 7-8%. There remains a last years’ tendency, when high-quality office centers under construction are completely being leased long before the end of construction. In 2004 volumes of prior lease deals came to 60 % from the total amount of deals. Moscow offices are more often being leased than sold. The lease comes to about 80 % from the total amount of deals on office property market.
Spaces from 50 to 150 m² accounts for main demand (51,5 %). According to experts in the latest years there is an increase in volume demand for spaces of larger dimensions. There is a rise in number of deals on selling spaces with more than 1000 m².
Requirements for class “B” spaces come to more than 60 % of demands. An increased demand is explained by tenants’ wish to save on space lease.
More than 60 % of office property offers is situated within Metro Ring Road. The main reasons for high demand for office spaces in the center are: prestigiousness, traditions and convenient excess by public transport for employees and clients. But transport flow congestion in the centre, availability of offers of inexpensive and high-quality office property impels the tenants to pay more attention to commercial real estate property, situated outside the center of Moscow.
The main reasons, why tenants move from the center to bedroom communities and farther, are lower lease rates, possibility of larger spaces lease and availability of free parking places. Tenants get a necessary level of conveniences and service while they pay 18-30 % less and, consequently, for the same amount of money they can rent larger spaces. In other words, tenants get the possibility to rent a class A office for class B price. An office, situated outside the center, provides additional advantages: less intensity of transport flow, lack of traffic jams, traffic against the main transport flow, availability of parking places.
By the present moment there are 3 business centers on the territory, adjoined to Moscow Ring Road (Country Park – the main tenant is Volvo, $320 Mio per m² per year, “First Kilometer” and office-park “Mozhaiskii”). There is also construction of several offices in the area of intersection of Yaroslavskii high road and Moscow Ring Road (implementation in the first quarter of 2007) and on the territory of trade center “Mega-Belaya dacha” (term of implementation-2007).
From the March 2005 there is a monthly increase in demand and supply for 1,5 – 2%. It proves that the office property market became more active against 2004. Taking into account the fact that there's little difference between demand and supply (3-7%), it may be concluded that the objects' capacity is huge and the market is far from saturation.
7COMPETITIVE EDGE OF THE PROJECT
The main advantages of the object are:
-Proximity to the Moscow Ring Road;
-Convenient access for passenger cars;
-Publicvehiclestops;
-Location on the main entrance to Dzerzhinsky.