Briefing by Sergey Lavrov, Minister of Foreign Affairs of the Russian Federation

​25.10.2016

Moscow

Post-release

Russian Foreign Minister Sergey Lavrov met members of the Association of European Businesses (AEB) on 25 October in Moscow at the Conference Hall of the Four Seasons Hotel. 

Dr. Thomas Staertzel, Chairman of the AEB Board, opened the meeting with a welcome speech. He noted that European businesses are interested in working on the Russian market:

“The Association of European Businesses remains optimistic on the economic potential of the Russian Federation and expects investments in Russia to grow in the next 2-3 years”.

During the briefing Mr. Lavrov shared his opinion on Russian - EU partnership in the challenging times and expressed the hope that all conflicts would be resolved soon.

He also commented on the situation in Ukraine and Syria and the impact that European sanctions were having on business inside and outside Russia.

“Today the business community or the business diplomacy will have a very special role in maintaining confidence and international trust. We are familiar with your attention to develop the mutually beneficial cooperation and continue to work actively on the Russian market. We are aware of your understanding of counterproductive nature of the sanctions and we definitely share this mood”, - noted Mr. Lavrov. 

The briefing by Mr. Lavrov was followed by a Q&A session moderated by AEB CEO Dr. Frank Schauff, who reminded of the long-term perspective of a common economic space from Lisbon to Vladivostok. 

AEB member company representatives received answers to their most pressing and important questions directly from the source. 

Participants in the discussion included:

1. Alexander Liberov, First Deputy Chairman of the AEB Board, CFO, Siemens LLC;

2. Gerald Sakuler, AEB Board Member, AEB treasurer;

3. Adrian Salter, Founder and CEO, Pifagor Development;

4. Philippe Pegorier, AEB Board Member, Chairman of Machine Building Committee, President, Alstom;

5. Cesare Biggiogera, AEB Board Member, CEO, Prysmian Group Russia;

6. Michael Germershausen, Chairman of AEB Human Resources Committee, CEO, Antal Russia;

7. Art Franchek, President, American Institute of Business and Economics;

8. Vilgelmina Shavshina, Councilor, DLA Piper;

9. Reiner Hartman, Head of representative Office, UNIPER Russia

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The complex development of territories will become the main trend in construction. Will the authorities and constructors manage the complicated ask?

International exhibition forum for realty, investments and territories development projects of the Russian Federation took place in Moscow. One of the main issues of discussion was the complex urban development. And though nobody argued that the approach is right, its methods caused serious controversies.

To build and to build

According to the Housing Mortgage Lending Agency’s (HMLA) research, 60 m citizens of the country need improving their housing conditions. In other words, housing construction is of great demand. But what principles will it be regulated with?

From Mikhail Menn’s, the RF Minister of Construction Housing and Utilities, point of view, infill construction has exhausted itself. And today territories’ complex development is relied on. This approach includes a number of issues: land turnover improvement, redevelopment of former industrial zones, and rational use of intra-city areas.

According to the HMLA’s analysis, more than 2 m sq. meters may be received additionally, and 20—25% of urban territories may be involved in construction. This potential is not used at present. But it is very important as the majority of these territories have engineering infrastructure.

— In this regard, we should clear out what kind of state support for construction is needed in new conditions, — Mikhail Menn remarked. — The mortgage loan state support program will complete in 2016. It means that new mechanisms of constructors support should be worked out.

Support measures have not been determined yet, the minister admits, different variants and opinions are being studied. There are problems hindering the complex development of territories. Many cities have no general lay-out, cancelling free housing privatization is constantly postponed. And it prevents from the market development.

Advantage of standards

— To deal with complex development of territories, it is necessary to work out relevant standards, — Denis Philippov, CEO of the Russian Housing Development Foundation, thinks. — Acknowledged criteria must exist, and the practice of private agreements between municipal authorities and developers should become a thing of the past.

Following Mr Philippov, such development of territories should be based on a number of principles. At present the development is poorly regulated, and an integral housing and advertising space is not formed in the result, improvement is not complex. And if all these components are united, the cities will look quite differently.

It is very important to develop mechanisms how to involve the unused land in construction turnover. At the same time, land plots for development should be allotted only if the approved documentation is available. And one more important principle: a developer should be responsible for the construction parameters and terms.

— If all these principles and standards are observed, it will allow to construct within cities’ boundaries, without constant development of empty spaces, — Denis Philippov stressed.

The whole region is an experimental ground

At present, territories’ complex development is not a theory but the implementation of specific projects. The process fetches way in the Moscow region. It has turned into an experimental ground for testing new approaches for the development of large plots.

According to Andrei Kupriyanov, First Deputy Minister of the Moscow region construction complex, in 2015 10m sq. meter housing was commissioned. It became possible due to the implementation of a number of important innovations. Concepts institute is one of them. Before the beginning of construction main principles and project parameters are adopted.

One more important achievement of the regional government: they managed to decrease the terms of construction documentation approval via electronic documents’ turnover – about 80% of all documents are sent in non-legible form.

Business representatives agreed that these changes add to the efficient development of territories. However, entrepreneurs stress some details which should be paid attention to.

— Such projects should be considered from the viewpoint of both the present and the future, — Managing Partner of GRAVION GROUP, Yury Nemanezhin, thinks. — Not all approaches proposed today will turn efficient.

According to the businessman, much is said about the lack of jobs in the Moscow region. And they are paid much attention to in the plans of the territories’ complex development. But how are these tendencies taken into account on the labour market?

Free-lancing is getting more and more popular. Many companies hire remote workers. So, are numerous office areas and a great number of industrial parks the authorities are demanding from investors so much necessary?

No life without smartphone

The implementation of each complex project takes a time. And soon the new houses will be inhabited by present youth. What are their demands?

To study their purchasers’ pool, the Klin brewing company carried out an interesting investigation: young people from 18 to 22 were asked what they first need in their lives. The first place was taken by smartphone, the second – by sex. When they were asked what they would do without a smartphone, about 60% were surprised how that could be.

So, these are the people who in some time will determine the housing demand.

At present in industrial countries, infrastructure for charging electric devices and gadgets is created while developing new territories – it is an example of targeted audience’s demands taken into consideration by developers.

Another acute issue is how to use social infrastructure. Educational-amusement centers are popular in Germany: both children and adults may find occupation to their liking there.

— In the Moscow region, the authorities try to decrease the number of second schools. But it means that half a day the schools are empty, — Yury Nemanezhin continues. — Why not build them so that they could be used as leisure centers?

It is important that a territory development should be complex from the very beginning, HBD of “Granel” GC,Andrei Tsvet, thinks. A project becomes partly obsolete while it is being constructed: there were a lot of examples when a new residential area was designed together with a parking, but in some time it turned out that there was not enough place to have a walk with children. And at the same time a number of car-places stayed unoccupied, as well as offices on the ground floor of the houses located in side streets. Business does not want to rent or buy them.

From complexity to self-sufficiency

— We shall never be able to develop territories efficiently unless we project for 20—25 years ahead, —Ilya Zalivukhin, CEO of the “Yauzaproject” architectural and urban development company, is sure. — The Moscow governments works out requirements to them correctly: they include creation of social engineering and transport infrastructures and jobs. But these targets may be achieved only on condition of housing price decrease, infrastructure expenditures including budget expenses decrease.

In this regard, according to the architect, construction within cities’ boundaries should be a priority. If houses are constructed on new territories, many requirements will appear inexecutable.

A simple example: in buildings within city boundaries ground floors will be very much demanded by business for rent or buying, and they will be of no use on the outskirts.

The Moscow region has a great potential – there are many towns with good prospects. But this potential is not used properly. These opportunities may be realized only via investors’ attraction.

— Dealing with territories’ complex development it is important to gain economic sustainability. If they manage to do it, the goal is achieved, Ilya Zalivukhin resumes.