City Promotes Projects at MIPIM
Published: March 6, 2007 (Issue # 1251)
Alexander Belenky / The St. Petersburg Times
Visitors look on at a model of the winning design for the Gazprom-City tower.
St. Petersburg ranks as one of the regions in Russia with the lowest level of investment risk. In November last year the national rating agency Expert RA put the city in first place in a list of Russian regions with “the lowest investment risk in 2005-2006,” praising it for “the high efficiency of regional governance.” St. Petersburg has a BBB- credit rating from Standard & Poor’s.
According to the Committee for Economic Development, Industrial Policy and Trade, $5 billion was invested into fixed capital in St. Petersburg in January-November 2006, which is a 6.7 percent increase on the same period for 2005.
Foreign investment tripled, increasing to $2.7 billion in the first nine months of 2006. Direct foreign investment accounted for $479.5 million. Most of the funds were invested into the processing industry, food production and tobacco production.
During the 10th St. Petersburg International Economic Forum held in June last year, companies signed contracts amounting to around $1 billion. Among the major contracts was an investment agreement with Nissan for the construction of a $200 million car plant in the city. Another foreign carmaker, General Motors, started construction of its plant in June.
In the 2006 city budget spending on infrastructure tripled over 2003, reaching $993 million. This year investment into infrastructure will increase to $1.5 billion.
The city has won a national tender to create a special economic zone, a project that will run through 2006-2026 and provide favorable terms for entrepreneurs. On the territory of the special economic zone the development of software, communications, consumer electronics, automatic control systems, military and civil avionics and medical equipment will all be subject to the terms of the scheme.
The benefits of being located in a special economic zone include a unified social tax of 14 percent instead of 26 percent, exemption from custom fees, land tax, property tax and transport tax and a profit tax of 20 instead of 24 percent.
A multifunctional project comprising residential buildings and office and entertainment areas is being constructed in Strelna near St. Petersburg on a 180-hectare site. It should be completed by 2010, providing housing for about 35,000 residents.
The total cost of the project is estimated at about $1.5 billion. Over one million square meters of residential premises and 500,000 square meters of commercial premises are to be constructed and funded by the Shanghai Overseas Investment Company.
Last year the Russian government allocated two projects financing from the state investment fund — the Orlovsky tunnel under the Neva River and the Western High-Speed Link Road.
The tunnel is to link the city center with Vasilievsky Island from the intersection of Piskarevsky Prospekt and Orlovskaya Ulitsa. The total cost of the tunnel will be $987 million. Apart from the $328 million supplied by the investment fund, the city budget will provide roughly the same amount. Private investors are to cover the remaining costs. Systema Gals, a subsidiary of AFK Systema, has completed the basic planning works.
The cost of the Western High-Speed Link-Road is estimated at $2 billion. The 46.4 kilometer toll-road will run from north to south through the city, connecting the ring road with the sea port and main transport hubs of the city.
The concession scheme is aimed at ensuring that the construction will be financed by an investment fund ($620 million), the St. Petersburg budget ($370 million) and private investments. Planning works have already been completed.
In December 2006 a tender was announced to find a private company to construct and exploit the road. The winner will be announced in October of this year.
The planned overland express is another key infrastructure project. By 2011 it should link the Baltic Pearl with the Prospekt Veteranov metro station. The Kupchino and Obukhovo stations will be linked to the initial line at a latter date. The total cost of the project is 18 billion rubles ($700 million).
A new $225-million stadium is to be built on the site of the Kirovsky Stadium on Krestovsky Island which was originally built in the 1950s. It will be funded from the tax payments of Gazprom Neft oil company into the city budget.
From a short-list of five architectural companies, City Hall approved the plans drawn up by Kisho Kurokawa architect & associates. According to the signed contract, construction of the 62,000-seater stadium should be completed by December 2008. The building will meet the standards of the governing bodies of European and World football, UEFA and FIFA.
The stadium, designed in the form of a “space-ship,” will be 56.6 meters high.
Sea Passenger Terminal
The federal authorities and the Morskoi Fasad (Sea Facade) firm will invest $310 million in the construction of a sea passenger port on Vasilievsky Island to serve 1.2 million passengers a year. The port will be completed by 2009.
This is currently the largest project in Europe for the development of land on a seashore site — the 476-hectare plot will be home to the port, office centers, shopping and entertainment facilities and residential buildings.
The state budget is funding the reconstruction of the Petrovsky fairway, a new navigation channel and the provision of the navigational systems. The creation of new landing and hydro-technical systems and the port’s buildings are being financed by private companies.
The state budget spent 2.7 billion rubles on the project last year, while private companies invested 2 billion rubles. Thirty-five hectares of land have been reclaimed and dredging works are continuing.
To be located on the banks of the Neva and Okhta rivers near the Peter the Great Bridge, Gazprom-City will comprise a high-rise office center for Gazprom Neft oil company as well as office and shopping areas, a hotel and museum, residential buildings and transport and social infrastructure.
Though construction of the 300-meter high skyscraper in the historical center of the city has been criticized by local media and architectural experts, the Gazprom Neft Invest company plans to complete the tower by 2012. The whole project is due to be completed in 2016.
The total cost of the project is estimated at $2 billion. It will be funded from Gazprom Neft tax payments to the city budget. Over one million square meters of area will be developed.
The redevelopment of this island, located in the heart of St. Petersburg and first developed in the 18th century, will cost $319 million in investment and take 30 months to complete.
New construction on the 220,000 square meter island will comprise offices, hotels and varied social infrastructure. The construction of a multifunctional center of 10,000 square meters is obligatory as are the provision of 1,000 car-park spaces, a main road and several pedestrian bridges to provide public access to the island.
The British architect Norman Foster and the Moscow based ST Group construction holding were awarded the contract in February 2006 from a selection of three applicants that put in bids for the project.
The state buildings on the island have already been demolished.
The project includes relocating railway warehouses from the city center to the Shushary district and redevelopment of the territory between Ligovsky Prospekt, Ulitsa Konstantina Zaslonova, Obvodny Canal, the Neva Embankment and Nevsky Prospekt.
About 300,000 square meters of new buildings are to be constructed. The plans are still being developed and getting the necessary approvals.
Higher School of Management
In April 2006 the Russian government issued a decree on the creation of a Higher School of Management. The new school will be created on the basis of the existing departments of the management faculty of St. Petersburg State University and the Scientific and Research Institute of Management.
The University has been allocated the Mikhailovskaya Dacha palace and park ensemble in Strelna, just outside St. Petersburg to create the business school. The total cost of the project is estimated at $200 million.
Last year, the Federal Agency for Education granted the project 500 million rubles. Most of the funds (350 million rubles) were spent on equipment, literature on management, training programs for lecturers and promotion. The remaining amount was spent on maintenance and planning works for the development of the Mikhailovskaya Dacha.
In November of last year construction of the new campus was officially inaugurated.
At the moment 137 hotel projects are being implemented in the city, providing for 11,672 new rooms. Of them, 22 hotels are being constructed and engineering and planning works are being carried out in 74 hotels, while 40 hotels are awaiting approvals and city government decrees.