Gleb Belavin, Deputy Director General of Tenant Relations at the MLP Company, participated in BestBreakfast 32
“The Opening of the New Business Season. Petersburg’s Investment Climate” BestBreakfast took place on September 14. The event’s organizers were Best, Duvernoix Legal, and StroiExpert, with the support of their automotive partner Avanguard and the information portal Arendator.ru.
Georgii Rykov, the Director General of Best Commercial Real Estate and Tamara Baeva, the Director General of Business FM St. Petersburg served as moderators for the event.
The participants of the business breakfast discussed St. Petersburg’s investment potential for construction, industrial, and retail companies. Participants also discussed the reasons for St. Petersburg’s fall to 22nd place in the National Rating of the Investment Climate in Russia’s Regions from ASI, as well as results in development for the first half of 2016, and also shared their main challenges in developing their own business and how to overcome them.
According to a survey on total investment volume in 2016 from Best Commercial Real Estate, St. Petersburg was ranked sixth after Tyumen, Moscow, Krasnodar, the Moscow region, and Tatarstan.
On specific indicators per capita, the results were more modest, for example: 19th place according to investment volume, and 20th place according to area being turned into buildings per capita.
Over 50% of the total volume of capital investments over the past year and a half were connected to investments in real estate. A year before that, this proportion stood at 63%. Real estate remains a unique driver of the city’s economy.
If we examine financial sources for investment projects, we will see at the present time that the amount of financing from bank lending has lowered; it makes up only six percent, which hasn’t changed very much in the past three years. In the “high days” of 2007-2008, more than 25% of investments were made with bank loans.
The company’s data values the 2015 real estate market at 320-350 billion rubles, or 5-5.2 billion US dollars at the current exchange rate. If you count this in real money, then it has reduced by 25%, and this is despite the fact that investment expenses are rising steadily and are ahead of official figures on inflation and exchange rates.
The largest amount of investment is from housing development projects. The most significant decline is in the retail real estate sector.
The participating businessmen specified the following issues as key development problems:
Economic and, in light of the upcoming elections, political uncertainty.
A reduction in effective demand and a lack of funding.
The state’s refusal to fulfill infrastructure obligations to developers.
An unpredictable future for investors and business.
Russia’s image for foreign investors. Russia today is seen as a trouble maker due to unexpected and unpredictable decisions.
Gleb Belavin, Deputy Director General of Tenant Relations at the MLP Company, participated in BestBreakfast 32 and remarked: “For us and for the company, ten percent of our business is located in St. Petersburg, and we are concerned about the investment climate of this region. We understand that the more intensely the region’s economy develops and the higher the population’s consumer demand, the quicker the vacant lots will fill up at our «Utkina Zavod» facility.
However, participants noted a number of positive trends that point to a growth in certain sectors of the economy, including:
Thanks to the high exchange rate and unchanging wage levels, businesses have begun to reorient themselves, particularly focusing on export, which today has proven itself to be extremely profitable.
Innovative ideas and new technology continue to be introduced in traditional industries.
The city’s historic and cultural potential still remain important resources for St. Petersburg, including in attracting investments.
The results of BestBreakfast’s traditional vote showed that all the participates are unanimously “ready to invest in Russia,” while noting in the discussion that they rely only upon themselves and request that the authorities at the very least don’t interfere.