Regions Apply Integrated Approach

In the last decades, St. Petersburg and Moscow have become familiar with integrated urban development. It is more difficult in regions, where high-rise and even infill development is much more common.

The two capitals switched to integrated urban development involuntarily. IUD construction usually prevails in the urban fringe, where the cities' administrations forced developers to move wary of a social fallout: urban territories available for construction were used up in the 90s and the beginning of the 2000s, so further development in established urbanized areas would degrade the quality of life there.
Among the PROEstate topics are some of the regional IUD projects – even regions with less intensive investments are running out of territories available for development. Administrations of smaller cities can adopt the experience of St.Petersburg and Moscow to avoid the mistakes made here.
Today IUD projects account for 50% of the real estate primary market in St. Peter­s­burg and the Leningrad Region, and in the years to come this number is expected to reach 70%.
According to "Glavstroy-SPb", today 13 IUD projects are available for sale in St. Petersburg. The total new build floor area announced is around 11.8 million sq m.
"If we talk about regions, such projects are first of all necessary in cities with a million-plus population and high level of economic activity. These are Novosibirsk, Yekaterinburg, Kazan and some other cities. However the scale of IUD there should be much lesser than in Moscow and St. Petersburg," says Pyotr Buslov, the Head of LLC "Glavstroy-SPb" analytical center. Pyotr believes that ensuring employment of residents in IUD projects is very important. Otherwise city authorities will face significant growth of commutation. "Thus, the use of a city's transportation infrastructure will only be increased. To avoid that, IUD projects should be implemented nearby sources of employment, or such sources should be created as a part of the projects," assures the expert.
Albina Yamaletdinova, GC Ruslan SP Managing Partner, points out that one of the biggest regional IUD projects is "Akademichesky" which is constructed by KORTROS in Yekaterinburg with government support. "I should mention that the Yekaterinburg agglomeration is one of the leaders in the number of IUD announced. One can say IUD is the dominating type of development projects in this region," said Yamaletdinova. Albina adds that IUD projects in Bashkortostan and Ufa are mainly implemented under the control of different state and municipal unitary enterprises. "Governmentalized" development is one of the particularities of this region.
"IUD projects in Kazan, such as Smart City Kazan and Innopolis, are industry-specialized and offer a number of specific opportunities: Innopolis is a high-tech innovation center, and Smart City is an investment platform for business development. These projects are supported by the government," says Yamaletdinova.

Opinion

Mikhail Yakubov, Head of Development Consultancy, JLL:

– The main difference in implementation of IUD projects in regions is a much weaker commercial real estate market with less capacity and consumer purchasing power. At the same time, IUD projects usually implicate multifunctionality and long construction periods. Another characteristic of the regional market is lower demand for high priced residential property, which, in its turn, restricts diversification opportunities of a IUD project concept for a developer.