Free from the Burden of Infrastructure

The specificity of regional IUD projects is the opportunity for developers to avoid construction of infrastructure facilities in many cases.

It is important to note that despite IUD projects in Russia are implemented since mid 2000s, there are still no distinct criteria to define if a project can be designated as such. Usually IUD projects have at least 500,000 sq m floor area (with at least 400,000 sq m residential floor area) developed by one company according to an integrated building and development concept. These territories must include social (day-care facilities, schools, sports venues, cultural centers, medical centers), utility and road (networks, driveways, often roads of city significance) infrastructure facilities.
Albina Yamaletdinova, GC Ruslan SP Managing Partner, points out that every region has its own specifics of integrated urban development projects. This depends on the peculiarities of the residential and commercial real estate market in a certain region, the support provided for such projects by local executive authorities, the specificity of urban planning regulation in this sphere and many other factors.
 "IUD projects require a comprehensive approach to construction of the utility and transportation infrastructure, which implies significant capital investments. While such scale of expenses is acceptable for developers in Moscow due to high selling costs per square meter of residential property and high lease rates in business centers and malls, this pressure can dissolve investment potential of a whole project in a region," said Yamaletdinova.  
Vitaly Nikiforovsky, VP at Springald group of companies, believes there is still not much tension around the infrastructure construction issue in regions: "Generally, the infrastructure was build in the Soviet period with a certain margin, so city authorities do not shift the burden of infrastructure issues to developers – any kind of construction is welcomed."
"It is absolutely different in metropolises, where the authorities wouldn't be able to provide the necessary infrastructure for everyone, even if they wanted to, – the city budget wouldn't withstand it. This is why the stage of building licenses includes negotiations regarding construction of infrastructure by efforts of developers. It is understandable that a small company building one or two residential houses can hardly construct a school/day-care center or the necessary roads/utility systems. So today we see a definitely positive trend when a number of companies, whose sites are located nearby, pool their efforts to build infrastructure and fund it according to their construction volumes in a certain area. In this cases we can say that the territory is developed in the integrated way," thinks Nikiforovsky.
Arseny Vasilyev, GC "UNISTO Petrostal" CEO, believes that the authorities' role should be limited to coordination of participants of IUD projects. "Today it is very important to coordinate efforts of developers in order to decrease cost loading for a single company and distribute funds more flexibly. For example, a number of companies build day-care centers and schools together in Murino-Devyatkino and plan to construct two exit ramps by the railway lines. In Kudrovo, developers do the same to build a traffic network. So successful coordination of private efforts is obviously possible. To solve evolving problems authorities need to anticipate them and take the initiative," says Vasilyev.
Evgeny Bogdanov, CEO of RUMPU, Finnish engineering company, also mentioned lack of coordination in IUD projects: "Integrated urban development is not just massive construction works, it is also cooperation of all parties involved in a huge project. I believe that IUD objects should be developed with the participation of the government represented by municipality administration and dominant companies, providing electricity, water and gas supply, as well as municipal authorities and the developer. They should all be involved in construction of day-care facilities and schools."

Opinion

Vitaly Nikiforovsky, VP at Springald group of companies

– Every settlement develops according to a General planning scheme. This scheme strictly defines the way a territory must be used. Then there are regional design standards describing distinct criteria of landscaping and provision of social and utility facilities. De facto IUD is just large-scale accurate execution of the General planning scheme by a developer.