On the Waves of Investments

Construction Weekly found out how St. Petersburg ranked in different ratings in 2015 – both in Russian and foreign ones. We considered the Region's potential from the perspective of different domains. The portrait turned out ambiguous, but not devoid of investment attraction.

St. Petersburg is regularly indexed in world and Russian ratings by a variety of indicators: investment attraction, tourist potential, comfort of living, safety of business conduct, etc.
The traditionally strong points are tourism, education and art. The general economic instability tainted the Region's financial indicators for the year, but preserved a positive evaluation of investment climate.

Tourism, Art and Science

Last year, St. Petersburg ranked second in the rating of Russia's best tourist regions, according to studies conducted by the Center for Information Communications "Rating". As of year-end 2015, only Krasnodar Krai managed to outstrip St. Petersburg.
Given that, the city on the Neva ranked first in the rating of Russian cities for weekend holidays (along with Sochi and Kazan) according to the study published on the website of the tourist social network Tourister.ru.
According to TripAdvisor's study, Peterhof became Russia's most romantic city. The rating compilers pointed out that the palace interiors and the parks surrounding it are very popular among newly-weds who come here for a wedding photo sessions.
The romanticism of tourist journeys to St. Petersburg is also boosted by the State Hermitage that ranked among the world’s 10 most romantic museums in the rating by the British newspaper The Telegraph.
As always, scientific potential of the Northern Capital is high. St. Petersburg ranks second in the RF and first among the subjects of the Northwestern Federal District regarding the development of science and new technologies. According to the RIA-Rating information agency, in the RF, Moscow ranks first and Nizhny Novgorod Region ranks third. Leningrad Region ranks fourth.
St. Petersburg ranks high in the education, as well. In the rating of universities reputation by disciplines compiled by RAEX, St. Petersburg universities are in top ten by the following disciplines: "Technical, Scientific Disciplines and Exact Sciences", "Economics and Management", "Mathematics and Natural Sciences", "Humanitarian and Social Disciplines", "Medicine".
St. Petersburg ranked second in the rating of the safest cities in Russia, after Moscow. In 2015, the city saw the installation of over 5 thousand surveillance cameras.
The Department of Sociology of the Financial University affiliated with the Government of the RF made a rating of Russian cities with best living standards. St. Petersburg is in top ten – it is the sixth-best city after Tumen, Moscow, Kazan, Krasnodar and Grozny.
The study authors proceeded from the main social & economic indicators of 38 large and medium Russian cities and relied on Rosstat data and public opinion polls. Three different approaches were applied to estimate the quality of life in cities. First – level of material wealth, quality of medical service, access to good education. Second – quality of housing fund and work of housing and public services, level of urban amenities provision, condition of public roads. Third – migration and satisfaction with life.
The crisis is shaking the economic domains, and the indicators here show negative dynamics, however, there are reasons to remain optimistic.
Thus, at the St. Petersburg International Economic Forum in 2015, the Strategic Initiative Agency named most comfortable Russian regions for conducting business. While in 2014 St. Petersburg ranked 21st in this rating, last year it went up to top ten. When compiling the rating, the work of authorities and the regions investment component were assessed by 45 criteria. 76 subjects of the RF took part in the compilation of the rating.
According to St. Petersburg Committee for Economic Policy and Strategic Planning, in 2015 the index of industrial production fell against 2014 by 7.3%, but the sales of organizations grew by 9.4%. Inflation accounted for 13.2%, and Petersburgers' real cash earnings decreased by 6.5%.

Investments: Crests and Troughs

Let's start with troughs. According to Nina Oding, head of Leontief Center research department, the most significant failure in the investment plan occurred in the car industry. In December 2014, the sales of new cars in the country went down by 40%, and as of year-end 2015 they fell by another 35.7%. "The management froze the plans for expansion at all assembly plants. The same refers to breweries which started to close," says Nina Oding.
The similar situation is seen in investments in estate property.
In the review of estate property investments in 2015, made by GVA Sawyer, Moscow remains firmly in the leading positions by geography of investments into property. St. Petersburg's share in investments into estate property reduced from 8% to 3% of the total volume of investments. Thus, as for 2015, the cumulative volume of investment transactions in St. Petersburg constituted about 65 million USD against 350 million USD in 2014 (exclusive of investments into land assets).
"Here we experience an impact of the absence of possibility to adequately assess the cost of a facility, which makes investors stick to a conservative approach to investment," thinks Bogdan Zvarich, analyst at GC Finam.
"If we range the segments of Petersburg commercial property market from the viewpoint of investment demand, then now, in my opinion, a request for trade facilities is the most widespread, then follow office facilities, and lastly storage facilities. We observe an interest to facilities which cost from 500 million to 1 billion rubles with payback time of 7-9 years," thinks Anna Sigalova, deputy director of the investment services department at Colliers International in St. Petersburg.
Of course, in 2015 there were fewer investment crests. The pharmaceutical industry became one of the leaders in investments, informs Bogdan Zvarich. Nina Oding agrees with him – she believes that the creation of a pharmaceutical cluster is one of the few ideas that have been translated into life: "The city will see small pharmaceutical manufacture and laboratories. This is not even imports phase-out, but localization."
Another industry that the crisis not only left untouched, but rather played into the hands of, is agriculture. So, the region neighbouring St. Petersburg – Leningrad Region – considerably improved the situation in fishery industry and cheese production because of the food embargo. "Since August 2014 – when importing food products from a number of countries was banned – the enterprises of the region have started to produce cheese. As a result, the output of this product in the region grew – in 2014, the production of cheese and cheese products amounted to 260 thousand tons, in 2015 it was already 320 thousand tons," points out Alexander Varenov, vice chairman of the Committee for Agricultural and Fishery Industry of Leningrad Region.

By the way:

Although because of drop in population income the purchasing power reduced, network retailing in St. Petersburg began to gain momentum. "New discounters – shops for economic shoppers – appear around the city one after another: "Dixie", "Magnet". For example, the Finnish holding Kesko wants to open the eighth hypermarket in St. Petersburg on Vyborg high-road," said Dmitry Schegolsky, director general of the Benua real estate property agency. The market starts tuning in to purchasers' demand, summarizes Nina Oding. For example, in public catering investors abandon the practice of opening expensive restaurants in favor of budget cafeterias or canteens.