City Opens Wasteland to Development

VedomostiKhodynskoye Pole, between Khoroshovskoye Shosse and Leningradsky Prospekt, is the only undeveloped area in central Moscow.
City Hall's plans to open Khodynskoye Pole, the last large undeveloped area in central Moscow, to construction are taking shape.

Moscow Mayor Yury Luzhkov has spelled out in an order which companies will be allowed to participate in developing the territory between Khoroshovskoye Shosse and Leningradsky Prospekt. The main investor will be Mosfundamentstroi-6, or MFS-6, one of the largest members of the Moscow construction union. Its main partner will be Domostroitelny Kombinat No. 3, or DSK-3, a subsidiary of Inteko, a firm owned by Luzhkov's wife, Yelena Baturina.

Developers are having an ever-harder time finding land for new projects, which makes an untapped resource like Khodynskoye Pole attractive. The area has room for some 1 million square meters of housing, worth about $500 to $700 million.

The decision to develop Khodynskoye was put off for a long time while City Hall negotiated to win the land rights. The territory includes the Frunze airport, which belongs to the Defense Ministry and is consequently federal property. City Hall and the ministry finally signed an agreement on the area at the end of last year.

Resolution No. 145-PP signed by Luzhkov made everything clear.

The Aviapark company will finance the construction of non-residential objects on the territory of the former aerodrome along with the ZAO TsUM-Invest company, attracted by Aviapark, as well as other investors. The investor for housing construction is to be MFS-6, at the proposal of the Defense Ministry. MFS-6 will also be permitted to attract investors.

There is nothing in the resolution about MFS-6's partners, but nonetheless, its partner has been decided.

The main investor will be DSK-3, said Alexander Notin, vice president of the Moscow construction union. Thus the main part of Khodynskoye Pole will be used for apartment houses of the P3M type, which DSK-3 produces.

DSK-3 might try out its new planned 23-story blocks on Khodynskoye Pole. Last year the factory erected a total of 470,000 square meters and plans to build a further 500,000 this year.

DSK-1 had previously planned to take part in the construction of Khodynskoye, which has long worked with MFS-6. However, it would seem that such plans are not in the cards.

"Though initially several P44T houses [made by DSK-1] were intended for the area, I don't think they are there now," Notin said.

The companies that have received the right to develop Khodynskoye have received favorable conditions. According to the agreement, the investor will receive 70 percent of the housing built -- normally the city takes 36 percent and sometimes as much as 50 percent. The remaining 30 percent is earmarked for military use, but the city is exchanging it for housing that already exists in the fund of the Department of Municipal Housing and Housing Policy.

The city will also receive 40 percent of the non-housing objects and 20 percent of the garages and parking spaces.

In exchange for this and "taking into consideration the social significance of the development," City Hall has freed investors from making payments into the development of city engineering networks and equipment and from transferring funds for the development of the social and engineering infrastructure.

According to market players, this could reduce the production cost by 40 percent.