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. Last Updated: 07/27/2016

Study: St. Pete Lowest in Risk

Russia's Most Attractive Regions
By Investment Risk and Potential
St. Petersburg12
Nizhny Novgorod86
Moscow (city)91
Moscow (region)193
Source: Expert ratings agency, figures for 2004-05
* The higher the rating, the greater the investment risk
**The higher the rating, the lower the investment potential

Some investors now consider St. Petersburg as a better place to do business than Moscow, and big-ticket taxpayers are packing their bags and heading off for President Vladimir Putin's hometown.

Expert ratings agency underpins that trend with a study that has found the northern capital to be Russia's safest investment destination.

Moving up two spots from last year, St. Petersburg topped Expert's annual rating of the country's "least risky" regions for investment, while Moscow came in ninth place. Lipetsk region came in second place and Novgorod third.

In its annual rating, Expert weighed the probability of losing an investment on a number of factors, including political attitudes, social indicators and macroeconomic figures.

For example, regions where political protests are less frequent carry lower risks for investors.

While Moscow retained its status in the study as the region with the greatest investment potential, social indicators helped St. Petersburg gain the "least risky" rating this year.

"Low social risks" catapult St. Petersburg to the top, said Grigory Marchenko, head of regional analysis at Expert. Not surprisingly, Chechnya came in last on the list.

Over the past year, several large firms have started a quiet migration to St. Petersburg, promising it tens of millions of dollars in taxes and other revenues.

Oil major Sibneft, which was recently acquired by Gazprom, has confirmed that it is likely to move its headquarters to St. Petersburg.

"We are proud that such companies as Gazprom, companies of a global scale, are actively coming to St. Petersburg," Governor Valentina Matviyenko said last week, according to the city government web site.

Matviyenko was speaking during the unveiling of Gazprom's plans to bankroll a new sports arena and giant office center in the city, which also happens to be the hometown of the gas giant's chief executive, Alexei Miller.

Shipbuilder Sovkomflot and Russia's No. 2 lender, Vneshtorgbank, began moving their headquarters from Moscow to St. Petersburg in 2004.

Although that is good news for St. Petersburg, the northern capital is unlikely to overtake Moscow in terms of potential returns on investment.

Moscow's sheer size creates unprecedented consumer demand and spurs growth, Marchenko said, which is why his agency named the capital to be the area with the greatest investment potential in Russia.

In contrast to Expert's risk rating, the investment potential rating takes into account such economic factors as industrial capacity and consumer demand. "Where there are people, there is everything else," Marchenko said. "Moscow's population is 10.5 million people, while St. Petersburg's does not top 5 million."

The Moscow region came in third, after St. Petersburg, in terms of investment potential, but it ranked 19th in terms of investment risk, according to Expert.

Russia's breadbasket, the Krasnodar region, was rated 16th in terms of risk, but ninth in investment potential. Expert ranked St. Petersburg's suburbs -- the Leningrad region -- No. 21 for investment risks and No. 19 for potential.