Braun and Green: Industrial Parks Invite Investors

Industrial parks in Russia and European countries have different conditions for development: Europe is densely populated, while pristine, if one can still say so, forests and meadows are cherished by ecologists, bicyclers and the European Commission. Thus, local authorities rack their brains over effective ways to use existing land plots and receive higher profit, by creating brownfields and greenfields, which have been here for a hundred years. However, in Russia the first similar projects started to appear just ten years ago: we have enough land around cities, and following the USSR collapse there are numerous empty buildings.

An industrial park is not only an area with utilities. Apart from engineering infrastructure, it has to have access roads and a managing company, as minimum requirements. A specialized association in Russia in 2012 developed a standard, which regulates voluntary certification of facilities.

The matter is that there are very many factories closed after the change of economic conditions, and a part of buildings are still nailed up. “Advanced” Russian cities, like Nizhny Novgorod, Novosibirsk and, of course, both capitals, actively develop creative rooms at closed factories (with musical sites, co-working centres and art exhibitions), but such a solution is not a solution for the whole of Russia: tens of creative centres will hardly increase GRP of the region.

Knowing foreign practices, by the end of 2013 Russia had built and commissioned 16 (to a greater degree corresponding to the given definition) brownfields — industrial parks on the territories earlier used by manufacturing, 8 of which have already passed the certification. And almost all Russian brownfields are in private ownership.

It is interesting to note that a quarter more brownfields (industrial parks developed on earlier unused territories) operate now, though by the number of planned facilities the ratio of greenfields to brownfields is 6-7 to 1, respectively. Greenfields are mostly initiated and built by the state, and it can be easily explained: reconstruction of Soviet buildings can often be more expensive than construction of utilities to empty lands — thus, should investors not come to industrial parks (which has already taken place in Russian practice), the losses will not be too high. Such a situation is relevant mainly for public projects — too often their primary aim is attracting investment from the federal budget within the framework of current public programs, and simultaneously improving the investment climate. The quality of development of industrial park projects in such cases leaves much to be desired.

In private projects, when initiators risk losing their own money, the market and investors’ needs are studied more carefully, and the sites are chosen that will be in demand of business, not the ones that stay idle long.

Industrial parks are not a magical magnet for private investments and work only when, apart from the site, the investor finds a market, workforce and opportunities for development in the region. When the region has problems in this field, absolutely different tools should be used.