Use of PPP mechanisms in TIH construction in the capital

In recent years Public-private partnership (PPP) mechanism is widely used in Russia within the large-scale infrastructure projects implementation. The essence of PPP consists in mutually beneficial and long-term cooperation of public and private party, i.e. between the state and the investor which becomes possible due to association of resources and risks distribution.

In Russia the majority of PPP projects in 2014-2015 was carried out within concession agreements in municipal, social and power spheres. The share of each of these branches in total number of PPP projects has made about 30%, at the same time the rest – only 10% belonged to transport.

However, unlike other regions, the maximum level of investment potential and large PPP projects implementation in the sphere of transport is observed in Moscow. In particular, for the solution of a serious problem of traffic jams the Government of Moscow in 2011 adopted the program of 273 transport hubs creation (TH) by 2020, and 196 of them will be major.

The main goal of TPU construction is creation of comfortable conditions for passengers at change from one type of transport to another with an opportunity to use various additional services on the route. Thus, TPU creation assumes large-scale projects implementation on transformation and construction of technological (platforms, passages, intercepting parkings, police station, first-aid post and so forth) and commercial (shops, cafe and restaurants, hotels, offices) component. The cost of each of them depending on certain characteristics can make from 190 million to 30 billion rubles.

To minimize volumes of the capital investments and budget economy the the state raises funds of private investors which carry out necessary infrastructure construction and receive a commercial profit. The right to construct within TPU creation projects in Moscow is transferred to developers following the results of the open auction with the right of land plots acquisition or rent (unlike construction of highways which is most often carried out within concession agreements). Thus, "MKZhD" JSC creates subsidiaries (one per TPU: "Vladykino", "Botanichesky Sad", "Yaroslavl", "Novopeschanaya", etc.) having land plots with the right of commercial component construction. The choice of the investor which will offer the highest price and the best terms is carried out accoding to the results of an open competition. Upon its completion "MKZhD" JSC sells 100% of the share in the subsidiary to the developer.

Transfer of the land plot for the construction purposes to rent (usually for a period of 10 years) is carried out following the results of open auctions (for example, TPU "Novokosino", "Alma-Atinskaya") within also determines the annual size of payment for the site. According to the results of TPU construction project implementation the total object area is transferred to the possession of the investor (besides technological component which is handed into city property on a grant basis).

As a rule, within competitions or auctions several interested developers appear because such projects are attractive due to bigger liquidity of the commercial areas in TPU due to high passability location. However in practice it turned out that bigger area shopping centers joined TPU structures , than it was supposed initially to reduce the payback period. They, in their turn, attracted additional flows of public transport passengers and car owners that does not improve transport situation, but, on the contrary, aggravates it only. Due to similar phenomenon of projects criticism sometimes TPU is deciphered as "trade and transfer knot" or even "trade and parking knot".

In the last 2 years a reverse tendency is observed: due to the crisis phenomena on the commercial real estate market and lack of the loan capital among the persons interested in funds investment in TPU construction. Under otherwise equal conditions the project payback period increases. As a result potential investors suggest the state to revise initial plans for knots construction and to reduce office and floor spaces, and also to include residential real estate in TPU borders to increase the economic effect.

In this regard TPU settling beyond the Outer Moscow Ring Road or in eastern parts of the city – areas, which are traditionally less demanded among office space tenants are of the greatest appeal. Economy class housing construction in close proximity to TPU is economically effective as the project with an inhabited component is also interesting to final buyers: they receive residential property provided with qualitative social, trade and transport infrastructure. And though profitability of such real estate per 1 sq.m will be lower, investors will manage to compensate a part of TPU infrastructure construction costs at the expense of a great final demand.

TPU "Salaryevo" construction of which is planned to be finished by the end of 2017 is considered one of the most perspective projects. In the new residential area located by the metro station of the same name there is a high potential for development in the long term due to population growth and low starting land cost.