Novosibirsk Economy Investment Potential Real Estate 2010 г 1. Novosibirsk - is a megalopolis, third in Russia by size. The geographical center of Russia. Population: 1.397 million (est. January 1, 2009) Area: 506.67 sq. km The economy of Novosibirsk Oblast is highly diversified. The economy is distinguished for maintaining a proper balance between industrial and farming sectors, and a high potential of scientific innovations. Situated in a region with an economy not based on resource supplies, the city does not depend on the international demand for raw materials. The added value produced in Novosibirsk and Novosibirsk Oblast largely results from the use of intellectual resources or advanced processing. Other Прочие услуги 30% 30% Industry Промышлен24% ность 24% Transport 7% Транспорт 7% Строительство Construction 4,50% 4.5% Связь 10% Telecommunications Сельское Agriculture хозяйство 7,50% 10% 7.5% Торговля 17% Trade 17% The city economy is sustainable in periods of instability. 1. Economy 2. 3. 4. 5. 6. Logistics Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 . The city is the fourth in Russia as to the amount of retail turnover and the fifth as to the monthly income level of its population . 1. The amount of Gross Regional Product of Novosibirsk Oblast has grown in 2008 by 9% relative to that of 2007, reaching RUB 434 bln (compare to a 6% growth of the gross domestic product of the Russian Federation). 2008 110% 108% 106% For the period of 2000 to 2008, the gross regional product of Novosibirsk Oblast has grown 2.3 times (compare to 1.8 times for the gross domestic product of Russia) 2008 + 9% + 6% 104% 102% 100% 98% 2008 250% 2007 2007 200% 96% to 2.3 times to 1.8 times 94% ВРП Новосибирской области GRP of Novosibirsk ВРП России GDP of Russia 150% 100% Novosibirsk Oblast is one of top eight regions of Russia most effectively coping with the crisis (according to the rating of the Ministry of Economic Development of the Russian Federation) 2008 2000 2000 50% 0% ВРП Новосибирской области GRP of Novosibirsk ВРП России GDP of Russia In periods of economic growth, the pace of city economy development is higher than the average for the country. 2. Novosibirsk is a major transportation hub in Siberia Novosibirsk Oblast is a place of intersection for traffic arteries of Western Siberia including the Trans-Siberian Railroad, three federal highways, a port on the river Ob, one of the largest in Siberia, and an international air hub, Tolmachevo. 1. Economy RUSSIA 2. Logistics 3. 4. 5. 6. St-Petersburg Norilsk MOSKOW EUROPE Siberian Federal District Far East Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 NOVOSIBIRSK KAZAKHSTAN Krasnoyarsk Irkutsk Central Asia MONGOLIA Novosibirsk provides connection between Siberia, Far East, China, India, Central Asia (Kazakhstan, Tadzhikistan, Uzbekistan) and European regions of Russia and, then, Europe. CHINA The geographic situation of the city is the basis for its attractiveness for investment. 3. Novosibirsk is a major research and development center in Siberia The following scientific centers are situated in Novosibirsk and its suburb: Akademgorodok A scientific complex of 22 research institutes of the Russian Academy of Science, Siberian Branch playing an important role in the development of Russian and international science. Established in 1957, Akademgorodok is the Russian counterpart of Silicone Valley. Koltsovo Science Town Founded in 1974, Koltsovo, a virology and biotechnology center, was granted the status of Science Town in 2003. Academy of Agriculture Science This is a complex of agriculture research institutes. 1. Economy 2. Logistics 3. Scientific potential 4. International status 5. City development in 2009 6. Commercial property structure 7. City investment potential to 2030 Technology Park The city has 47 higher education institutions: 10 academies, 14 universities and 23 institutes. This is a complex comprising industrial facilities, laboratories, offices and residential buildings for researchers. Based on the resources of Akademgorodok, its construction was launched in 2007 for a purpose of creating an environment encouraging for innovation. Presently, the Technology Park is the most important project among those aimed at providing support for science-intensive industries. The Technology Park is intended to provide development in four principal areas: biomedicine and biotechnology, information technologies, power electronics, and instrument making. In 2009, there were more than 300 innovation companies in Akademgorodok featuring RUB 11 bln of annual revenue and RUB 1.8 bln of export contracts. The scientific potential of the city is the main resource for its development. 4. Representation of international brands Factories Retail shops Sales of motor vehicles PepsiCO, Heineken, Mars IKEA, Ashan, Metro, LeroyMerlin, Mosmart authorized dealers of Audi, Mersedes-Benz, BMW, Lexus, Porsche, Volksvagen, GM ( Chevrolet, Opel, Hammer), Peugeot, GM DAT (Daewoo), Mazda, KIA Motors, Honda, HINO. Banking banks operating in the city including 80 operating on the allRussian scale. There are some fully foreign-owned banks such as: Raiffeisen, BSGV, Barklais and Nordea in the region as well. Shops Clothing and footwear brand stores Max Mara, Mexx, Markc&Spenser, Sisley, Zara, Adidas, Puma, Ecco, Salamander, Carnaby, Carlo Pazolini, Chester and other. Hotel business 1. 2. 3. 4. 5. 6. Economy Logistics Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 Hilton . Representations of foreign countries General consulate of Germany since 1994 . Novosibirsk is a member, the only one in Russia, of the World Technopolis Association. Byelorussian Embassy since 2000 General consulate of Bulgaria since 2003 Consulate of Kyrgyzstan since 2004 Consulate of Uzbekistan since 2007 Owing to the high purchasing power and activity of its population, the city is an attractive place of business for international corporations. 5. Industry, transport and science development in 2009 Plants Roads Technology Park - Launching the Licolor brick-making plant. Property acreage: 7 ha. Investments: US$ 67 mln. Estimated payback period: 5 years. Plant capacity: 63 million bricks a year. - Launching a fiber-optic cable production plant in Berdsk, satellite town of Novosibirsk. - Commencing with construction of plant for advanced treatment of grain. Property acreage: 17 ha. Investments: US$ 225 mln.. - Completing preparation of a site for construction of a lithium-ion battery production plant. Investments: US$ 248 mln. Commissioned: - a new motorway Koltsovo-Akademgorodok. Investments: US$ 6.7 mln. - a traffic intersection at Inya Railroad Junction. Investments: US$ 30 mln. - Kirova Street overpass. Investments: ca US$ 37 mln. 1. 2. 3. 4. 5. 6. Экономика Logistics Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 The construction of the first module for the Technology Park of Novosibirsk has been accomplished. The module is to be completely equipped within the first quarter of 2010. Projects for construction of the second and third modules intended for nanotechnology production (precise metal processing, special galvanic processes, thermal processing) and accommodation of a business incubator for small innovation businesses have been prepared. The Technology Park area is 48 ha with immovable property of 330,000 sq m total space located therein. Investments: US$ 566 mln including US$ 140 mln in 2009 composed of US$ 123.3 mln from the Oblast, city and federal budget resources and US$ 16.7 mln of private investments . Permanently active in raising investments, the city authorities provide a friendly environment for business operations. 5. Construction, logistics and retail trade development in 2009 Housing Commissio ned >> 1,200,000 sq m Commercial property Offices - Commissioning the Cobra, a class "A" office center S= 18,000 sq m. - Opening a class "B" business center+ Lanta Center S= 23,000 sq m. Investments: US$ 34 mln. Warehouses - Commissioning a class "A" logistics center, S= 121,000 sq m. Investments: US$ 135 mln. - Tolmachevo Logistics Park. Credit resources to an amount of US$ 137 mln for financing of the first stage of construction are provided by VneshEconomBank (Bank for Development and Foreign Economic Affairs) S= 285,700 sq m. Trade centers Exhibition centers Social facilities Commissioned: 40 buildings of 182,200 sq m total space. - Opening the second Metro Cash & Carry trade center, Investments: ca US$ 30 mln. - Opening the Golden Park trade center (30,000 sq m), Investments: US$ 40 mln. - Opening the second Auchan trade center, Investments: US$ 30 mln. - Commencing with construction of an exhibition center, the largest one this side from the Urals. S= 60,000 sq m. Investments: more than US$ 100 mln. The demand for commercial and residential immovable property still remains unsatisfied. 6. Commercial property composition in 2009: Warehouses Novosibirsk is a major logistics center in Siberia. More than 1.6 mln sq m of warehousing facilities are situated in Novosibirsk including about 420 thousand sq m of those rated as class "A". Trade centers About 60 retail trade centers of approximately 900 thousand sq m total space are operating in Novosibirsk Oblast (up to 95% of them in Novosibirsk). The total amount of trading space in Novosibirsk Oblast is 2.5 mln sq m including more than 2 mln sq m in Novosibirsk. . D А+В 40% 22% Office space In 2009, the amount of office space was about 2 mln sq m (up to 25% of that amount С being commissioned in the last 4 years). 38% 1. 2. 3. 4. 5. 6. Economy Logistics Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 Number of high-quality space in square meters per 1000 population: (Source: GVA Sawyer ) 700 700 600 528 500 Novosibirsk Новосибирск 438 400 300 340 287 235 265 334 285 According to RosBusinessConsulting, a leading Russian consulting agency, in 2008 Novosibirsk was the third in the list of Russian cities most attractive for business. Sankt-Petersburg Санкт-Петербург Москва Moskow 200 100 0 Склады Warehouses Офисы Office Торговые Trading space площади The steady demand for leased space is caused by the shortage in space that meets quality standards. 6. Potential of the Commercial Real Estate Market А+B+C+D 12,60% 8% B+C+D 92% 87,40% Offices In July 2009, the percentage of available space in office centers of Novosibirsk (estimated for 47 items of property rated "В", "С" and "D") was 8%. Taking "A" class business centers into account, the percentage of vacant space was 12.6%. (Source: RID Analytics) Demand and supply are in balance. Owing to the high occupancy factor, investors may be sure that they receive secure and long-term proceeds. The current adjustment of prices offers good opportunities for investors having enough funds of their own. Average sell prices in the fourth quarter of 2009 - Office space: US$ 2067 per sq. m - Warehouse space: US$ 607 per sq. m -Shopping space: US$ 3363 per sq. m The retail market of Novosibirsk shows a significant potential and remains attractive because of different rates of return as compared to developed countries In the fourth quarter of 2009, average rates of rent were as follows: - Office space: US$ 215 per sq. m a year - Warehouse space: US$ 71 per sq. m a year - Shopping space: US$ 428 per sq. m a year We expect to buy for our investors real estate items with an annual rate of return not less than 15-20%. 7. City development plans to 2030 include: Population growth by 22%, up to 1.7 million Housing stock growth 2 times, up to 51 million sq. m City limits expansion by 28%, up to 649.23 sq. km Transport infrastructure development. Subway lines growth by 91.4 km. Construction of the Southern Bypass Highway, Academic Highway, and several bridges over the rivers Ob and Inya. Construction of a logistics park, the largest in Siberia. Development of knowledge-intensive industries. The implementation of the Technology Park Project in Akademgorodok will result in creation of 13,000 employment vacancies and accommodation for more than 200 resident innovation companies. The annual income of the companies will exceed US$ 650 bln. 1. 2. 3. 4. 5. 6. Economy Logistics Scientific potential International status City development in 2009 Commercial property structure 7. City investment potential to 2030 According to estimates made by the Mayor Office of Novosibirsk, 2010 will show a growth of the retail trade turnover by 11.4%, average wages by 10.7%, number of motor vehicles per 1000 population by 2%, and gross regional product by 1%. The diversified economy, situation at a traffic intersection, R&D base and intellectual resources are main components for investment appeal of Novosibirsk. Address: 909 office, 2, Kommunisticheskaya street, Novosibirsk, Russia, 630007 Tel/Fax: +7(383) 3-281-282 www.verbacapital.ru License number: 21-000-1-00604 of October 21, 2008 to carry on management of investment funds, unit investment funds and non-governmental pension funds.