The city of Moscow is taking steps to improve its investment climate and the quality of its governance as part of a campaign to attract investors to help expand its urban centre.

The city of Moscow is taking steps to improve its investment climate and the quality of its governance as part of a campaign to attract investors to help expand its urban centre.

Under the plans, the current surface area will be more than doubled, deputy mayor of Moscow Andrei Sharonov told PropertyEU at the ULI Europe annual conference in Paris last week.

‘Moscow is being expanded and has become 2.5 times bigger with new urban developments,’ he said. ‘We are moving government agencies to the new districts which will provide more reasons for development. These low density areas have great potential.’

The city of Moscow currently has a population of 11.8 million, rising to 15 million daily due to the influx of workers from outside the city. Dramatic growth in the number of cars has led to huge traffic congestion and increased air pollution, causing Moscow’s rating in livability rankings to nosedive in recent years. The city also rates poorly in international investment climate rankings due to problems with corruption and red tape.

However, a new government under Moscow’s new mayor Sergey Sobyanin and his deputy Andrei Sharonov is making haste with plans to improve the city’s image both at home and abroad. The plans for the new urban developments include the creation of an international financial centre and a science park which will be overseen by a single municipal investment authority, Sharonov said. ‘We hope the pendulum will swing back and that we will see new investors and new faces from Europe, the US and Asia.’

Sharonov said the Moscow authorities were also seeking to attract ‘smart money’ from Russia and abroad for the city's post-industrial megapolis. ‘A certain percentage will be devoted to scientific institutions and innovative businesses that we want to incentivize.’ He also foresees a growing role for international retail developers. ‘There is a lot of space for growth, retail in Moscow is underdeveloped. This is the most obvious area where they can play a role. There is a serious shortage of different types of segments and retail formats.’

The new settlements will arise to the southwest of Moscow in rural areas with low population density covering an area of 2,500 square kms, Sharonov said. Connectivity through improved transport connections is also a key priority, he added, but said progress was already being made in some regions. The city authorities embarked on an aggressive development plan three years ago and new rail links to Moscow airport have since curtailed travelling time to 30-35 minutes, he pointed out.

‘Our plans for a Russian Silicon Valley will give a serious boost to the development of an innovative economy. But it is the task of the city government to provide the infrastructure.’

Moves to create a Russian Silicon Valley have also started to bear fruit, Sharonov said. The creation of tax-friendly industrial zones with special administrative regimes has already drawn a number of larger international companies, he added. ‘There’s big potential for redevelopment. We’re trying to create mixed-use territories with residential, education, retail, leisure and mixed use.’

The municipality is also taking to steps to improve the livability of urban districts through the creation of pedestrian zones and leisure facilities within walking distance from residential and office areas.