Roman Tkachenko in CRE Magazine

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Russia’s leading specialized publication on commercial real estate – CRE – has come out with an article on the problems of attracting investors to build roadway interchanges in the districts where retail centers are situated on the MKAD. Roman Tkachenko, Head of the Representative Office of RD Group in Russia, provided expert commentary for the publication.

As CRE writes: “Reconstruction of the MKAD, including all its interchanges, could cost approximately 150 billion rubles. According to Moscow’s Deputy Mayor for Urban Development and Construction Marat Khusnullin, the city will fund the reconstruction of approximately 13 interchanges but investors will foot the bill for reconstruction of the entry and exit ramps for retail centers, their merging lanes, etc. The website of Moscow’s Urban Development and Land Committee indicates that the reconstruction plans for the MKAD are almost ready.”


The initiative of the municipal authorities has not been warmly welcomed by developers and owners of shopping centers along the MKAD.

Roman Tkachenko, Head of the Representative Office of RD Group, is skeptical about the situation. “As far the existing shopping centers on the MKAD are concerned, investment in road work will become a substantial burden. In contrast to the bedroom districts, for properties located on the MKAD expansion of the access road infrastructure will not directly influence the flow of visitors and will not lead to an increase in lease rates. For developers it is commercially prudent to invest in road infrastructure if the direct access driveways either did not exist earlier or limited the flow of consumers,” CRE cites the expert.

All developers today have to ponder the question: what in reality will happen if potential investors ignore the appeal of the city administration? According to Roman Tkachenko, “in the case of a refusal by the developer to invest in road infrastructure the government could exclusively change the transport flow in proximity to retail center, for example, instead of a direct entrance make a peripheral entrance. The laws would not allow the authorities to outright ban traffic on an entry road or take direct financial punitive measures.”

The most rational mechanism for interaction between the government and developer is through reaching an agreement, Tkachenko says. “The state could offer investors various instruments for compensating the costs incurred, such as lowering the land tax or lease rates for land use. Or providing alternative compensation in the form of horizontal infrastructure. For example, the city could allocate an additional piece of land for a parking lot.”