Money-Growing: Parking Places Running Out


According to reports from the traffic police directorate (GIBDD), by the end of this year there will be 1 car per household in Moscow, though the city mayor’s office believes this number will not be reached before 2020. At any rate, despite all the efforts by the city authorities, the number of car parking places to be built over the next three years will be less than the increase in the private car fleet in just one year.

In early November the Moscow government approved the outlines of a target-oriented program for the development of garages for the years of 2005 to 2007. The plan provides for the construction of 329,000 places in parking areas and garages of all sorts – which is 1.5 times more than the number built over the past 3 years.

That number, however, includes underground and multi-storied garages within residential estates, as well as places in parking areas within shopping malls where motorists are only allowed to leave their cars for a few hours.

Konstantin Korolevsky, first deputy head of the Moscow city government’s department for town-planning policy, development and reconstruction, overseeing the garage development program, says that with the average prime cost of construction of one car-place being $5,000, the implementation of the program will require $1.5 billion.

Korolevsky specifies that the average cost of construction of a sheltered car park today amounts to $2,000 to $2,500 per car space. Construction of a sheltered ground-level unheated garage with individual metal garage units requires $4,000 to $4,500 per car.

A place in a heated garage costs $5,000 to $7,000. The prime cost of an underground car garage in central Moscow amounts to $15,000 or more, in the outskirts it is about $6,000 to $7,000. The cost of construction can increase considerably if a complicated geological survey or the relaying of utilities line is required.

Investors awarded contracts for the construction of car parks in the city will provide 95 per cent of the amount cited by Korolevsky. The developers of residential estates and shopping centers are the main investors in garage development programs.

Only two types of car parks will be built at the expense of the city budget. They are the so-called ‘interception car parks’ on the outer limits of the city that aim to ease traffic congestion in downtown Moscow and its main thoroughfares, and parking facilities in districts with municipally-owned residential quarters. The problem is, Korolevsky explains, that investors are not interested in these types of projects, because the payback period on them is 6-8 years, as compared to 2-3 years in districts developed for commercial purposes.

An official at the state-owned Directorate for Experimental Development of Micro-districts (GUP UEZ) – the company has overseen garage development programs in the past – told Vedomosti that the development of car parks near municipally-owned residential buildings where apartments are distributed among low income families is not progressing very quickly.

“A person who has waited to receive a flat for twenty years will most likely spend all his savings on renovation work and will not be able to scrape together enough money for a garage for another several years,” believes the official, who did not want his name divulged.

That is why the city authorities plan to build multi-storied parking facilities in districts like South Butovo and to lease them at rates set by the city municipal property department. In the opinion of Vedomosti’s interlocutor, rates will vary depending on the district and type of garage, with discounts offered to benefit-holders (war veterans, the disabled, etc.)

The city authorities hope to have several interception car parks built outside the city center within a year. From 2006 such car parks are set to grow annually by at least 1,500 places. Aleksandr Kuzmin, chief architect of Moscow and chairman of the Moscow Committee for Architecture, says that the Institute for General Town-planning (Genplan) has allotted 100 sites on the territory of Moscow for interception car parks.

The first facilities will be built near the Planernaya and Vykhino metro stations. “The problem with selecting sites is that an interception parking will not attract motorists unless it is situated in the immediate proximity of a metro station,” says Kuzmin. The public town-planning council under the Moscow Mayor will examine the proposed layout of such facilities across the city before the end of this year, according to Kuzmin.

To ensure the implementation of the garage building program new agencies had to be established, as GUP UEZ, which had been coordinating garage construction since the early 1990s, could no longer cope with the increasing workload, Korolevsky reported.

At the request of UEZ’s general director Valery Silin, UEZ will continue overseeing the People’s Garage (Narodny Garazh) program, developing parking facilities at the expense of motorists themselves on a building society principle. UEZ has selected 47 plots for the construction of People’s Garage car parks across the city and is now preparing designs for the project. All the other garage development projects will be overseen by a nascent agency – GUP Directorate for Garage Construction.

Andrei Patrushev, PR-director at Knight Frank realty, insists that developers of luxury real estate projects are experiencing no problems with the sale of car-spaces. Leonid Belaga, head of advertising and communications at Krost, says that parking on the premises of a residential estate enables investors to increase sale prices by 10 per cent.

However, a Moscow government official taking part in implementing the garage construction program, complained to Vedomosti that developers often build parking areas with a capacity 30-40 per cent less than required, and in doing so they cut construction costs without warding off potential clients who are told initially that car spaces are available.

Spaces in underground parking areas on the premises of the so-called “Golden Mile” residential estates in Ostozhenka are sold at $40,000 to $70,000, while the sale price of a car-space in Gruber House in Novy Arbat can reach up to $95,000, says Andrei Patrushev.

“Buying a car-space before the construction is completed is almost always justified. Prices are directly dependent on the increase in apartment prices. Moreover, at least one car-space is an indispensable condition of selling a luxury apartment. Otherwise, it may take a much longer time to find a buyer,” Patrushev notes.

The same rule applies to commercial real estate, the experts assert. Monthly rental rates for underground car-spaces within class A office buildings range from $250 to $600 excluding VAT. The lowest rates – $275 per month excluding VAT for a space in a state-of-the-art underground parking area – are offered at Central City Tower at 22, Ovchinnikovskaya Naberezhnaya [embankment], according to Knight Frank experts.

The Romanov Dvor office center is one of the most expensive in Moscow in terms of car-space rental rates. Parking a car there costs $400 per month provided the space is only occupied during working hours, or $600 for an around-the-clock service.

A space in a ground-level car park at a class A office building is cheaper – about $150 to $250 excl. VAT. Class B offices do not usually operate underground parking lots, but have spacious ground parking areas instead. Spaces in that segment are rented at $80 to $220 excluding VAT.

The main concern of city officials is finding land plots for construction. Parking areas in Moscow used to appear primarily as a result of the re-development of existing facilities, while in the next three years the authorities will focus on the development of new multi-storied garages, says Aleksandr Kuzmin.

For example, in the next two years modern multi-storied garage facilities will be built on 400 sites along the Moscow Ring Road (MKAD), currently occupied by single-storey car parks. To avoid conflicts with the owners of existing facilities the city authorities plan to offer them individual metal garage units within the newly built parking areas at low rates, to be set by the government by the end of this year. By 2007 on sites currently occupied by metal garage units the city plans to build multi-storied garages with a total capacity of 53,000 cars, which exceeds the number of cars currently parked there by several times.

Another source of land that is available for the expansion of Moscow’s parking areas are school stadiums and sports centers where the government plans to build underground garages. Such projects are currently being carried out in Michurinsky Prospekt and are to be launched in Molzhaninovsky District. Vladimir Obyedkov, prefect of the North Administrative Okrug, admits that such projects are difficult to implement because of protests by local residents who oppose any new construction in the area.

But in the near future it will become more difficult for protesters to defend their neighborhoods and easier for developers to find land plots for the construction of garages. Korolevsky hopes that as by the end of November Russia’s chief sanitary inspector will approve new regulations reducing the so-called 50-meter buffer zone between residential buildings and garages.

That will enable the authorities to increase the number of parking spaces by 30 per cent, says Korolevsky. The city officials have managed to convince the sanitary services of the benefits of modern construction. Installing special ventilation equipment helps to considerably reduce hazardous omissions. The systems were first installed in garages at 15, Litovsky Boulevard and at 25-27, Zemlyanoi Val.

Officials claim that the concentration of hydrocarbons and hazardous gases from the omissions in ventilated garages are significantly lower than the maximum concentration limit set by the World Health Organization. Furthermore, the authorities plan to carry out regular environmental inspections of all cars parked in garages near residential quarters, which will help reduce omissions by 10 to 15 per cent.

Another source of land, according to Korolevsky, are land plots seized from tenants for failing to develop them for a long time. 36 plots seized over the past 18 months will be used for garage construction, and in the near future the same fate will befall 19 more plots.

The first quarter of 2005 will see the launch of garage construction over railway tracks on Novaya Basmannaya Street (900 spaces) and at Basmanny Tupik (600 spaces). City architects are examining sections of the Moscow metro, public transport U-turn zones and plots beneath flyovers where more garages could be built.

In line with calculations by the Institute for General Town-Planning, developing those sites could increase the number of parking places in Moscow by 90,000 by the year 2010. Also, the authorities plan to build lift-equipped garages at 25, Srednyaya Pereyaslavskaya Street (60 spaces), at 6, Strastnoi Boulevard, and at 5 and 16, Gastello Street.

Over the next three years fourteen garage complexes will be built over civil defense installations in the South Administrative District.

To make garage development projects more attractive for investors Korolevsky has suggested allowing developers to use up to 30 per cent of the space for commercial purposes. Yuri Roslyak, first deputy mayor of Moscow and chairman of the city department for economic policy and development, even suggested including retail and office space at interception car parks – that would help attract investors and reduce budget spending.

City officials hope that in three years Moscow’s parking facilities will expand to accommodate 47 per cent of its private cars, compared to 38 per cent by the end of 2004. By the end of this year Moscow will have 900,000 parking places available.

The city’s officials are basing their numbers on the forecast that Moscow’s private car fleet will increase 18 per cent over the next few years. Within the next 15 years the car fleet will grow 1.5-fold to 3.4 million by early 2020, and then there will be one car per household.

Forecasts from GIBDD experts are somewhat different. They say the private car fleet will exceed 3 million by the end of 2005, and will reach 3.7 million by 2007. By the time the city government’s garage development program is implemented the number of private cars will reach 4.5 million.