Market Know-How: Prospects of Unlucky Island

Meanwhile the city authorities make various efforts to improve the image of the shabbiest Moscow district. For instance, there are plans to found museum of the last “khrushchevka” (Khrushchev-era 5-store residential blocks currently demolished all over Moscow). However, so far all the efforts to restyle Kapotnya were futile. Nevertheless in 2004 several students of Moscow Architecture Institute, guided by the chief Moscow architect Alexandr Kuzmin, already worked out how to make Kapotnya an attractive place.

Ilya Shershnev, Swiss Realty Group business development director, comments: ‘Several issues have affected the district fortunes, namely existence of Moscow Oil Refining Plant (MNPZ), the proximity to Moscow outer ring road (MKAD) and wind directions typical for Moscow. As a result Kapotnya became synonymous to appalling ecology conditions. Although there are other districts in Moscow, which are substantially worse than Kapotnya for many reasons’.

However, according to Mikhail Gorohovsky, first vice president of Best Nedvizhimost corporation, ‘Kapotnya is the most dreadful Moscow neighborhood. One recalls immediately the refinery fire torch and the hostel for evicted dwellers, which became well known for everyone in Moscow. And the transport accessibility is absolutely crazy. Any investor who would like to build some commercial housing in Kapotnya would seem to be suicidal for me. If anything at all will be built eventually there, it will be municipal housing only’, the expert believes.

Inequity of history

Kapotnya district is located in south east of Moscow, on the place of Kapotnenskoye village, which was first mentioned in history in 1334 and situated on Moskva river high bank.

Kapotnya’s most famous landmark is the oil refinery, which is seen from far away by high pipe with fire torch. Elena Buravtsova, press secretary of Domostroy real estate agency, says: ‘However the plant is not the most polluting and is not the only industrial estate in the district by far. The refinery conditions are at least under control, and a lot of attention has been paid to it for years. And Nina Usova, deputy director of realization department of Mian Development company adds: ‘Asphalt and concrete factory as well as heat power plant TEC-22 are located there. Let’s not forget about sewage treatment facility, located exactly in this district of Moscow. The very fact that Kapotnya is located in the south east, where a lot of industrial companies are placed, can’t make it more attractive. ‘

Irina Naumova, PR director of GK “Peresvet-Grupp” says: “Though being located next to the Kurchatov nuclear institute is not less potentially ecologically dangerous than vicinity to MNPZ, psychologically the view of giant pipes affects residents and potential buyers negatively, of course”.

Roman Sokov, director of consulting department of Becar Commercial Property Moscow, adds: “Apart from the very specifics of chemical industry the situation is aggravated by ageing plant machinery, which is to blame for periodic serious disasters and gas expulsions, which pollute the air of nearby districts and Moskva river. The residential blocks of Kapotnya are not separated from refinery by forest parks. The Kuzminki park, located to the east from the plant doesn’t help at all to Kapotnya residents who live to the south.”

The atmosphere pollution in the district is aggravated by vicinity to the ring road. According to Buravtsvea, “the car emissions comprise 92% of all the air pollutants. The overall level of pollutants, emitted by cars, has increased for 10% for the last 5 years. The increasing number of cars in Moscow makes the problem more serious. Apart from the transport the air is being spoilt by heating oil power plant TEC-22. The Moskva river also can’t display clear water and banks”.

Another ecological problem of Kapotnya is an unfavorable wind rose, i.e. wind directions in the south east. According to Sergey Leontiev, general director of Vesco Realty, the south east location of the district partly explains the grade of atmosphere pollution: the wind moves all the contaminating stuff and industrial emissions in that direction.

Elena Buravtseva doesn’t agree with this point of view. ‘One should not think that bad ecology is just a Kapotnya problem. The existing opinion that winds, prevailing in the city, thrust all the pollution to the east is not confirmed. The employees of laboratory of the Earth distance monitoring from space of the Geography Institute (Russian Academy of Science) argue that proportion of western and eastern winds in Moscow is approximately the same in Moscow area. And air contamination is observed anywhere.’

However all the market participants agree that Kapotnya’s transport accessibility is almost the worst in the city. Olga Pobedinskaya, marketing director of real estate company Agent 002 says: ”The district was built initially for the plant servicing. Therefore the Kapotnya project doesn’t suppose intensive communications with the outer world. As a result, the nearest underground station is far away, and you can travel from the district just by the only road along the plant territory or by MKAD. So the district residents are stuck between MKAD, the plant and the river.”

Moreover, according to Roman Sokov, the district is deemed to be distressed due to specific social status of the residents: “The non-payers of utility bills from the entire South East are resettled there, the correction facility # 163/3 is located here, designated for citizens, convicted for small terms and for the first delinquency.

Elena Buravtsova adds that the low demand for flats in Kapotnya is explained not just by ecological situation but by poor housing quality as well. There are a lot of aged buildings in the district, and hostels as well. This is a workers’ neighborhood. The low demand for flats keeps relatively low prices. Last month the average price for 1 sq. m. of living floorspace was from $2700 to $ 3200.

Young Workforce

In 2004 Alexandr Kuzmin founded experimental working group, composed of last year students of MARHI and proposed them to develop plans for one of the districts located along South roadway. There were seven people in the group, and everyone chose its own lot. Elena Maruha, MARHI student at that time and by now employed by Arka company of Sergey Tkachenko (who heads as well research institute for general planning in Moscow), decided to get involved into Moskva river banks redevelopment, in particular near Kapotnya. The plan was so drastic, that it gained popularity and earned fame as capital reconstruction project for the most distressed Moscow neighborhood.

First, the architect proposed to unite Kapotnya with the rest of Moscow by three inhabited walking bridges, which would contain retail complexes, offices and higher class flats. The plant territory should be separated from residential blocks by specially designed buffer zone. Elena Maruha correspondingly proposed to build House of oil on the plant territories due for redevelopment stretched close to the residential area, on the high bank of Moskva river.

Elena Maruha says: “I would like that the view will be not to plant but to the beautiful office building. It could be something like Gazprom building near river – it seems to me such a location could be interesting for potential investor. Perhaps the plant management could be interested in these plans. The bridges are quite attractive for business as well, as they would contain offices, retail areas and residential estates. The territory could be regenerated via these projects.”

It was supposed that Kapotnya residential blocks will be split into two classes. The high bank was supposed to host terraced houses with private mooring and gallery type houses. Higher, on a comparatively flat surface there should have been closed compounds with green patios. The first class was supposed to be commercial, and another municipal. Another river bank was supposed to host office towers, connected by walking streets to the residential area, sporting centre and botanical gardens of biology institute. New underground station will be built for local residents. The project doesn’t assume removal of the refinery from the area, as it is simply impossible economically. However her project proposed that asphalt plant industrial area is moved out of the city.

Alexandr Miheev, deputy head of construction and reconstruction department of South East administration says: “This was a student diploma thesis, which is very beautiful on paper. Some of the ideas without any doubt will be implemented, but exact date of implementation is not yet known, due to lack of practical workings.”

In 2005 the project was presented to Yuri Luzhkov, who approved it. Maruha recalls: “This was public committee, where agenda included examination of student projects. They proposed me to make a presentation on behalf of several authors, who had developed projects for regeneration of territories around the roadway. Then the administration has arranged some tender which I won as well, then there were presentation for Kapotnya residents etc”

According to Alexandr Miheev, the public committee decided in principle to realize the proposal. However the final project will be designed by Moskomarhitektura, which may use some ideas from the proposal, if they are viable. “So far just a political decision have been taken and it was ordered to use the project. However, we’ll be able to see the actual outcome only when the project and cost documentation for Kapotnya regeneration will be drafted.”

There are several cases of successful collaboration of South East administration with students. Alexandr Miheev says: “The idea to collaborate with students for city projects has been ripe for certain time. Our administration was pioneering this an we have been working with students since 2004. There is a special prefect decision in this regard due to several reasons. First, Mayor ordered to use young specialists and, second, our municipality has direct relationships with students, as our prefect is the professor of State Management Academy, and first vice-president of the Russian municipal academy. We have interesting problems which should be resolved by unorthodox ways and we propose to students to work for them.

At least one student proposal will be realized in the municipality. According to decision of Moscow government # 1932-RP as of 28 September 2006, the reconstruction of 80th block of Nizhegorodsky district will be carried out per pre-project proposals of students of Moscow State Construction University. Their workings were given to Moskomarhitektura, who should produce the final project. The department of economical policy and development of Moscow has already included this project into address investment program.

Not Clear When

If the official were enthusiastic in embracing students’ proposal, the market participants (some of them are to be the investors of the student projects), view the Kapotnya regeneration option skeptically. Natalya Vetlugina, the head of analytical service of “Novy Gorod” says: ‘Unless something is done with the refinery, there are no prospects. This relates not to residential housing only. The people’s attitudes have grown up to rejecting working in such places. If some sort of technopark is built in Kapotnya, any person with higher education would think for a moment, gather statistics and would not stay in an office situated in such a place’.

Boris Flekser, head of the research centre of new building departments of Miel considers the following. “The idea is nice. Of course, the students are able to make extraordinary decisions, but it is very difficult to realize them on practice. Nevertheless, somewhere and sometimes these bright ideas will be realised. As to higher-comfort housing, before speculating about construction of inhabited bridges and recreation zones, the MNPZ and transport issues must be resolved. Otherwise there will be no market demand for this housing.

Sergey Leontiev says: ‘The only possible options to awaken interest in Kapotnya is removal of MNPZ enterprise out of the city and carrying out massive tree-planting and beautification works in the districts. The most optimal scenario for the further district development will be the following: the city authorities find significant investor, involved in “economy class” housing construction, and using preferences entice him to reconstruct the area, including construction on the place of removed industrial enterprises’.

According to Nina Usova, “as far as the inhabitated bridge in Kapotnya is concerned, it is rather difficult to imagine a buyer, who would like to purchase quite expensive highly comfortable residential property in this area. This bridge would look more appropriate somewhere near the “Golden Island”.

The project has its own supporters, but they think as well that it would be better to realize these plans in other area. The project is interesting as the housing is organically combined with the natural complexes of Moskva river banks. But this would require vast investments with unclear return prospects. It would be much more interesting to realize this projects in higher Moskva area, for instance in Strogino.

Place Will Not Be Vacant

Notwithstanding the skepticism towards the student project, the market participants think that Moscow’s most distressed district indeed has future. Principally it is explained by lack of construction sites.

Flekser says: ’As the land is becoming more expensive and scarcer, it is unlikely that the city authorities would leave alone such a big territory. Sooner or later the place will be regenerated. The main task for enabling the district to develop is removal of refinery or carrying out significant works for ecology improvement. When the plan was built in 1940s, it was outside Moscow, then it found itself within Moscow, and something must be done with it.’

The new construction were started by Swiss Realty Group. Shershnev says: ‘Last year in Kapotnya we successfully built logistics park Logopark Kapotnya. It is exactly the case when proximity to the MKAD is an advantage. Now we expect to realize one more logistics project in Kapotnya. I do not think that it is possible to realize office projects here, but the residential property can be easily sold in every district within MKAD. Kapotnya is not an exemption to this, provided that prices are affordable, of course.’

Datomir Obuhanivic, general director of the Pervaya Ipotechnaya Kompaniya, says: “The developers of the affordable housing are already set to taking over sites in Kapotnya. Generaly Kapotnya is an absolutely normal district for development of economy class housing using panel-based buildings. For instance, Maryinski Park, which is considered to be one of the best complex development projects realized is located in close proximity. In any case there is a strict control in Moscow by the ecology department, and all the new projects are carried out with obligations to improve ecological situations. There are many methods to resolve this issue. Though the development in this area will cause additional expenses, this is normal practice in Moscow, as there are no easy land lots left in Moscow.

As experts note, some of the proposals of Elena Maruha perhaps will be used in realization of Kapotnya development project. Irina Naumova says: “It should not be ruled out that given the current lack of land lots this project will be realized using private developers as well. Everything depends upon the project participation conditions to be set by the city authorities.”