• 11/9/2018

Financial and time benefits when choosing a site in an IP

We have described repeatedly the advantages of deploying one’s business in an Industrial Park as compared to other possible options. Today we shall focus on the resource most valuable for modern man – time and talk about the benefits for the investor from that point of view.

Time is money and business people know that from firsthand experience. The faster you solve the issues of design, construction, connecting the necessary communications, start-up and commissioning your production facility, the faster the business will return to payback and start generating a profit.

The longer the project implementation period stretches in time, the larger the budget inflation it may entail.

What risks does the investor face:

  • A possible increase in necessary investments due to a change in the economic situation (rise in price of land, building materials, work at the facility, equipment, etc.).
  • Possible changes in the project approval procedure related to legislation and complication of the procedure for obtaining the necessary permits and documents.
  • To put a facility into operation, it is important to collect a number of documents and expert opinions, the duration of which may be limited.
  • Lost profits.

In addition, if the choice falls on a greenland site, there is a big risk of increasing time and financial costs associated with:

  • routing up and connecting utility communications;
  • bringing the site in line with the established requirements;
  • costs of legal, environmental and technical expertise.

One should never underestimate the time and money required to verify the land lot, including:

  • Verification of title documents.

When buying an industrial land lot, it is important to understand who owns the property. To do this, one needs to study the documents of its title. If the owner (seller) owns the plot for less than the limitation period (less than 3 years), it is recommended to check previous transactions (and request a purchase agreement covering the purchase of land plot from its owner). We recommend checking the documents with due diligence in case the site has been privatized.

  • Land category check

In order to check the category of land lot it is enough to study the information in the current extract from the Uniform State Register of Real Estate (USRRE). In case it is necessary to change the category of land use, an approved General Plan is required. If it turns out that you have to make changes to the urban planning documentation due to inconsistency in land category or its permitted type of use, you will have to expect results for at least a year.

  • Check for existing encumbrances

To understand what encumbrances exist on the site, one must request a Town Plan. However, even such Plan does not always reflect real information, therefore it is best to check the extract from the USRRE and go personally to the place to see what exactly is on the site (utilities, water bodies, third-party rights, landfill).

  • Checking for Red Lines (TPP)

Red lines should be indicated in the urban development plan. In the absence of urban development plan, one needs to request documents from the local municipality. It becomes clear from the Territorial Planning Project (TPP) which sites the red lines are cutting through. Red lines are used to highlight areas of public use. Moreover, if the red lines cut across a private territory, that does not make such a territory publicly accessible. Right of access to such territory is granted either after its redemption into municipality ownership or the establishment of the easement in your favor.

  • Checking the possibility of development of the territory

Understanding how to use the land is given by the Land Use and Development Rules (LUDR). Availability of LUDR for rural settlements in the Leningrad Region is critical – since without them you cannot get a building permit.

If, while checking the land, the investor still missed something important and hastened to make a purchase decision before conducting a thorough inspection, clearing such problems may either increase the time and cost of correcting them or make implementing the project plain impossible.

To give an example, in case of untimely environmental audit, it may suddenly become clear after the transaction that salts of heavy metals or peat are found in the composition of local soils. If we are talking about a brownfield site, an environmental survey of the building is necessary because the requirements for materials have become more stringent with time (for example, asbestos was actively used in construction before, while it is classified as a first category carcinogen nowadays). It is likely that the previous owner could, for example, drain used transformer oil in the basement, which also leads to additional reclamation costs. If the building is pre-revolutionary (or built during the first years of Soviet Russia), it can turn out to be an object of cultural heritage, which makes it more expensive, if not impossible, to reconstruct.

When placing the enterprise in the Greenstate Industrial Park, a number of questions is taken up by the management company, so that the Park residents may count on the support of its experienced specialists featuring:

  • many years of experience in implementing projects (both its own and clients’) from scratch and offering technical advice;
  • understanding of all stages, procedures and subtleties of preparing the necessary documents;
  • experience in working with state organizations, inspections and monopolists – suppliers of utilities, assistance in dealing with coordinating authorities.

In addition, the Managing Company takes care of issues in case of possible accidents involving utility communications, saves time, nerves and money of its residents, which could spend otherwise trying to solve such problems themselves.

When deploying an enterprise in Greenstate Industrial Park, the investor minimizes its risks, as:

  • An audit has already been conducted and all documents are provided to the client for review upon request, during the negotiation stage.
  • Urban planning documentation is approved, provided for review upon request and allows you to deploy enterprises of III-IV hazard classes on site.
  • Surveys have been carried out on the territory of the industrial park that meet the requirements for constructing the facility.
  • Land plots are connected to necessary utilities (power supply, sewage and water supply, heating, telecommunications, etc.) and feature extra reserved capacities. Beside the obvious time saves to connect to communications and utilities, that reduces the time required to obtain technical specifications for the project.

We hope this information will be useful and timely for you and will help you make a more informed decision when choosing a site for your business. Remember that the avaricious pays twice and take a duly diligent approach when searching for and choosing the future for your business!