How to choose a land plot for industrial construction
If you are to choose a land plot for arrangement of your production facilities, first of all, you need to understand what potential risks you will face in the course of selecting the right territory. In order to protect yourself from possible financial and time losses, you need to conduct a comprehensive audit of the land plot.
When conducting a technical audit, it is very important to understand the degree of development of the utility networks and if there are access roads available and motor roads nearby. The analysis shall start with the need to check the traffic diagram and the availability of access roads to the site in order to subsequently avoid significant financial risks. It is necessary to check through which land plots the access road is organized and to whom this territory belongs. To that end, the prospective buyer of the land plot shall request extracts from the Unified State Register of Real Estate. If the land is located in the federal highway zone, for example, then it is necessary to pay attention to possible restrictions on exiting and ask to provide technical specifications for connection from owner of the road.
The same procedure shall be followed to find out the possibilities of being connected to the utility networks. It is necessary to ask the land plot seller to submit signed contracts with utility providers for the supply of utility resources, allocated capacities. It should be born in mind that availability of technical specifications (TS) for connection does not in itself guarantee that your facility will be connected to networks, since TS describe terms and conditions for being connected to utility networks. If utility networks are not laid to the site, the buyer shall pay special attention to whose lands shall be used to lay the communication lines, in order to get connected to the connection points
Good title transaction
When buying a land plot, it is important to understand who owns the property. To do this, one needs to study the documents of its title. If the owner owns the land plot for less than the limitation period (less than 3 years), it is recommended to carry out a thorough legal due diligence of all previous transactions, including the privatization plan. Before finalizing the transaction, it is recommended to clarify the corporate and financial issues of the seller of the land plot, litigation in process, administrative cases, encumbrances (pledge, rent, easement, reservation for public needs).
If a facility is bought from an unknown legal entity, you will bear all the risks. It is doubtful that you will be able to receive a compensation in case of termination of such a purchase and sale agreement The company from which you have purchased a land plot may go bankrupt. Or the seller is already aware that its facility is pledged with the bank. Being an investor, you conclude a contract of sale and purchase of a land plot for construction on the basis of partial prepayment. The real estate is pledged with the bank and the transaction has not been finalized. Consequently, it is not possible to get refunded. And after a while, the land plot or the building are seized by the bank.
When choosing a land plot, it is also necessary to pay attention to town planning restrictions and the permitted use of the territory that you decided to acquire.
Sanitary protection zones
The sanitary protection zone is a special territory with a special regime of use around facilities and manufacturing sites that are sources of impact on the environment and human health. In such zones it is prohibited to arrange residential buildings, recreational areas, areas for rest of citizens, resorts, territories of horticultural farms, summer residences, sports facilities, children’s playgrounds, educational institutions, training and preventive and public health institutions.
Even before legal due diligence of documents for the land plot, the very first question that a buyer should ask is whether it is possible to arrange its production facilities on the proposed land plot, in accordance with the requirements of sanitary rules and standards (SanPiN) developed by The Russian Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing.
SanPiN regulations apply to the production facilities hazard class. In total there are 5 hazard classes and each has its own sanitary protection zone. The size of the sanitary protection zone is determined by the regulatory document “Sanitary protection zones and sanitary classification of enterprises, structures and other facilities” (SanPiN 2.2.1/188.8.131.520-03).
This document classifies industrial facilities and manufacturing enterprises into the following types:
- industrial facilities and manufacturing enterprises of class I – 1,000 meters;
- industrial facilities and manufacturing enterprises of class II – 500 meters;
- industrial facilities and manufacturing enterprises of class III – 300 meters;
- industrial facilities and manufacturing enterprises of class IV – 100 meters;
- industrial facilities and manufacturing enterprises of class V – 50 meters;
If your company belongs, for example, to the 3rd hazard class, then you will not be able to arrange your facilities on a land plot with class 4 – 5. Consequently, there is no need in subsequent audit. Greenstate Industrial Park can accommodate class 3, 4, and 5 companies.
It is also necessary to take into account that the SanPiN requirements have been developed for a long time and to determine the hazard class for some enterprises, it is necessary to obtain a qualified assessment by environmental experts, as in the case of determining the possibility of reducing the sanitary protection zone of an enterprise to exclude the situation when sanitary protection zone of one enterprise overlaps with the land plot where another facility is located. Closer attention to sanitary protection zone and environmental issues shall be paid to by food and pharmaceutical companies, since they have special requirements for arrangement of their facilities, as well as by enterprises that will be located in close proximity to the places of location of people.
It is very important to conduct an environmental audit prior to the purchase of the land plot in order to identify possible violations or inconsistencies that could result in large fines imposed on owner of the land plot, because unlike Civil law, for example, where the limitation period is 3 years, the limitation period for violations of SanPiN is 20 years.
Environmental requirements (quality of soil, groundwater and the level of air pollution) to arrangement of the facility on the chosen territory may not meet the established indicators and standards, which would lead to a serious extra spending or even loss of invested funds. In this regard, all environmental aspects shall be checked at the decision-making stage.
The process of choosing a land plot for industrial development is time-consuming and scrutinous. It takes a lot of time, effort and it often leads to loss of profit or even to loss of invested funds.
Choosing a land plot to arrange production facilities at the Greenstate industrial park helps the investor to greatly simplify the decision-making process, reduce risks and significantly reduce the period of implementation of the project. Moreover, YIT specialists will provide the following services free of charge as part of an investment project and within the scope of accompanying a transaction on a land plot at Greenstate Industrial Park:
SELECTION OF A LAND PLOT based on the individual parameters of your project;
PREPARATION OF A LAYOUT DESIGN of your project on the proposed land plot with indication of the points of connection to the energy and water supply networks, calculating the optimal area of the land plot for all construction projects;
ESTIMATING THE CONSTRUCTION COST AND TIME;
LEGAL SUPPORT OF THE TRANSACTION for drafting and execution of the land plot purchase and sale agreement;
PREPARING DELIMITATION PLANS FOR A LAND PLOT;
CADASTRAL REGISTRATION AND REGISTRATION of title to the acquired land plot;
CONSULTATIONS ON THE SCOPE OF POSSIBLE TAX EXEMPTIONS by the Government of the Leningrad Province during implementation of your investment project.
As an alternative solution, you may want to consider buying of already constructed building, however, you should pay attention to the hidden risks that may arise.
More information about the difference between Greenfield and Brownfield