THE ‘GOLDEN RING' PROJECT

The project's comprehensive concept is based on the General Plan for the Development of the City of Moscow, main concepts of the Urban Development Plan for the Territory of the Central Administrative District in Moscow and on main concepts of the Programme for the Development of Tourism in Moscow up to 2010. The project's concept is the development of the main ideas contained in these documents.

The project aim is to create, in the historical centre of Moscow, a tourist and recreational zone with the well-developed multifunctional state-of-the-art tourist service infrastructure. This zone will attract Russian and foreign tourists and will also facilitate further development of the city as the world tourist centre.

The city's central area features a huge investment potential which is due to its unique cultural, historical, architectural and natural heritage. The efficient use of this territory will be based on the development of the tourist industry since this business makes it possible to use the unique properties of the territory in the most effective way.

The development of the tourist and recreational zone involves implementing around 100 interrelated sub-projects which cover around 65 buildings to be renovated and constructed anew and also around 40 areas and zones intended for pedestrians.

For each of the sub-projects, the implementation process has been independently modelled. A number of models have been created for each project (and each of the models has been optimised independently), varying from ‘optimistic' to ‘pessimistic', and some averaged versions have been found.

Below a list of objects is quoted which contains optimised calculated investment indicators and integral efficiency parameters obtained by version modelling of the projects' implementation.

The costs include, in particular, expenditures on engineering works and infrastructure in the amount of 15 to 30 percent of the construction cost and also payable taxes (in case of the project net profitability).

The city administration's contribution involves construction of supply lines and bridges and also the urban development of the city zones.

One of the co-operation forms, when implementing commercially efficient projects, may involve establishing enterprises (jointly with the city) for constructing and operating objects. Also, the project financing (ВООТ, etc.) may be an instrument efficient from both the financial point of view and as a way for establishing relations with owners (including owners of federal property objects).

All sub-projects may be divided into three groups differing by their commercial efficiency. The most efficient group comprises the objects which feature high profitability and sufficiently high current liquidity. The Western Spit of the Island and the hotel and multifunctional compound on the Sofiiskaya embankment are examples of such objects. Such objects featuring high profitability (annual interest 34 to 39 percent in the hard currency) may be commissioned in stages and divided into smaller lots thus increasing the objects' investment attractiveness.

The second group contains less efficient sub-projects. They can be implemented either with partial financing from the city administration or using mechanisms of project financing and concession. Such objects can be combined in lots together with more efficient objects inasmuch as the high indicators of the objects included in the first group very frequently depend on the implementation of less efficient sub-projects. The urban development of the lots along the Kitai-gorod wall and the restoration of the Kosmodemian and Uglovaya towers are examples of the objects included in the second group.

The third group comprises the objects which do not ensure direct commercial profit but their development is sufficiently important, though indirectly, for the commercial objects' efficiency.

The third group mainly contains the projects for the urban development of city squares, pedestrian zones, etc. These objects can be a logical and natural ‘complement' to highly efficient objects or they may be financed from the city budget. The combined sub-project for the development of the Island and for the construction of pedestrian bridges from the Cathedral of the Christ the Saviour and across the Vodootvodniy channel is an example of such ‘alliance' of projects.