More than 70% of vacant buildings in the Vitebsk region do not find buyers at auctions. What is the reason?
— Viktor Vasilyevich, what caused the increase in unused real estate, and what new approaches to involve it in economic circulation are being developed today?
— The increase is due to the fact that property of liquidated business entities and social facilities in rural areas was accepted into communal ownership. For example, in 2017-2018, more than 2,000 real estate objects were accepted from such enterprises, about 45% of which were of industrial purpose.
In addition, property of 17 republican enterprises was accepted into communal ownership, as well as the complex of the former military town "Podsvilye" in the Gluboksky district — this is more than 10 thousand sq. m of buildings and structures.
Last year, the area of leased properties increased by 9.2%, and the property transferred for gratuitous use increased by 15.3%.
Currently, almost 94% of vacant areas are owned by cities and districts. We understand that working with such real estate requires improvement, and as one of the directions, we propose that local authorities consider the issue of creating specialized companies in large cities of the region, following the example of the regional center. In Vitebsk, the city executive committee established the communal unitary enterprise for service provision "Real Estate Center of Vitebsk", the experience of which deserves study and implementation by city and district executive committees, as well as state associations of the region.
— What are the specifics of the work of such a specialized organization?
— The functions of the enterprise owner are carried out by the Vitebsk City Council of Deputies, and the main activity is the lease of owned and rented property. The city executive committee transferred more than 600 buildings and structures to the organization's balance sheet, including almost 500 isolated premises of communal property.
The company provides potential clients with the widest possible range of related services, from selecting premises in accordance with client requirements to legal support of the transaction. As of March 1, 2019, the enterprise had concluded more than 460 active lease agreements, as well as 105 gratuitous use agreements for real estate objects.
In 2018, the budget received more than 2.1 million rubles from the sale of unused property by the company at auctions.
— Perhaps the Orsha district, whose comprehensive development is currently the focus of the entire country, will follow this path. How successfully is unused and inefficiently used real estate being managed there?
— Indeed, the plan for involving unused real estate in economic circulation in the Orsha district is under special control of both our committee and the regional executive committee, the State Property Committee, and the government.
Based on the results of the inventory in the Orsha district, 643 unused or inefficiently used objects of various forms and levels of ownership were identified.
Together with regional management bodies, proposals for their involvement in circulation have been prepared, and extensive information and explanatory work is being carried out. The relevant information is structured, illustrated, conveniently formatted, and maximally accessible to potential investors.
Proposals for the possible use of idle real estate are posted on the official websites of "Vitebskoblimushchestvo", the Orsha District Executive Committee and the Regional Executive Committee, the National Agency of Investment and Privatization of the Republic of Belarus, and other specialized organizations.
As of April 1, more than 20% of buildings and structures have been put into economic circulation, of which almost 36% are used by organizations for their own purposes, and over 19% have been sold, leased, or transferred for gratuitous use.
— How challenging is the target for reducing the area of unused real estate set for the region as a whole for 2019?
— The lists and schedules for involving unused property in economic circulation, write-off (demolition) formed for the current year include 1017 objects, including 63 buildings and structures of republican and 690 of communal property, 55 buildings of the regional consumer union, and 209 units of real estate belonging to OJSCs.
By the way, the Unified Register of State Property contains information about 137.4 thousand real estate objects and almost 41.6 thousand land plots located in the Vitebsk region.
For many years, sale has remained the main method of involving property in circulation.
More than 70% of the objects put up for auction remain unclaimed by potential buyers.
One of the reasons is the specificity of the buildings themselves and their remote location from district centers and large settlements.
It is not easy to find new owners for objects of social infrastructure in rural areas, even those put up for auction for one basic unit. This year, the sale of 310 objects is planned, including more than 130 structures repeatedly for 1 basic unit. Since the beginning of the year, more than 200 auctions have been held, and almost 90 objects have been put up for auction.
As of May 1, 40 buildings and structures were sold, and another 12 objects were leased, transferred for gratuitous use, or demolished.
It can be noted that since the opportunity to sell illiquid objects for one basic unit became available, owners have been found for more than 1.1 thousand buildings and structures using this method. Currently, 37% of these structures are involved in circulation, more than 42% are under development, and the procedure for returning the remaining objects to state ownership has been initiated.
I would like to remind you that the legislation also provides for the gratuitous transfer of real estate that has attracted the interest of potential investors. To do this, it is necessary to submit an investment project to the management body (as a rule, this is the local executive committee). It is understood that each project is individual, there are no uniform requirements, but it is imperative to indicate the deadlines for its implementation, the volume of projected investments, and the number of jobs to be created.
The practice of selling state property, leased by bona fide economic entities for at least three years, will also continue. Last year, local authorities made such decisions for 28 facilities, the total market value of which exceeded 3 million rubles. In total, over the past 3 years, lessees have purchased 61 facilities, and about 5.8 million rubles have been transferred to the budget.
— The Decree No. 169 "On the Disposal of State Property", signed by the Head of State on May 10, is intended to intensify all these processes. What are the main innovations of the document, what should be paid special attention to?
— The Decree improves the regulation of public relations in the sphere of state property disposal. Among the key innovations of the document, several provisions can be highlighted. Thus, the installment plan granted to the buyer of state property is increased from 1 year to 3 years, while its term (within 3 years) will be determined by the buyer himself. To intensify work with unused property, holders of state real estate are granted the right to retain 50% of the funds from its sale.
In addition, for repeated auctions in the absence of demand, it can be put up for sale immediately with a price reduction of up to 50% (previously, there was a mandatory step with a reduction of 20%).
Relations regarding the sale of unused state property for one base value have been improved. Thus, the existing possibility to sell real estate located in the territory of medium-sized, small urban settlements and rural areas at an auction with the establishment of an initial sale price of 1 BV (i.e., without putting it up for full price) is extended to the entire country, except for regional centers and Minsk.
The decree also addresses the right of all categories of tenants, including individuals engaged in agro-tourism and craft activities, to purchase leased state property, which will contribute to the development of entrepreneurial initiative and employment.
As of January 1, 2019, the total area of real estate objects owned by the Vitebsk region and its administrative-territorial units is over 9.8 million sq. m. Of this, the area of leased objects exceeds 325 thousand sq. m and increased by 9.2% in 2018. Almost 923 thousand sq. m were transferred for gratuitous use (an increase of 15.3%).