Smart City, Kazan: Design for Life
Monday, 16 July 2012
Modern Russian cities today fail to handle their growing population, ageing city infrastructure and increased service costs. They are becoming unsafe and uncomfortable encroaching upon citizens’ valuable time and welfare with various problems from bad traffic to carbon emissions.
As rapid urbanization creates new challenges, technology is providing a range of effective solutions. The Smart City concept is an innovative approach to urban development that enables to connect certain smart items and intelligent systems into a single resource efficient entity. According to the experts, Russia might grow through smart urban areas creation. The so-called satellite cities at the outskirts of megacities can be independent with proper trade and business facilities and still remain interconnected with the downtown.
As it has been recently announced, Tatarstan launches its own Smart City Project. The satellite city will be developed on a 360 hectare land close to Kazan on the way to the international airport. The details of the project, initiated and presented to the Tatar government by a Malaysian consortium comprising Amanah Capital Group Limited, Straits Consulting Engineers and APUDG Urban Planner, were discussed during the meeting with the President of TatarstanRustamMinnikhanov on July, 5 2012. As the result Minnikhanov appealed for prompt start of the project. He also proposed Smart City territory extension and the status of special economic zone.
Abas A Jalil, CEO of Amanah Capital Group, told Kazan Times about the ins and outs of the Kazan Smart City.
Kazan Times: How much investments will be employed under the project?
Abas A Jalil: On the first stage of the project, aimed to create necessary infrastructure, i.e. to make the City welcome new construction, the amount of investment required is about USD 150 – 200 million. The funds will be spent on roads construction, engineering and utilities, necessary smart elements incorporation, the basic framework. The total size of investment for the Smart City with all the facilities completed, the convention center, international hospital, schools, hotels, financial center and housing area built is estimated on average USD 2.2 billion. This amount of money will come from various investors from South East Asia and the Middle East. For each element there is its own investor, for example, at the time we are negotiating with an international school operator the terms of a school construction in the Smart City.
KT: What is the time schedule?
A J: The comprehensive study of the project will take 6 months, and then it must be approved by the government, the local authorities, municipality, and utility companies. We are expecting the approval to be gained within three months. Concurrently, we are working on establishment of a real estate mutual fund in cooperation with local banks and international banks, which also will take from 6 to 9 months before the final agreement is ready. So, providing that the approval is ready and the fund is established in nine months time, the construction of the Smart City infrastructure can start by the second quarter of 2013. The infrastructure development can take around 1-2 years. At the time of the first stage the important elements of the city may appear as well, i.e. the international school or the private hospital. These are the two elements that are in high demand in Kazan, their construction will make the city suitable for foreigners to live in as they will be able to come with their families. The creation of the important elements of the Smart City will take 3-5 years, so in five years time you will be able to see the buildings. We are not expecting it to be fully developed from end to end, but at least the important components will be there in five years. Certainly, the project will take much time, but it should start somewhen.
KT: What are other important elements of the Smart city?
A J: Another in-demand element of the Smart City is a big international convention center integrated to a hotel, shopping mall and offices, just as the same type as in the world’s largest cities. The center will host international exhibitions, forums and meetings. A large financial center will also be constructed to provide office premises for big international companies, such as PWC, KPMG and others, which are nowadays scattered around Kazan. All the international companies working in Kazan will be concentrated in one financial center; the idea came from Kuala Lumpur City Center and Dubai Internationals Financial Center. The Smart City will be easy to reach due to intermodal transport launched from the airport to Kazan downtown. It will have everything for comfortable living.
KT: What distinguishes the Smart city from other large-scale infrastructural projects in Tatarstan?
A J: Recently RustamMinnikhanov announced that the Smart City might become another special economic zone in Tatarstan. We expect this status to contribute to international promotion of the Smart City and to attract more foreign companies. What differentiates the Smart city from Alabuga Special Economic Zone is that it won’t have any manufacturing activities on its territory; as well it is not aimed to develop high technologies as Innopolis. The Kazan Smart City is for business, living, international facilities etc.
KT: Is Kazan Smart City only for foreigners?
A J: Everybody can buy an apartment there. Actually, the project provides comfortable living and working conditions for professionals. The prices at the residential area will depend on the property market. If you can’t afford having a flat in the Smart City you can easily move in and out of the city anytime. The entire city will be equipped with smart technology, for example high speed Internet, traffic control system, smart energy monitoring system and green technology elements.
KT: Have you already found smart technologies provider for the project?
A J: We have had several meetings with Siemens, which was recommended by the Tatarstan Investment Development Agency. Siemens is already involved in smart cities creation in Abu Dhabi, Skolkovo and some significant projects in Malaysia.
KT: What are the challenges of the Kazan Smart City project?
A J: The main challenge is to attract investors. However, with Universiade Games, the World Soccer Championship oncoming, more direct flights being launched from foreign countries to Kazan, people start knowing the city. And investors will start to have interest in Tatarstan and Kazan. Another challenge is coordination between the internal parties and the local parties, but it is currently in its normal way.
KT: When do you expect the funds to repay?
A J: The mutual fund will have the horizon of 5-10 years that is the money raised for infrastructure development. In case all the plots of the Smart city are taken by the investors within ten years, the fund will generate back its profit.
KT: Why did you choose Tatarstan?
A J: We have chosen Tatarstan mainly because the local government is very welcoming and it provides us with the necessary assistance in all spheres. Investors from South East Asia and the Central Asia are still coming to Russia at the very inception level; they don’t understand the market well. But the great government assistance and support makes the things much easier in collecting the information, meeting the right partners, firm registration etc. Tatarstan and Malaysia have already had good relations; we are just one of the several Malaysian companies doing business here.
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