City Hall is and has been the largest land owner in St. Petersburg; therefore, it is necessary, in the overwhelming majority of instances, to resolve the issue of allotting a land plot for construction with the city. When determining the cost of rights for municipal land in St. Petersburg, one should rely on the “burden” indicator for land used to construct one square meter of a building. In essence, this indicator expresses the opinion of experts and investors as they describe the adequate future yield from a future facility.

Currently, the main means for allotting land plots in St. Petersburg are the following:

• Goal-oriented presentation of rights for investment in real estate and property The goal-oriented presentation is regulated by the decree of the St. Petersburg government and is implemented by signing a lease agreement for a land plot over the design and construction period. Following the completion of the investment terms and conditions, the constructed real estate facility and land plot may be registered as personal property or the plot may be registered for long-term lease.
• Enforcement of rights for land plots and for buildings thereon located at public tenders Vacant land plots are presented for lease over the period of design and construction, and a building with land plots is presented directly to the ownership of the investor. Tenders are held in the form of auctions open to participants who submit formal bids. The St. Petersburg Property Fund organizes tenders in St. Petersburg.
• Allotment of land plots as property to the owners of buildings, situated on said plots, as per standard prices. In this case, the owner of a building has priority rights to purchase the land plot. This procedure will not be subject to research, given that allotment of land plots is not effected as per market prices, but, rather, as per standard prices which are regulated according to legislation.

Pricing Principles in St. Petersburg
When property is allotted as per the first and second mechanisms, an independent assessment of the market value must be completed on the real estate facilities for sale. As part of the goal-oriented transfer of land plots, a market valuation is performed by an independent appraiser, following the conduction of the corresponding state expertise; a basis is set for the sale price as per the corresponding decree issued by the St. Petersburg government. In the event real estate facilities are sold at public tenders, the value indicated in the appraisal report is the starting price for the tender.
In the Russian experience of appraising the rights to land offered for construction, the so-called “burden” of the land offered for one square meter of a constructed facility is the generally accepted indicator for setting a land value. Additionally, when determining the “burden,” the most economically viable facility is established in terms of function and area. The cost “burden” indicator for one square meter of useable area is the most economic idea. In essence, this indicator expresses the opinion of experts and investors as they describe the adequate future yield from a real estate facility under various uses.
One should bear in mind that during the goal-oriented completion of a real estate facility, an investor practically does not have the opportunity to acquire the facility if the indicator “burden on usable space” is less than the permitted generally accepted value. Accordingly, there is practically no sense in appealing to the understanding of “land value”. Indeed, for example, under the samw burden on usable office space at $450, the cost of one square of land can be $1100 or $1,500. The main reasons for such discrepancy in prices is the various and individual urban-planning limitations for each facility.
Naturally, one can trace the market price dynamics for land slated for construction in St. Petersburg by analyzing the indicators “burden on usable space.” For example, the average indicators “burden on useable space” for shopping complexes in 2004 reached $180-$240/sqm; while in 2005 they were already up to $300 and higher. Currently, the average generally accepted calculated indicators are $300-$350 for widespread-format shopping complexes. In terms of land plots most appropriate for office use, the average “burden” in 2004 was $120-$170, while in 2005-2006 it often exceeded $150 and reached $280 and higher. By the middle of 2007, the average indicator for the “burden” on office facilities has already reached $400. Taking into account the favorable economic conditions in the regions and the high indicators for economic growth, one can expect this growth trend to continue in St. Petersburg.
The above-stated average indicators were calculated by analyzing the sales of facilities for goal-oriented means. We must note that quite a lot of facilities vary somewhat or a lot from the indicated value, and this is the result of a facility’s location, attendance, prestige, environment etc. Let’s now analyze the indicators derived from the results of public tenders.

 Analysis of cost “burden” indicators derives from the results of public tenders
The share of land offered via public tenders over the past three years has increased, and it is very likely that this trend will continue, as the city is gradually transferring to competitive means for dispersing state assets to private parties. Moreover, the changes in the procedure for presenting land plots for commercial construction are being discussed at the federal level, and legislation is in the pipeline to strengthen the required procedure for tenders when distributing plots.
However, this has not occurred thus far, and facilities, especially land plots for commercial construction, are not widely offered via public tenders, which is not very good for analysis. One must also not ignore the substantial differences of the facilities offered via tender as well as facilities presented for goal-oriented means. The various terms and conditions, levels of document preparedness, and procedure of settlements with the state seriously affect the market value of facilities, telling on the figure paid for a respective facility in the event of goal-oriented presentation and the starting price in the event of a sale via tender. Typically, the least profitable facilities in terms of generating a profit are offered via tender. On the other hand, several bidders could show interest in a respective facility, thus said facility’s value could very likely increase and so could the “burden” for a meter of constructed area. Therefore, we should not directly compare yields from sales as part of the tender procedure with yields from sales for goal-oriented purposes. When holding a tender, the land plots for commercial use increase in cost by 50% on average; however, the average “burden” in 2005-2006 was around $135, which is substantially lower than similar indicators for goal-oriented offerings. Projects for the construction of shopping centers in the Vyborg region, on Kompozitorov ($230 “burden”) and in the Krasnogvardeisky region, on Polyustrovsky Prospect ($316 “burden”) are the exception. The average “burden” in 2007 was the same as that for goal-oriented offering, which is around $400; however, this figure can reach $1,000 and higher for individual projects.
Forecasting this figure when offering real estate facilities via tender is a more difficult task than analyzing the market for goal-oriented offerings, given that there are subjective factors at play during tenders, such as personal preference on the part of the bidders in acquiring this or that facility. The results of tenders could demonstrate substantial growth versus the appraisal for specific “burden” indicators specifically as a result of concrete features of a tender. For example, the results of a tender for obtaining the rights to construct commercial areas on a plot in Primorsky district, on Shkolnaya St., the “burden” was $1,380 dollars, while an independent appraiser had evaluated the top “burden” to be $186. It is unlikely correct to reach conclusions on the economic benefits in favor of this method or the one for transferring state real estate to private parties. However, in terms of investors, the main advantage of tenders is that they are accessible and offer equal terms and conditions to all the interested participants.