WPS4115

# **SURVEY OF LAND AND REAL ESTATE TRANSACTIONS IN THE RUSSIAN FEDERATION**

## **Statistical Analysis of Selected Hypotheses**

Gregory Kisunko, Jacqueline Coolidge<sup>1</sup>

**Abstract** : This paper analyzes land transactions between municipalities and private businesses, based on official data and on business surveys in 15 regions of the Russian Federation. Since the Russian Federation passed the new Land Code in 2001, land privatization has been officially encouraged by the federal government and in particular, land under previously privatized buildings was supposed to be privatized to the owner at a nominal price. The paper shows that many sub-national authorities (which own or control the vast majority of land of interest to businesses) appear to use a combination of high statutory land buyout prices and administrative barriers to deter land privatization and to offer “long-term leases” (which are not fully marketable) instead. On the other hand, regions that have established low buy-out prices and taken steps to remove unnecessary administrative barriers to land privatization appear to have higher rates of land ownership by businesses, and to face lower levels of corruption in the privatization process. The paper concludes that further reductions in the statutory prices for privatization of land under buildings and elimination of unnecessary administrative barriers should help to encourage further land privatization and the development of a competitive, secondary market in commercial land.

### World Bank Policy Research Working Paper 4115, January 2007

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

> 1 This paper was prepared by Gregory Kisunko (World Bank PRMPS) and Jacqueline Coolidge (World Bank Group FIAS), in conjunction with projects in the Russian Federation carried out at the request of the Ministry of Economic Development of Trade and the Federal Anti-monopoly Service. The projects were supported financially by the Foreign Investment Advisory Service of the World Bank Group, the European Union, and the Swiss Economic Cooperation Agency.

> The authors would like to thank our Russian contractor -  Marketing Agency Media Navigator, Nizhniy Novgorod and especially Dr. Denis Vorontsov who on behalf on the contractor managed the two surveys that provided the data on which this paper is based and Elena Fomicheva from Media Navigator for excellent research assistance, Domagoj Ilic for invaluable inputs and advise during the survey and the analysis,  Sanda Putnina and Tatyana Ponomareva for assistance in gathering other data needed for the analysis, Nisha Narayanan for helping us to put this paper together, and Peer Reviewers Steve Knack, Russell Muir, Vincent Palmade, and Jim Anderson, who all provided excellent feedback on an earlier draft.

We would especially like to thank Steve Butler and Andre Khakhalin for their guidance and for sharing with us their work and insights on land policy in Russia, and in particular for describing the important relationship between privatization and land pricing policy and how it might be used in the analysis of this data.