Russia’s Arctic “Lend A Hectare” Scheme: Free Land Use For Foreign Investors

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Op/Ed by Chris Devonshire-Ellis 

  • Follows similar scheme in Russia’s Far East which attracted 40,000 residents
  • Acquisition of 1 hectare of free land 
  • Foreigners may apply from early 2022  

Russia has launched an Arctic Hectare Programme, modelled on its successful Law on the Far Eastern Hectare, or the Federal Law of May 1, 2016, No. 119 FL, being legislation introduced by Russian President Vladimir Putin to give 1 hectare, or 2.5 acres of free land in the Russian Far East to Russian citizens and foreign nationals as long as they live there for five years.

The program originally was mostly aimed at Ukrainian Citizens, and came about as a possible method of resettling about 500,000 refugees. According to some observers, more Ukrainians and Belarusians will settle in Siberia than Russians themselves. However, the plan only allows Russian Citizens to own the land. Foreigners can join the scheme, but cannot own the land until 5 years after they have immigrated to Russia – in order to dissuade drug traffickers from abusing the system. Consolidated groups (of 20 lots minimum) will also be provided with basic infrastructure. As of December 2017, more than 107 thousand people had applied and 40 thousand people have become owners of land in the Russian Far East.

The Arctic programme is similar, and begins from June 1, 2021. All land plots will be terrestrial. Applicants may choose from locations in the Murmansk, Nenets and Yamalo-Nenets Regions, in certain districts in the Krasnoyarsk, Arkhangelsk, Komi and Karelia Regions.

Murmansk Regional Governor Andrei Chibis said “We can see the success of the Hectare Program in the Far East, and thus many people living in the North or who would want to come here will open their businesses in the Arctic. First of all, in tourism. We shall support such infrastructures, and having received an Arctic hectare, businesses will build hotels, tourism facilities, and besides, they will build own houses. This offer is attractive, since we offer the so-called “Arctic” incentives and unprecedented low taxes for small and medium businesses for the term of three years.”

The Karelia Region is to become a Free Trade Zone in its own right and will be attractive to foreign investors from Finland, Sweden and Norway in particular.

In the Arctic, unlike in the Far East, land plots will be offered mostly next to big cities – Murmansk, Norilsk, and Arkhangelsk, as applicants prefer locations next to cities and big villages or shores of navigable rivers. These areas are most accessible in the Arctic and may either already have or will soon develop the necessary infrastructures.

The programme will help settle the Arctic and within a few years, high speed internet will be available even in the smaller villages. We discussed Arctic digital infrastructure developments in the article Murmansk-Vladivostok High Speed Digital Infrastructure Being Installed.

If the program succeeds, the Russian Arctic will see new active businesses and development of local river and air routes. Existing Arctic Residents will be the first permitted to apply for land plots. At the end of 2021, applicants from Russia’s other regions will be invited to follow suit. An applicant may receive for free a land plot of maximum one hectare for the term of five years, and after that time the land may become a property or may be rented for a long term. The hectare may be used for building a house or for businesses.

The Arkhangelsk Region’s Ministry of Agriculture and Trade sees the program will favor development of agriculture tourism, fishing, growing potato, growing vegetables in greenhouses, and development of small farms. “The Arctic Hectare is a very good solution, will attract people to the North, and will stop the population outflow,” the Murmansk Region’s legislator Boris Pishchulin said.

In addition to free land, the Russian Arctic has recently been declared a Free Trade Zone, with businesses and individuals investing there receiving tax benefits and other investment incentives. Arkhangelsk is developing an Arctic marina to attract foreign yachtsmen and investors, while Murmansk, which was designated the Arctic regional capital city last year, is to be a Free Port as well as tourist destination. Some investors are turning it into a Centre of Arctic Gastronomy and developing restaurants and bars featuring local cuisine.

Russia’s Federal Government have earmarked US$243 billion to develop the region.

Investors looking for opportunities in the Russian Arctic may email us at russia@dezshira.com

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About Us

Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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