Housing Construction in Moscow Agglomeration: Spatial Equilibrium Modelling

Abstract

In conditions of intense spatial transformation of Moscow agglomeration (MA), driven by housing construction and migration from Russian regions to MA, urgent task is to build a integrated model of key economic and spatial drivers and outcomes of the transformation. In the article a new model of spatial equilibrium in MA is developed. The model includes three modules: 1) spatial equilibrium model for labour and housing markets in MA; 2) model of dynamic equilibrium between migration and housing construction in MA; 3) model of distribution of housing construction by zones of MA. In the first module equilibrium values of the population, employment and wages are predicted for concentric zones of MA (central business district – CBD, urban zone and zone of new construction). In the second module the equilibrium between migration from Russian regions to MA and new housing construction is shown. The deviation from equilibrium leads to an adjustment of incentives for migration, change of migration flows and finally rebalancing of equilibrium and reproducing of real income gap between MA and other Russian regions. The module 3 describes distribution of housing construction by concentric zones of MA, providing equal profitability of development projects due to adjustment of land prices. Despite the rather generic nature of the model, it is already able to reproduce several trends in spatial evolution of the MA in recent decades, especially the transition from extensive development phase with the spread of urban area in the Moscow suburbs in oil spot fashion and hyper-dense  development of CBD, to intensive phase with in-depth development of the main “body” of the city. The model stresses how closely are integrated processes in the largest agglomeration (of Russia and in the national settlement system. The model shows how
the political and economic processes through changes in rents and agglomeration effect change incentives for work, life and construction in different areas of MA and form the fate of different urban territories. The model describes the reverse side of the coin, how interregional migration is affected by the internal structure of the Moscow agglomeration. When making decision on the promotion of housing construction, especially largescale economy-class greenfield projects of on the periphery of agglomeration, the city implicitly accepts the decision to increase migration from Russian regions, affecting the national system of settlement in Russia.