Billions of dollars to be invested in the project will turn Sochi into a site for a rally of the world’s super-rich people. In 2008, it will host an investment forum as part of the St Petersburg international economic forum.
Changes are already under way. Sochi plans to spend a huge amount on the development of the local transport system (to build an airport), on new hotels, on the modernisation of the local power grid, on new sports facilities (only four such facilities of the 11 required are in place, and seven are under construction), and on the Olympic Village, an international broadcasting centre and a media centre.
Russia’s goal is to make Sochi, its best summertime resort, a year-round spa. In addition, with the new sports facilities, Russian athletes will be able to live and train in Russia, not abroad.
Once IOC selected Sochi for Winter Olympics 2014 Russian parliament approved the allocation of RUR2.5bn (around $100mn) to modernise the Sochi airport and the Pulkovo Airport in St Petersburg. The relevant parliamentary committee voted for those amendments to the 2007 federal budget. Experts estimate the additional investment approved as “substantial.” “For example, the reconstruction of the Sochi airport requires $100mn. The government could provide 50%, which is Vladimir Potanin’s Interros Holding will invest almost RUR40bn ($1.56bn) in sports facilities in Sochi and Krasnaya Polyana, while Oleg Deripaska’s BasEl will invest RUR40bn to RUR50bn ($1.56bn-$1.9bn) in the Imereti Riviera project (building Olympic facilities).
A monorail in Sochi? Construction professionals from a large Austrian building company have come to Sochi to meet the city mayor. They proposed to design a monorail road to connect two Sochi suburbs, Adler and Krasnaya Polyana, as well as other infrastructure facilities.
The general ado about a Russian city hosting the 2014 Winter Olympics has influenced the local real estate market.
Sochi can become the most expensive city in Russia during the Games.
The IOC decision sent local real estate prices up 30%-40% after the voting results became known. According to a long-term forecast by Swiss Realty Group, the local market will be steadily growing. Most of the available plots of land will be used for developments in the next two or four years. However, despite the favourable forecast, Swiss Realty Group does not recommend entering any projects in the next few months, before the offer price growth is confirmed by real market transactions. The general recommendation now would be to wait for an intensive growth of the market, followed by a liquidity crisis and a correction.
After that, investors will be able to make wiser decisions.
