SOCHI: THE IMPACT OF THE 2014 WINTER OLYMPICS

CONTENTS 1 2 4 8 10 12 14 16

THE RACE IS ON EXECUTIVE SUMMARY REAL ESTATE DEVELOPMENT SOCHI OVERVIEW THE SOCHI 2014 WINTER OLYMPIC GAMES THE IMPACT OF THE OLYMPIC GAMES CONCLUSION: THE SOCHI 2014 LEGACY APPENDIX: THE OLYMPIC VENUES

CONTACTS C&W/S&R

Advisory Department

Sergey Riabokobylko Partner, Senior Executive Director [email protected]

Tim Millard Partner, Head of Department [email protected]

Research Department

Research Department

Tim Gosling Director, Head of Department [email protected]

Viktor Kapilevich Analyst [email protected]

Office Agency

Land Department

Maxim Andryukhin Head of Regional Projects [email protected]

Olga Kuzyakina Director, Head of Department [email protected]

Retail Department

Retail Department

Konstantin Sakharov Executive Director [email protected]

Natalia Oreshina Director [email protected]

Client Solutions

Marketing and Business Development

Viktoria Manzioukova Partner, Head of Department [email protected]

Veronika Tishkova Communications Manager [email protected]

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

THE IMPACT OF THE 2014 WINTER OLYMPICS | 

THE RACE IS ON

The International Olympic Committee has chosen Sochi to be the host city of the 2014 Winter Olympics and Paralympics; the first time Russia has hosted the Winter Games. Strong administrative support and the personal involvement of Vladimir Putin in the Sochi 2014 committee and marketing campaign, as well as the city’s unique geographical position combining a subtropical climate with a ski resort, helped the success of the bid.

However, the small city faces a Herculean task to prepare itself to host this international event. While massive investment has been promised by the government, and a number of Russian groups have already pledged huge investments, there’s plenty more to be done. The fundamental question is whether this investment will allow Sochi to avoid the pitfalls that many hosts of such international events have met once the dust has settled, by transforming the city into an international resort.

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EXECUTIVE SUMMARY

• With a population 329,481, Sochi is one of the smallest cities to ever host the Winter Olympics, meaning that it will need to dramatically expand facilities. • With a total Olympic budget of $12bn, the Sochi games will be the most expensive Winter Olympics to date. Major Russian industrial groups have been early in announcing their role in the large private investment volumes expected.

Krai region. • The capacity of the hotel sector in Sochi is limited. However by 2014 over 196,000 rooms will be available for domestic and foreign visitors. • Sochi currently lacks any international standard shopping centers, but there are several planned in the coming years.

• 200,000 - 300,000 people are expected to visit Sochi during the games.

• Average residential prices in Sochi now exceed those of Moscow at about $5,000 per sq m.

• Investment plans assume that the area’s annual visitor figure, currently around 3m, could rise to 6m by 2014.

• Sochi’s office market is in its infancy, but demand has risen dramatically since the Olympic announcement.

• Successful implementation of the 2014 Winter Games requires foreign and domestic investment to help improve:

INVESTMENT CLIMATE

• Transport infrastructure • Housing, office and retail/leisure venues • Telecommunications and services • Hotel facilities • Sports facilities • Environmental infrastructure e.g. parks, nature reserves etc. • Massive development in Sochi is likely to result in significant enhancement of the city’s long term political and economic status. • Hand-in-hand with the rise of Sochi’s profile, this large scale development has the potential to transform the city into a year-round, world-class resort, thus boosting economic growth across the Krasnodarsky

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The city has underdeveloped infrastructure and faces a huge task, although Sochi is already the leader in Krasnodarsky Krai in terms of investment volume. These funds are mainly invested in development of the coastal districts of the city, going towards construction of hotel complexes, business centers, and infrastructure and entertainments projects. Part of this volume is also dedicated to the development of the sports, tourism, and transport sectors, as well as housing, utilities infrastructure, production, and agriculture, and beautification of the city. Major current investors in the region include: • Interros group: a holding that includes Norilsk Nickel (metals), Siloviye Mashiny (machine buiding), Rosbank (banking), Soglasie (insurance), Agros (agriculture), Prof – Media (media), and Open Investments (real estate). Interros announced an initial investment of $100m into Roza Khutor Alpine Resort (550ha) but that has

THE IMPACT OF THE 2014 WINTER OLYMPICS | 

now been raised to $500m. Overall, it’s estimated that Interros will invest $1.5bn in the area. • Gazprom: Russia’s largest company with market capitalization of over $300bn (June 2007). • Inteco: Russia’s foremost company in real estate construction and petrochemicals with a turnover of approximately $1bn. • Basic Element: a financial/industrial group with annual turnover of around $18bn and market capitalization of $23bn. Business is concentrated in infrastructure and development, aviation, machinery, and resources. The group has already announced a desire to invest up to $2bn in the main Olympic complex, in addition to

upgrading Sochi Airport and several other projects yet to be revealed. To date, investment has been concentrated in: • Hotels • Sports complexes • Development of Krasnaya Polyana ski resort • Transport infrastructure – airport, seaport, highways • Ecological projects (e.g. waste processing plants) • Luxury residential • Electricity generation

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REAL ESTATE DEVELOPMENT THE HOTEL SECTOR

• Maly Akhun Complex – 1,300 5-star rooms and 3,100 4-star rooms

The hotel sector is obviously the most affected by the Olympic Games. It has a direct impact since Olympic Games related arrivals cause a manifold increase in the demand for short term accommodation. The impact of the event varies between host cities due to a range of factors, the main variable being the maturity of the domestic tourist market and the scope of hotel supply for local and international tourists.

• Hotel Imeretinskaya Complex – 8,000 rooms • Hotel Complex Karusel – 2,150 3-star rooms • Stary Gorod – recreational complex • Sochi Golf resort and SPA – sports-recreational complex between Krasnaya Polyana and Sochi

Under the Russian government’s program, more than 35,000 new rooms (all segments) are to be available by 2014. At the moment, more than 94,000 rooms plus 30,000 additional rooms (50 - 100 km from the airport) and apartment hotels (family-style accommodation, 23 star) are available. This includes approximately 20,700 hotel rooms classified as 3- to 5-star and an additional 4,600 rooms in the 2-star category which are all in the southern part of Sochi.

• Homar – a man-made island with a sports-recreational and hotel complex Current supply in the 5-star segment is extremely limited, as one recent development illustrates. In 2006 a boutiquehotel: Rodina – managed by Stein Group – opened after reconstruction. It offers 40 rooms: 6 luxury and 34 suites. However, this is not a ‘commercial hotel’, as one of Russia’s ‘oligarchs’, Oleg Deripaska (Basic Element), invested in the hotel’s reconstruction in order to be able to use it for his own needs. The majority of visitors are from amongst the Russian ‘elite’. Prices vary from $290 to $2,850 per night.

The biggest projects announced thus far include: • Solnechny Gorod – 1,100 5-star rooms, 1,100 4-star rooms and 2,200 3-star rooms

As a comparison, a room at the Radisson SAS Lazurnaia costs $250 - $320 per night.

• Novy Bereg – 1,500 5-star rooms and 2,950 4-star rooms

TOTAL HOTEL CAPACITY IN SOCHI – NUMBER OF ROOMS Star category

0-10 km from the point of reference Existing

New construction

10-50 km from the point of reference Existing

New construction

5 Star

300

1,632

1,089

4,000

4 Star

126

3,900

6,716

6,250

3 Star

4,978

2,200

5,131

3,149

2 Star

5,481

–

* Point of reference – Sochi International Airport CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

28,503

–

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The Radisson SAS and Park Hotels meet the requirements of a 4- or 4+-star hotel, but clearly there remains a lack of high quality hotels offering 300 - 500 rooms, and which can provide high quality services such as restaurants, conference rooms, internet access, etc. Therefore, Sochi’s hotel development program requires the construction of more than 50 5-star hotels. In addition, many existing hotels have refurbishment or redevelopment plans – including the Moskva, Chaika, Zvezdny, and Zhemchuzhina. The international operators already mentioned are joined by Russian hotel chains Heliopark and Inturist-Group in working in Sochi. Other international names, such as Hilton, are looking at the city. New high quality hotel facilities should provide not only short term benefits for the hospitality industry (international and domestic tourist placement) but also a future strategic advantage in terms of their ability to attract and host domestic and international events.

THE RETAIL SECTOR Currently, Sochi’s retail sector is characterized by low vacancy rates and high demand, although there are no existing shopping centers which meet international standards. The most popular retail format is the public market. Retail premises meanwhile, are most often small units in multipleuse buildings. This can be partially explained by the specific nature of a resort city, with a significant portion of the local population (more than 40%) engaged in seasonal private business. Therefore, incomes tend to be low and not so secure. At the same time, the fertile land and subtropical climate allow people to produce a lot privately. Furthermore, tourists coming to the city on vacation are more interested in entertainment than shopping.

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For the moment, few retail chains operate on the Sochi market: • The Paterson national supermarket chain has two branches • Furniture chains Shatura, Fronda, and Mr.Doors all have branches • Sportswear chains Adidas, Reebok (2 branches), Nike, Puma, and Intersport (2 branches) all have outlets. However, the overall situation is changing rapidly thanks to growth in personal income, economic stabilization in the region, and now the triumphant Olympic bid becoming a dominant factor. That said, development of the retail sector will most likely be driven by the entertainment segment. Among the most ambitious plans are proposals for the construction of non-retained islands which will act as sites for huge recreational complexes, for example the Homar and Stary Gorod projects. Retail space will also be added to the large Karusel ski resort and the Sochi Golf and SPA complex.

• IKEA has recently announced plans for a $130 - 150m MEGA Family Center in Sochi • Bosco di Ciliegi (which holds franchises to Etro, Kenzo, Max Mara, Marina Rinaldi, Max & Co, Alberta Ferretti, Moschino, Ermanno Scervino, Pomellato, Mandarina Duck, La Perla) plans to build a retail center by the end of 2008. The premises will feature all the brands, alongside restaurants and a fitness center. • Mercury Group has begun construction of a luxury village on Krasnaya Polyana, with a number of luxury boutiques, (Armani, Dolce & Gabbana, Prada, Gucci, Chopard) restaurants and concert halls • There are plans to redevelop the former Chaika hotel into a multifunctional complex with a retail area of about 21,000 sq m • There are plans for the construction of a couple of new retail centers near Kurortny Prospect and the embankment.

Moreover several retail and office/retail centers are proposed in Sochi. • ZAO Market plans to transform a former central market into an office/retail center with a total area of 14,000 sq m., with the first of the two phases planned for completion by the end of 2007.

As stated, entertainment will play a significant role in development of the retail sector. Contractor

Area

Approximate investment volume (USD)

Special economic zone for tourism and recreation

n/a

40.5 ha

210m

Marine landscape and recreation complex in the form of “Novy Bereg” island in the Khostinsky district

n/a

180 ha

12bn

Chaika Plaza shopping, business and hotel complex with underground parking (Chaika Hotel reconstruction), in the central district

OOO PFK “Korort”

160,000 sq m

470m

Sochi-Plaza multifunctional shopping and business hotel and residential complex (Moskva hotel reconstruction), in the central district

OOO KB “Natsionalny bank razvitiya businessa”

n/a

n/a

Atex International CEZ (UAE)

65,000 sq m

1.2bn

Project

International class marina to attract tourists from overseas

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

THE IMPACT OF THE 2014 WINTER OLYMPICS | 

THE RESIDENTIAL SECTOR Krasnodarsky Krai, and specifically Sochi, is one of the most encouraging resort regions for prospective residential development in Russia. The Sochi residential market has been developing rapidly over the last few years. In 2006 residential prices grew by 55 - 60% on average, compared with 2005. However, in the elite segment, price growth was around 120%. Among the differing segments, prices vary according to a property’s distance from the sea, the surrounding environment, local infrastructure development, and the quality of the building. In the central part of the city new elite residential complexes proliferate, while the construction of economy class residential buildings is more common in the Lazarevsky and Adlersky districts. In Q1 2007 the average price for business class residential was around $1,500 - 2,500 per sq m. Average prices in the elite segment stood at double this at $3,000 - 5,000 per sq m, but in some cases reached as high as $10,000 per sq m.

After the announcement of Sochi’s success in the Olympic bidding, rapid growth in residential prices was noted, in some cases, local experts announced 100% growth of average residential and land prices. It is believed that average residential prices in Sochi now exceed those of Moscow at about $5,000 per sq m.

THE OFFICE SECTOR Sochi’s office sector is underdeveloped, with very few office complexes. The local market does not employ standard office classification, with local gradation based entirely on the quality of fit out. Recently however, high demand for office space has arisen in the Sochi market, with the Olympic announcement stimulating requirements dramatically. The rental rate for high quality offices in the central district of Sochi is as high as average Moscow A/B+ class office space ($600 - $700). The local market expects further increases in both rental rates and demand. The construction of several modern office centers, including for instance Chaika Plaza (10,000 sq m) on which construction recently got underway, but it’s thought these will struggle to even begin to meet anticipated demand.

TOP QUALITY RESIDENTIAL PROJECTS IN SOCHI

“Novaya Alexandriya”

“Krasnaya Ploschad”

Pushkina Prospect Delivery date: Q4 2007 Price range: $3,300 - $8,200 per sq m Hanging gardens will decorate the building.

Gorkogo Street Price range: $3,300 - $7,425 per sq m

“IDEAL House”

“Alexandrisky Mayak”

Hostinsky district, South-West slope of Bihta mountain Delivery date: Q4 2007 Price range: $2,300 - $3,490 per sq m

Price: $4500 per sq m.

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SOCHI OVERVIEW

GENERAL INFORMATION Sochi is 1,500 km south of Moscow in Krasnodarsky Krai, just north of the Russia’s southern border. It stretches along the shore of the Black Sea against the backdrop of the snow-capped peaks of the Caucasus Mountains, where Mount Elbrus, the highest mountain in Europe, stands 5,642m high. France’s Mont Blanc is a mere 4,810m. Sochi incorporates over 200,000 hectares of forest, and houses over 30,000 plant species in its botanical gardens, parks, and nature reserves. Sochi extends 145km along the coast, making it the world’s second-longest, and Europe’s longest, city, with a population of 330,000 (2006 Regional Statistics). The surrounding region, Krasnodarsky Krai, is home to 5.1 million people, and is Russia’s third largest region. Sochi has always been and remains one of the most popular summer resorts in Russia. It is almost the only Russian city in a subtropical location. Even without the scenic Caucasus Mountains or the pebbly and sandy beaches, the city attracts tourists for its tropical vegetation, numerous parks, monuments, and extravagant Stalinist architecture. About two million people visit Greater Sochi each summer, when the city is home to the annual film festival “Kinotavr”, and the region acts as a getaway for Russia’s elite. In addition to being a tourist attraction, the city is often chosen to host political talks, as well as business conferences and cultural festivals. Sochi hosts more than 100 Category A VIP visits every year. Russia has successfully hosted more than 100 international sports events in the last 25 years. Annually, Sochi hosts an average of more than 400 events, which draw over 1.5 million people.

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POPULATION AND ECONOMY The city is divided into four districts – the Tsentralny (Central) District, the Lazarevsky District, the Khostinsky District and the Adlersky District, as well as summer resort towns like Makopse, Lazarevskoe, or Adler and the skiresort Krasnaya Polyana. District Tsentralny (Central)

Population

Area (sq km)

113,900

32.0

Khostinsky

75,600

420.3

Adlersky

69,100

1,352.0

Lazarevsky

63,200

1,744.0

The Central and Khostinsky districts (accounting for only 13 % of Sochi’s area) are considered to be the most prestigious districts (as well as the famous resort Krasnaya Polyana). About two thirds of the city’s population is concentrated in these areas. High population density influences the residential as well as the commercial real estate price range. Tourism has become the primary occupation for Sochi’s population. The hospitality sector of the city employs approximately 172,000 people, which is 43.4% of the overall population. It illustrates the city’s large workforce potential.

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ECONOMIC DEVELOPMENT INDICATORS Per capita retail trade turnover in 2006 (USD per year)

The major economic sectors of the city are: • Health • Leisure and tourism • Construction

Sochi

1,992

• Retail

Russia

2,191

• Transport

Moscow

6,416

Average personal income in 2006 (USD per month) Sochi

371

Russia

389

Moscow

1,100

• Food industry There are 579 different health and leisure facilities in Sochi, including hotels and tourist resorts. Sochi is visited by more than 3 million people every year. There are 227 medium or large hotels and resorts (as of 2006). According to statistics, the region’s hotel and tourist industries earned RUR 8.6bn in 2006, 20% higher than in 2005. The average occupancy rate increased by 3%, to reach 66%. Tourism and leisure provides the largest contribution to the local budget. The share of hotel infrastructure in the budget income of the city is more than 26%.

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10 | SOCHI

THE SOCHI 2014 WINTER OLYMPIC GAMES Currently the city’s infrastructure does not meet the high demands of the International Olympic Committee - the lack of quality sports facilities and an underdeveloped infrastructure are obvious. However, the Russian Olympic Committee has already announced plans to build the numerous new sports venues needed.

A total of 11 competition venues will be split between a pair of venue clusters – one coastal, one mountain – set, 48 km from one another. A pair of Olympic Villages will also be built: the main Olympic Village is situated on the Black Sea coast, the sub-Village in the mountains.

PRIMARY OLYMPIC FACILITIES Name of Venue

Capacity

Delivery Date

Description

Sochi Olympic Stadium

40,000

2012

To host the opening and closing ceremonies of the 2014 Winter Olympics.

Olympic Skating Centre

12,000

2012

Figure skating and short track.

Bolshoi Ice Palace

12,000

2009

Ice hockey competition venue and two-rink practice hall.

Maly Ice Palace

7,000

2013

Ice hockey competition venue and practice hall.

Sochi Olympic Oval

8,000

2011

Skating competition venue and practice hall. Speed skating.

Olympic Curling Centre

3,000

2011

Curling.

Cross Country Stadium (Psekhako Ridge)

16,000 (11,000 standing)

–

Biathlon, Cross-country skiing and Nordic.

Biathlon Stadium (Psekhako Ridge)

20,000 (13,000 standing)

–

Biathlon, Cross-country skiing and Nordic.

Roza Khutor Alpine Skiing Venue

18,000 (10,000 standing)

–

All Alpine skiing disciplines, with two separate finish areas surrounded by a large, temporary grandstand.

Roza Khutor Snowboarding Venue

15,000 (10,000 standing)

–

All three Snowboard disciplines in one venue.

Alpika Service Mountain Resort

14,000 (10,000 standing)

–

Freestyle skiing venue.

Russian National Sliding Centre

11,000

–

Luge, Bobsleigh and Skeleton.

National Ski Jumping Centre

15,000

–

K-90 and K-120 Olympic jumping hills and three smaller jumping hills (K-60, K-40 and K-20). Ski jumping and Nordic combined.

Main Olympic Village

3,000

–

Mountain Olympic Village

2,000

–

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

THE IMPACT OF THE 2014 WINTER OLYMPICS | 11

The Coastal Cluster for ice events will be in Sochi’s Imeretinskaya Valley along the Black Sea. The venues are on average around 6 km from the Olympic Village, with three of the venues no more than 1 km away. Bolshoi Ice Palace, Maly Ice Palace, Olympic Oval, Sochi Olympic Skating Center and the Olympic Curling Center. The Mountain Cluster will be in the Krasnaya Polyana mountains The venues are on average 4 km away from the mountain-based Olympic village and include the Russian National Sliding Center, Psekhako Ridge, Roza Khutor Alpine Resort, Alpika Service Mountain Resort and the Russian National Ski-Jumping Center. The Main Media Centre (MMC) will be in the Imeretinskaya cluster. A sub-Media Centre will serve the Mountain Cluster in the Krasnaya Polyana mountains.

• The airport will double current capacity to 2,500 passengers per hour by 2014.

The MMC will be close to the airport (5 km) and the coastal venues (an average of 5 km), and approximately 60 km from the farthest mountain venue.

• The Krasnaya Polyana area’s road network will be upgraded and 59 km of high-speed roads leading to comptetion venues will be built.

The Roza Khutor alpine resort, privately funded by Interros, will host all Alpine events. It will cover 227 hectares with 15 lifts. The Gazprom resort on Sochi’s Psekhako Ridge, with 13 planned lifts serving 52 hectares, will host the cross country skiing.

• More than 140 km of Special Olympic Routes will be built, which will be restricted to Olympic transport only and include exclusive Olympic Lanes between all venues. Two Olympic Routes to the mountains will have a 14,000 vehicle per day capacity. Additionally, a 50 km light rail system will whisk 10,000 passengers per hour from the coast to the mountains in about 35 minutes.

The area’s annual visitor figures, currently around 3 million, are expected to rise to 6 million by 2014, suggesting that these facilities should have a viable future once the games are over.

DEVELOPMENT OF TRANSPORT INFRASTRUCTURE Improvements to the transport network are a vital part of the Olympic area development schedule. The redevelopment of urban Sochi will lead to a substantial relocation of housing from the CBD to the suburbs. This relocation presents a significant problem for the population because of the lack of a public transport infrastructure connecting the city center with suburban areas. Therefore FTP WHO? have recently announced the following plans: • An upgraded transport infrastructure will provide a multi-modal transport system, with special Olympic Routes, Olympic Lanes and a new tunnel between the coast and Sochi’s Krasnaya Polyana mountains.

The main transport infrastructure development projects include: Project

Investment volume (mln USD)

Construction of a second rail track along the coast (67 km)

627.4

Construction of Sochi bypass section

638.7

Reconstruction of 116 km of the M27 motorway (“Dzhubga Sochi”)

837.4

Construction of Krasnaya Polyana Road network (53 km)

337.2

Construction of Krasnaya Polyana Expressway (50 km)

1,520.8

Construction of the high speed railway Alder-Grushevaya Polyana (63 km)

758.8

The projects will be developed by RZhD, RosAvtoDor and the Federal Railway Agency. Transport infrastructure development will definitely influence prices in all segments of the real estate market. CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

12 | SOCHI

THE IMPACT OF THE OLYMPIC GAMES OTHER HOST CITIES The Montreal Olympic Games were unprofitable because expenses far exceeded revenues. The total cost of the 1976 Olympic Games was calculated to be $1,596 million, with revenues at $606 million. The deficit of 990 million (CDN) from the Olympic Games was levied by the Quebec government from citizens with a 20% property tax increase; the Canadian city plunged into a financial slump after the 1976 Games and only finished paying off the debt in 2006.

OLYMPIC EXPENDITURE (BN USD)

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

The “Barcelona Effect” was also been identified in the history of organizing the Olympic Games. The city incurred significant cost overruns; however it recovered quickly through increased investment and improved tourist facilities Revenue targets were set at $1.638bn against expenditure of $1.635bn. In the short term, Barcelona’s profitability was only $5 million, but in the long run, tourist infrastructure development created a huge flow of visitors following the games. The peculiarity of the Olympic Games in Barcelona was that the core fundraising was achieved by private initiative. Total investment related to the Barcelona Olympics was estimated at $8bn (Ministry of Economy and Treasury of Spain).

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Nowadays the cost of hosting Olympic events has increased dramatically. The Beijing Olympics Committee has already announced $1.6 billion budget to host the Games. The total budget is estimated at 36 billion USD. Beijing is in a distinctly different position to Barcelona, Sydney and Athens. The city’s hospitality infrastructure is underdeveloped and cannot cover the potential demand for accommodation facilities. Presently, the peculiar nature of Beijing’s hotel market is such that the majority of hotels are unrated and primarily used by domestic tourists. The government plans to develop the city’s hospitality infrastructure by providing 252 new hotels by 2008, bringing the total to 800 starrated establishments, where Barcelona only had to build an additional 75 hotels.

INVESTMENT VOLUME OF SOCHI WINTER OLYMPICS VENUES* Project Sports Facilities Biathlon Centre Cross Country Skiing Centre

Investment Volume (‘000 USD) 806,031 7,786 5,173

Roza Khutor Alpine Resort

261,791

Russian National Sliding Centre

131,225

Maly Ice Palace

26,227

Sochi Olympic Skating Centre

41,537

Olympic Oval

30,171

Bolshoi Ice Palace

178,588

The Olympic Games budget is directly proportional to the infrastructure development of the city hosting the event. The USA (Atlanta) and Australia (Sydney) needed relatively small budgets for hosting the Games which indicates an already highly developed and diversified hospitality infrastructure. The complete reverse situation is the case for developing countries with only a rudimentary hospitality market, thereby necessitating the development of infrastructure almost from scratch.

Sochi Olympic Stadium

55,959

Olympic Curling Centre

12,527

Ski Jumps K-120 and K-90

31,811

Snowboard Park

11,736

Freestyle Center on the trails of “Alpika Service”

11,500

Main Olympic Village (Imeretinskaya Valley)

75,545

The Olympic budget for the Sochi games as been set at approximately $12 billion to the development of the Sochi region, including $7 billion in federal funding. It is estimated that the Sochi 2014 Organizing Committee will be able to generate $485 million in domestic marketing revenues for the Winter Olympics and Paralympics, including $300 million from local sponsors and $125 million from ticket sales.

Mountain Olympic Sub-village

48,363

Olympic Villages

120,908

MPC & IBC

268,902

Press Centre (Imeretinskaya Valley)

191,270

International Broadcast Centre Total

77,632 1,195,841

* All the facilities are new installations and are financed from Non-OCOG Budget.

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

14 | SOCHI

CONCLUSION: THE SOCHI 2014 LEGACY Different countries have different goals in hosting the Olympic Games. However, the following common aims are shared by all governments: Improvement of:

2. Create a year-round tourism industry to expand upon existing summer tourism. This expansion will improve economic conditions for the local population and sustain employment levels year-round.

• Telecommunications services

3. The development of modern entertainment, exhibition, retail and accommodation facilities along the coast, which should ensure Sochi becomes a world-class resort destination.

• Hotel facilities

4. Improvement of regional security.

• Transport infrastructure • Housing, offices and commercial venues

• Sports facilities • Environmental infrastructure • Foreign and domestic investment levels. It’s evident that the XXII Winter Olympic Games will have a great impact on Sochi, its outskirts, the Krasnodarsky Krai region and Russia as a whole. After the Games have finished, the city has the potential to be a year-round world-class resort, greatly enhancing local economic growth. The key components of the government plans for the Sochi 2014 legacy include: 1. Development of alpine, sliding and ski jumping facilities, which will: • Help to broaden the interest and participation of Russian youth in these popular winter sports • Provide world-class training facilities for Russian athletes • Provide, for the first time, venues for national and international alpine competitions in Russia.

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

5. New high quality tourist developments will create new job opportunities for Sochi’s population. 6. Thanks to a large scale PR campaign and the development of infrastructure, Sochi will attract far more tourists, both international and domestic, which will lead to an increase in the population’s income. 7. The additional Winter Paralympics which will: • Increase awareness, acceptance and appreciation for Paralympics in Russia • Necessitate a new accessible infrastructure in all the Olympic facilities • Ensure the renovation of existing infrastructure in facilities and transportation systems for accessibility • Serve as a model for greater inclusion and accessibility in Russia.

THE IMPACT OF THE 2014 WINTER OLYMPICS | 15

8. The development of environmentally friendly facilities will set new standards for Russia: • The improvement of environmental standards and the extension of protected areas in the Sochi region • The heightening of environmental awareness both in Sochi and throughout the rest of the world’s largest country.

Finally, complex city redevelopment will lead to the transformation of Sochi’s urban and economic infrastructure. The core regional industries (tourism and hospitality) will develop and increase their capitalization. Moreover, PR campaigns and the development of the resort infrastructure will make the city more attractive to international and domestic tourists alike.

POST-GAMES OWNERSHIP Competition Venues Venue Name (Existing/New)

Sports and Disciplines

Use of Venues

Ownership

Current Use

Post-Games Use

Current Ownership

Post-Games Ownership

Coastal Cluster – Sochi Olympic Park Bolshoi Ice Palace

Ice Hockey 1

New

Multi-purpose sports, concert and entertainment center

n/a

Krasnodar Region

Maly Ice Palace

Ice Hockey 2

New

Multi-purpose sports, concert and entertainment center

n/a

Krasnodar Region

Olympic Oval

Speed Skating

New

Exhibition Hall with joint use as a competition and training center

n/a

Krasnodar Region

Sochi Olympic Skating Center

Figure Skating, Short Track Speed Skating

New

Exhibition Hall with joint use as a competition and training center

n/a

Krasnodar Region

New

Russian National Olympic and Paralympics Training Center

n/a

Rossport

n/a

Rossport

Olympic Curling Center

Curling

Mountain Cluster – Krasnaya Polyana Russian National Sliding Center

Bobsleigh, Skeleton, Luge

New

International competition center and national training center

Psekhako Ridge

Biathlon, CrossCountry Skiing, Nordic Combined

Ski Resort

Russian National Training Center

Gazprom

Gazprom

Ski Resort

International competition venue, training facility and year-round tourist resort

Interros

Interros

Ski Resort

International competition center, training facility and tourist resort

Alpika Service Company

Alpika Service Company

New

International competition center and national training center

n/a

Rossport

Roza Khutor Alpine Resort

Alpika Service Mountain Resort

Russian National Ski-Jumping Center

Alpin Skiing, Snowboard

Freestyle Skiing

Ski-Jumping, Nordic Combined

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

16 | SOCHI

APPENDIX: THE OLYMPIC VENUES The new Sochi Olympic Stadium will be within walking distance of the Olympic Village and its capacity will be 40,000. The stadium walls and roof will be one continuous glass surface. The bowl will open to the north, allowing for a direct view of the Krasnaya Polyana Mountains, and the upper deck will open to the south with a view of the Black Sea. It will cost $63.5m to build the venue, including temporary work for the Olympics. The projected delivery date is 2012. The facility will serve as a training centre and venue for the Russian national football team after the games. Centrally located within the Olympic Park sports venues, the Medals Plaza will be near the Olympic Stadium, the Black Sea coast and the Cauldron. The stage will remain after games, allowing future visitors to stand on the stage on which the names of all the medal winners will be permanently recorded. This temporary venue will accommodate 30,000 seated and 10,000 standing spectators. The Olympic Curling Centre will be a 3,000-seat multipurpose arena, only 1.5 km from the Olympic Village. It is currently in the planning stage. After its completion, it will host all the curling events at the 2014 Winter Olympics. Investment will amount to $14m, including temporary work for the Olympics. The projected delivery date is 2011. After the Olympics, it will remain as a sports arena.

include both skating competition venues and a skating practice hall, all within 360 m of each other. The venue is currently in the planning stage. The projected delivery date is 2011. Investment will amount to $32.8m, including temporary work for the Olympics. The Bolshoi Ice Palace will include both ice hockey competition arenas and a two-rink practice hall, all within 300 m of each other. It will be purpose built as a stateof-the-art, world-class ice hockey, multi-sport and entertainment venue. The arena will have 12,000 seats. The projected delivery date is 2009. The Maly Ice Palace will include both ice hockey competition venues and a practice hall, all within less than 300 m of each other. The venue will have 7,000 permanent seats, only 105 m from the practice hall, which will have two rinks. The projected delivery date is 2013. Investment will amount to $27.2m, including temporary work for the Olympics.

The Olympic Skating Centre will seat 12,000 spectators and include both skating competition venues and a skating practice hall, all within 360m of each other. The projected delivery date is 2012. After it is complete, it will host the short track speed skating and figure skating events. Investment will amount to $43.9m, including temporary work for the Olympics. After the Olympics it will be used as an exhibition hall.

The International Broadcast Centre (IBC) and the Main Press Centre will both be in the Main Media Center, planned as an integral component of the Sochi Olympic Park. This state-of-the-art exhibition and retail centre will include 45,000 sq m of one-storey space for the IBC, while the MPC will be on two levels with 25,000 sq m. The IBC and MPC will share common services, while additional dining areas will be provided for each. The MMC will be served by an external transport mall with space to park 30 buses and 1,000 cars. An Olympic Park internal shuttle service will take press and broadcasters directly to their venues within the secure zone of the park. The MMC Hotel will provide 600 rooms within the park. After the Games, the MMC will become an integral part of the Imeretinskaya Resort.

The Sochi Olympic Oval will seat 8,000 spectators and

The National Ski Jumping Centre will feature K-90 and K-

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

THE IMPACT OF THE 2014 WINTER OLYMPICS | 17

120 Olympic jumping hills, as well as three smaller jumping hills (of K-60, K-40 and K-20) for training and youth development. The venue will be within walking distance of the main spectator transport mall where buses and trains will deliver spectators to Krasnaya Polyana (approx 750 m away). The “Mountain Live Site” will be just outside the venue with views of the Krasnaya Polyana Mountains. The venue will have temporary seating for 5,000, with terraces that will provide viewing for an additional 10,000 standing spectators. Planned for construction in the existing Alpika Service Mountain Resort, the freestyle skiing venue has been designed to accommodate 14,000 spectators, including temporary grandstand seating for 4,000, and space for an additional 10,000 standing spectators. The spectator bus drop will be less than 50 m from the venue entry, far closer than in recent Winter Games. The Roza Khutor Snowboard Venue has been designed to accommodate all three snowboarding disciplines in one venue. Snowboarding is one of the most popular winter sports in Russia, so the venue will accommodate 15,000 spectators, with temporary grandstand seating for 5,000 and space for an additional 10,000 standing spectators along the courses. The venue is also easily adaptable to host ski cross.

accommodate all alpine skiing disciplines, with two separate finish areas surrounded by a large, temporary grandstand that will seat 8,000 spectators; the venue has the capacity for an additional 10,000 standing spectators. The new Russian National Sliding Centre will feature one of the longest and most challenging tracks ever designed. Advanced track shading devices will allow precise and consistent control of the track’s temperature. The venue will have 500 permanent seats, 500 temporary seats and space for 10,000 standing spectators. The Psekhako Ridge will be a combined venue offering spectacular views of the peaks of the Krasnaya Polyana Mountains. The venue will provide two separate and distinct competition areas with separate sets of tracks, start-finish zones, athlete support facilities and tribunes. The Biathlon stadium will have temporary seating for 7,000, with space for an additional 13,000 standing spectators. The cross country stadium will feature temporary seating for 5,000, with space for an additional 11,000 standing spectators. The venue will also include a permanent Competition Management Building, a scoring and timing tower with clear views of both biathlon and cross country courses, and a sports centre adjacent to the finish areas with training and medical areas, federation offices, meeting areas, dining areas, and storage.

The Roza Khutor Alpine Skiing Venue is designed to

SCHEME OF OLYMPIC PROJECTS ON THE COAST

CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH

Russia and the CIS Headquarters 125047 Russia Moscow Ducat III, Gasheka ul., 6 Telephone: +7 (495) 797-9600 Fax: +7 (495) 797-9601 www.cushmanwakefield.ru