SOCHI: THE IMPACT OF THE 2014 WINTER OLYMPICS
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SOCHI: THE IMPACT OF THE 2014 WINTER OLYMPICS
CONTENTS
1 THE RACE IS ON
2 EXECUTIVE SUMMARY
4 REAL ESTATE DEVELOPMENT
8 SOCHI OVERVIEW
10 THE SOCHI 2014 WINTER OLYMPIC GAMES
12 THE IMPACT OF THE OLYMPIC GAMES
14 CONCLUSION: THE SOCHI 2014 LEGACY
16 APPENDIX: THE OLYMPIC VENUES
CONTACTS
C&W/S&R Advisory Department
Sergey Riabokobylko Tim Millard
Partner, Senior Executive Director Partner, Head of Department
Sergey.Riabokobylko@eur.cushwake.com Tim.Millard@eur.cushwake.com
Research Department Research Department
Tim Gosling Viktor Kapilevich
Director, Head of Department Analyst
Tim.Gosling@eur.cushwake.com Viktor.Kapilevich@eur.cushwake.com
Office Agency Land Department
Maxim Andryukhin Olga Kuzyakina
Head of Regional Projects Director, Head of Department
Maxim.Andryukhin@eur.cushwake.com Olga.Kuzyakina@eur.cushwake.com
Retail Department Retail Department
Konstantin Sakharov Natalia Oreshina
Executive Director Director
Konstantin.Sakharov@eur.cushwake.com Natalia.Oreshina@eur.cushwake.com
Client Solutions Marketing and Business Development
Viktoria Manzioukova Veronika Tishkova
Partner, Head of Department Communications Manager
Viktoria.Manzioukova@eur.cushwake.com Veronika.Tishkova@eur.cushwake.com
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH
THE IMPACT OF THE 2014 WINTER OLYMPICS |
THE RACE IS ON
The International Olympic Committee has chosen Sochi However, the small city faces a Herculean task to prepare
to be the host city of the 2014 Winter Olympics and itself to host this international event. While massive
Paralympics; the first time Russia has hosted the Winter investment has been promised by the government, and
Games. a number of Russian groups have already pledged huge
investments, there’s plenty more to be done.
Strong administrative support and the personal involvement
of Vladimir Putin in the Sochi 2014 committee and marketing The fundamental question is whether this investment will
campaign, as well as the city’s unique geographical position allow Sochi to avoid the pitfalls that many hosts of such
combining a subtropical climate with a ski resort, helped international events have met once the dust has settled, by
the success of the bid. transforming the city into an international resort.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH
| SOCHI
EXECUTIVE SUMMARY
• With a population 329,481, Sochi is one of the smallest Krai region.
cities to ever host the Winter Olympics, meaning that
it will need to dramatically expand facilities. • The capacity of the hotel sector in Sochi is limited.
However by 2014 over 196,000 rooms will be available
• With a total Olympic budget of $12bn, the Sochi for domestic and foreign visitors.
games will be the most expensive Winter Olympics to
date. Major Russian industrial groups have been early • Sochi currently lacks any international standard shopping
in announcing their role in the large private investment centers, but there are several planned in the coming
volumes expected. years.
• 200,000 - 300,000 people are expected to visit Sochi • Average residential prices in Sochi now exceed those of
during the games. Moscow at about $5,000 per sq m.
• Investment plans assume that the area’s annual visitor • Sochi’s office market is in its infancy, but demand has
figure, currently around 3m, could rise to 6m by 2014. risen dramatically since the Olympic announcement.
• Successful implementation of the 2014 Winter Games
requires foreign and domestic investment to help INVESTMENT CLIMATE
improve:
The city has underdeveloped infrastructure and faces a huge
• Transport infrastructure
task, although Sochi is already the leader in Krasnodarsky
• Housing, office and retail/leisure venues Krai in terms of investment volume. These funds are mainly
• Telecommunications and services invested in development of the coastal districts of the city,
going towards construction of hotel complexes, business
• Hotel facilities centers, and infrastructure and entertainments projects.
• Sports facilities Part of this volume is also dedicated to the development
of the sports, tourism, and transport sectors, as well as
• Environmental infrastructure e.g. parks, nature
housing, utilities infrastructure, production, and agriculture,
reserves etc.
and beautification of the city.
• Massive development in Sochi is likely to result in
Major current investors in the region include:
significant enhancement of the city’s long term political
and economic status. • Interros group: a holding that includes Norilsk Nickel
(metals), Siloviye Mashiny (machine buiding), Rosbank
• Hand-in-hand with the rise of Sochi’s profile, this
(banking), Soglasie (insurance), Agros (agriculture), Prof
large scale development has the potential to transform
– Media (media), and Open Investments (real estate).
the city into a year-round, world-class resort, thus
Interros announced an initial investment of $100m
boosting economic growth across the Krasnodarsky
into Roza Khutor Alpine Resort (550ha) but that has
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH
THE IMPACT OF THE 2014 WINTER OLYMPICS |
now been raised to $500m. Overall, it’s estimated that upgrading Sochi Airport and several other projects yet
Interros will invest $1.5bn in the area. to be revealed.
• Gazprom: Russia’s largest company with market To date, investment has been concentrated in:
capitalization of over $300bn (June 2007).
• Hotels
• Inteco: Russia’s foremost company in real estate
construction and petrochemicals with a turnover of • Sports complexes
approximately $1bn.
• Development of Krasnaya Polyana ski resort
• Basic Element: a financial/industrial group with annual
turnover of around $18bn and market capitalization • Transport infrastructure – airport, seaport, highways
of $23bn. Business is concentrated in infrastructure
• Ecological projects (e.g. waste processing plants)
and development, aviation, machinery, and resources.
The group has already announced a desire to invest up • Luxury residential
to $2bn in the main Olympic complex, in addition to
• Electricity generation
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH | SOCHI
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 • Hotel Imeretinskaya Complex – 8,000 rooms
related arrivals cause a manifold increase in the demand for
• Hotel Complex Karusel – 2,150 3-star rooms
short term accommodation. The impact of the event varies
between host cities due to a range of factors, the main • Stary Gorod – recreational complex
variable being the maturity of the domestic tourist market
and the scope of hotel supply for local and international • Sochi Golf resort and SPA – sports-recreational
tourists. complex between Krasnaya Polyana and Sochi
Under the Russian government’s program, more than • Homar – a man-made island with a sports-recreational
35,000 new rooms (all segments) are to be available by and hotel complex
2014. At the moment, more than 94,000 rooms plus
30,000 additional rooms (50 - 100 km from the airport) Current supply in the 5-star segment is extremely limited,
and apartment hotels (family-style accommodation, 2- as one recent development illustrates. In 2006 a boutique-
3 star) are available. This includes approximately 20,700 hotel: Rodina – managed by Stein Group – opened after
hotel rooms classified as 3- to 5-star and an additional reconstruction. It offers 40 rooms: 6 luxury and 34 suites.
4,600 rooms in the 2-star category which are all in the However, this is not a ‘commercial hotel’, as one of Russia’s
southern part of Sochi. ‘oligarchs’, Oleg Deripaska (Basic Element), invested in the
hotel’s reconstruction in order to be able to use it for his
The biggest projects announced thus far include: own needs. The majority of visitors are from amongst the
• Solnechny Gorod – 1,100 5-star rooms, 1,100 4-star Russian ‘elite’. Prices vary from $290 to $2,850 per night.
rooms and 2,200 3-star rooms
As a comparison, a room at the Radisson SAS Lazurnaia
• Novy Bereg – 1,500 5-star rooms and 2,950 4-star costs $250 - $320 per night.
rooms
TOTAL HOTEL CAPACITY IN SOCHI – NUMBER OF ROOMS
0-10 km from the point of reference 10-50 km from the point of reference
Star category
Existing New construction 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 – 28,503 –
* Point of reference – Sochi International Airport
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS |
The Radisson SAS and Park Hotels meet the requirements
of a 4- or 4+-star hotel, but clearly there remains a
THE RETAIL SECTOR
lack of high quality hotels offering 300 - 500 rooms, and Currently, Sochi’s retail sector is characterized by low
which can provide high quality services such as restaurants, vacancy rates and high demand, although there are
conference rooms, internet access, etc. no existing shopping centers which meet international
standards.
Therefore, Sochi’s hotel development program requires
the construction of more than 50 5-star hotels. In addition, The most popular retail format is the public market. Retail
many existing hotels have refurbishment or redevelopment premises meanwhile, are most often small units in multiple-
plans – including the Moskva, Chaika, Zvezdny, and use buildings. This can be partially explained by the specific
Zhemchuzhina. nature of a resort city, with a significant portion of the
local population (more than 40%) engaged in seasonal
The international operators already mentioned are joined private business. Therefore, incomes tend to be low and
by Russian hotel chains Heliopark and Inturist-Group in not so secure. At the same time, the fertile land and
working in Sochi. Other international names, such as Hilton, subtropical climate allow people to produce a lot privately.
are looking at the city. Furthermore, tourists coming to the city on vacation are
more interested in entertainment than shopping.
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.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH | SOCHI
For the moment, few retail chains operate on the Sochi • IKEA has recently announced plans for a $130 - 150m
market: MEGA Family Center in Sochi
• The Paterson national supermarket chain has two
• Bosco di Ciliegi (which holds franchises to Etro, Kenzo,
branches
Max Mara, Marina Rinaldi, Max & Co, Alberta Ferretti,
Moschino, Ermanno Scervino, Pomellato, Mandarina
• Furniture chains Shatura, Fronda, and Mr.Doors all
Duck, La Perla) plans to build a retail center by the
have branches
end of 2008. The premises will feature all the brands,
• Sportswear chains Adidas, Reebok (2 branches), Nike, alongside restaurants and a fitness center.
Puma, and Intersport (2 branches) all have outlets.
• Mercury Group has begun construction of a luxury
However, the overall situation is changing rapidly thanks to village on Krasnaya Polyana, with a number of luxury
growth in personal income, economic stabilization in the boutiques, (Armani, Dolce & Gabbana, Prada, Gucci,
region, and now the triumphant Olympic bid becoming a Chopard) restaurants and concert halls
dominant factor. That said, development of the retail sector
• There are plans to redevelop the former Chaika hotel
will most likely be driven by the entertainment segment.
into a multifunctional complex with a retail area of
Among the most ambitious plans are proposals for the about 21,000 sq m
construction of non-retained islands which will act as sites
• There are plans for the construction of a couple of
for huge recreational complexes, for example the Homar
new retail centers near Kurortny Prospect and the
and Stary Gorod projects. Retail space will also be added
embankment.
to the large Karusel ski resort and the Sochi Golf and SPA
complex.
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.
Approximate investment
Project Contractor Area
volume (USD)
Special economic zone for tourism
n/a 40.5 ha 210m
and recreation
Marine landscape and recreation complex
in the form of “Novy Bereg” island in the n/a 180 ha 12bn
Khostinsky district
Chaika Plaza shopping, business and
hotel complex with underground
OOO PFK “Korort” 160,000 sq m 470m
parking (Chaika Hotel reconstruction),
in the central district
Sochi-Plaza multifunctional shopping
and business hotel and residential OOO KB “Natsionalny
n/a n/a
complex (Moskva hotel reconstruction), bank razvitiya businessa”
in the central district
International class marina to attract Atex International
65,000 sq m 1.2bn
tourists from overseas CEZ (UAE)
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS |
THE RESIDENTIAL SECTOR After the announcement of Sochi’s success in the Olympic
bidding, rapid growth in residential prices was noted,
Krasnodarsky Krai, and specifically Sochi, is one of the most in some cases, local experts announced 100% growth
encouraging resort regions for prospective residential of average residential and land prices. It is believed that
development in Russia. average residential prices in Sochi now exceed those of
Moscow at about $5,000 per sq m.
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 OFFICE SECTOR
the elite segment, price growth was around 120%. Among
the differing segments, prices vary according to a property’s Sochi’s office sector is underdeveloped, with very few office
distance from the sea, the surrounding environment, complexes. The local market does not employ standard
local infrastructure development, and the quality of the office classification, with local gradation based entirely on
building. the quality of fit out.
In the central part of the city new elite residential Recently however, high demand for office space has arisen
complexes proliferate, while the construction of economy in the Sochi market, with the Olympic announcement
class residential buildings is more common in the Lazarevsky stimulating requirements dramatically.
and Adlersky districts.
The rental rate for high quality offices in the central district
In Q1 2007 the average price for business class residential of Sochi is as high as average Moscow A/B+ class office
was around $1,500 - 2,500 per sq m. Average prices in space ($600 - $700). The local market expects further
the elite segment stood at double this at $3,000 - 5,000 increases in both rental rates and demand.
per sq m, but in some cases reached as high as $10,000
per sq m. 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 Gorkogo Street
Delivery date: Q4 2007 Price range: $3,300 - $7,425 per sq m
Price range: $3,300 - $8,200 per sq m
Hanging gardens will decorate the building.
“IDEAL House” “Alexandrisky Mayak”
Hostinsky district, South-West slope of Bihta mountain Price: $4500 per sq m.
Delivery date: Q4 2007
Price range: $2,300 - $3,490 per sq m
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH | SOCHI
SOCHI OVERVIEW
GENERAL INFORMATION POPULATION
Sochi is 1,500 km south of Moscow in Krasnodarsky Krai, AND ECONOMY
just north of the Russia’s southern border. It stretches
The city is divided into four districts – the Tsentralny
along the shore of the Black Sea against the backdrop
(Central) District, the Lazarevsky District, the Khostinsky
of the snow-capped peaks of the Caucasus Mountains,
District and the Adlersky District, as well as summer resort
where Mount Elbrus, the highest mountain in Europe,
towns like Makopse, Lazarevskoe, or Adler and the ski-
stands 5,642m high. France’s Mont Blanc is a mere 4,810m.
resort Krasnaya Polyana.
Sochi incorporates over 200,000 hectares of forest, and
houses over 30,000 plant species in its botanical gardens,
District Population Area (sq km)
parks, and nature reserves. Sochi extends 145km along the
Tsentralny (Central) 113,900 32.0
coast, making it the world’s second-longest, and Europe’s
Khostinsky 75,600 420.3
longest, city, with a population of 330,000 (2006 Regional
Statistics). The surrounding region, Krasnodarsky Krai, is Adlersky 69,100 1,352.0
home to 5.1 million people, and is Russia’s third largest Lazarevsky 63,200 1,744.0
region.
Sochi has always been and remains one of the most popular The Central and Khostinsky districts (accounting for only
summer resorts in Russia. It is almost the only Russian city 13 % of Sochi’s area) are considered to be the most
in a subtropical location. Even without the scenic Caucasus prestigious districts (as well as the famous resort Krasnaya
Mountains or the pebbly and sandy beaches, the city Polyana). About two thirds of the city’s population is
attracts tourists for its tropical vegetation, numerous parks, concentrated in these areas. High population density
monuments, and extravagant Stalinist architecture. About influences the residential as well as the commercial real
two million people visit Greater Sochi each summer, when estate price range.
the city is home to the annual film festival “Kinotavr”, and
Tourism has become the primary occupation for Sochi’s
the region acts as a getaway for Russia’s elite.
population. The hospitality sector of the city employs
In addition to being a tourist attraction, the city is often approximately 172,000 people, which is 43.4% of the
chosen to host political talks, as well as business conferences overall population. It illustrates the city’s large workforce
and cultural festivals. Sochi hosts more than 100 Category potential.
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.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS |
ECONOMIC DEVELOPMENT The major economic sectors of the city are:
• Health
INDICATORS
• Leisure and tourism
Per capita retail trade turnover in 2006 • Construction
(USD per year)
Sochi 1,992 • Retail
Russia 2,191 • Transport
Moscow 6,416
• Food industry
Average personal income in 2006 (USD per month)
Sochi 371 There are 579 different health and leisure facilities in Sochi,
Russia 389 including hotels and tourist resorts. Sochi is visited by more
Moscow 1,100 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%.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH10 | SOCHI
THE SOCHI 2014
WINTER OLYMPIC GAMES
Currently the city’s infrastructure does not meet the high A total of 11 competition venues will be split between a
demands of the International Olympic Committee - the pair of venue clusters – one coastal, one mountain – set,
lack of quality sports facilities and an underdeveloped 48 km from one another.
infrastructure are obvious. However, the Russian Olympic
Committee has already announced plans to build the A pair of Olympic Villages will also be built: the main
numerous new sports venues needed. 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
To host the opening and closing ceremonies of the
Sochi Olympic Stadium 40,000 2012
2014 Winter Olympics.
Olympic Skating Centre 12,000 2012 Figure skating and short track.
Ice hockey competition venue and two-rink
Bolshoi Ice Palace 12,000 2009
practice hall.
Maly Ice Palace 7,000 2013 Ice hockey competition venue and practice hall.
Skating competition venue and practice hall. Speed
Sochi Olympic Oval 8,000 2011
skating.
Olympic Curling Centre 3,000 2011 Curling.
Cross Country Stadium 16,000
– Biathlon, Cross-country skiing and Nordic.
(Psekhako Ridge) (11,000 standing)
Biathlon Stadium 20,000
– Biathlon, Cross-country skiing and Nordic.
(Psekhako Ridge) (13,000 standing)
18,000 All Alpine skiing disciplines, with two separate finish
Roza Khutor Alpine Skiing Venue –
(10,000 standing) areas surrounded by a large, temporary grandstand.
15,000
Roza Khutor Snowboarding Venue – All three Snowboard disciplines in one venue.
(10,000 standing)
14,000
Alpika Service Mountain Resort – Freestyle skiing venue.
(10,000 standing)
Russian National Sliding Centre 11,000 – Luge, Bobsleigh and Skeleton.
K-90 and K-120 Olympic jumping hills and three
National Ski Jumping Centre 15,000 – 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 | RESEARCHTHE 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
• The airport will double current capacity to 2,500
Cluster in the Krasnaya Polyana mountains.
passengers per hour by 2014.
The MMC will be close to the airport (5 km) and the • The Krasnaya Polyana area’s road network will be
coastal venues (an average of 5 km), and approximately 60 upgraded and 59 km of high-speed roads leading to
km from the farthest mountain venue. comptetion venues will be built.
The Roza Khutor alpine resort, privately funded by Interros, • More than 140 km of Special Olympic Routes will be
will host all Alpine events. It will cover 227 hectares with built, which will be restricted to Olympic transport
15 lifts. The Gazprom resort on Sochi’s Psekhako Ridge, only and include exclusive Olympic Lanes between all
with 13 planned lifts serving 52 hectares, will host the cross venues. Two Olympic Routes to the mountains will
country skiing. have a 14,000 vehicle per day capacity. Additionally,
a 50 km light rail system will whisk 10,000 passengers
The area’s annual visitor figures, currently around 3 million, per hour from the coast to the mountains in about 35
are expected to rise to 6 million by 2014, suggesting that minutes.
these facilities should have a viable future once the games
are over. The main transport infrastructure development projects
include:
DEVELOPMENT Project
Investment volume
(mln USD)
OF TRANSPORT Construction of a second rail track
627.4
along the coast (67 km)
INFRASTRUCTURE Construction of Sochi bypass section 638.7
Reconstruction of 116 km of the M27
Improvements to the transport network are a vital 837.4
motorway (“Dzhubga Sochi”)
part of the Olympic area development schedule. The Construction of Krasnaya Polyana
337.2
redevelopment of urban Sochi will lead to a substantial Road network (53 km)
relocation of housing from the CBD to the suburbs. This Construction of Krasnaya Polyana
1,520.8
relocation presents a significant problem for the population Expressway (50 km)
because of the lack of a public transport infrastructure Construction of the high speed railway
758.8
Alder-Grushevaya Polyana (63 km)
connecting the city center with suburban areas. Therefore
FTP WHO? have recently announced the following plans:
The projects will be developed by RZhD, RosAvtoDor and
• An upgraded transport infrastructure will provide a
the Federal Railway Agency.
multi-modal transport system, with special Olympic
Routes, Olympic Lanes and a new tunnel between the Transport infrastructure development will definitely
coast and Sochi’s Krasnaya Polyana mountains. influence prices in all segments of the real estate market.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH12 | SOCHI
THE IMPACT OF
THE OLYMPIC GAMES
OTHER HOST CITIES The “Barcelona Effect” was also been identified in the
history of organizing the Olympic Games. The city incurred
The Montreal Olympic Games were unprofitable because significant cost overruns; however it recovered quickly
expenses far exceeded revenues. The total cost of the through increased investment and improved tourist
1976 Olympic Games was calculated to be $1,596 million, facilities Revenue targets were set at $1.638bn against
with revenues at $606 million. The deficit of 990 million expenditure of $1.635bn. In the short term, Barcelona’s
(CDN) from the Olympic Games was levied by the profitability was only $5 million, but in the long run, tourist
Quebec government from citizens with a 20% property infrastructure development created a huge flow of visitors
tax increase; the Canadian city plunged into a financial following the games. The peculiarity of the Olympic Games
slump after the 1976 Games and only finished paying off in Barcelona was that the core fundraising was achieved by
the debt in 2006. private initiative. Total investment related to the Barcelona
Olympics was estimated at $8bn (Ministry of Economy and
Treasury of Spain).
OLYMPIC EXPENDITURE (BN USD)
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS | 13
Nowadays the cost of hosting Olympic events has increased INVESTMENT VOLUME OF SOCHI
dramatically. The Beijing Olympics Committee has already WINTER OLYMPICS VENUES*
announced $1.6 billion budget to host the Games. The
total budget is estimated at 36 billion USD. Beijing is in a Investment Volume
Project
distinctly different position to Barcelona, Sydney and Athens. (‘000 USD)
The city’s hospitality infrastructure is underdeveloped and Sports Facilities 806,031
cannot cover the potential demand for accommodation
Biathlon Centre 7,786
facilities. Presently, the peculiar nature of Beijing’s hotel
Cross Country Skiing Centre 5,173
market is such that the majority of hotels are unrated and
Roza Khutor Alpine Resort 261,791
primarily used by domestic tourists. The government plans
Russian National Sliding Centre 131,225
to develop the city’s hospitality infrastructure by providing
252 new hotels by 2008, bringing the total to 800 star- Maly Ice Palace 26,227
rated establishments, where Barcelona only had to build an Sochi Olympic Skating Centre 41,537
additional 75 hotels. Olympic Oval 30,171
Bolshoi Ice Palace 178,588
The Olympic Games budget is directly proportional to Sochi Olympic Stadium 55,959
the infrastructure development of the city hosting the Olympic Curling Centre 12,527
event. The USA (Atlanta) and Australia (Sydney) needed Ski Jumps K-120 and K-90 31,811
relatively small budgets for hosting the Games which Snowboard Park 11,736
indicates an already highly developed and diversified
Freestyle Center on the trails
hospitality infrastructure. The complete reverse situation is 11,500
of “Alpika Service”
the case for developing countries with only a rudimentary
Olympic Villages 120,908
hospitality market, thereby necessitating the development
Main Olympic Village
of infrastructure almost from scratch. (Imeretinskaya Valley)
75,545
Mountain Olympic Sub-village 48,363
The Olympic budget for the Sochi games as been set at
approximately $12 billion to the development of the Sochi MPC & IBC 268,902
region, including $7 billion in federal funding. It is estimated Press Centre
191,270
that the Sochi 2014 Organizing Committee will be able (Imeretinskaya Valley)
to generate $485 million in domestic marketing revenues International Broadcast Centre 77,632
for the Winter Olympics and Paralympics, including Total 1,195,841
$300 million from local sponsors and $125 million from
ticket sales. * All the facilities are new installations and are financed from Non-OCOG
Budget.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH14 | SOCHI
CONCLUSION:
THE SOCHI 2014 LEGACY
Different countries have different goals in hosting the 2. Create a year-round tourism industry to expand upon
Olympic Games. However, the following common aims existing summer tourism. This expansion will improve
are shared by all governments: economic conditions for the local population and
sustain employment levels year-round.
Improvement of:
3. The development of modern entertainment, exhibition,
• Transport infrastructure
retail and accommodation facilities along the coast,
• Housing, offices and commercial venues which should ensure Sochi becomes a world-class
• Telecommunications services resort destination.
• Hotel facilities 4. Improvement of regional security.
• Sports facilities
5. New high quality tourist developments will create new
• Environmental infrastructure job opportunities for Sochi’s population.
• Foreign and domestic investment levels.
6. Thanks to a large scale PR campaign and the development
It’s evident that the XXII Winter Olympic Games will have of infrastructure, Sochi will attract far more tourists,
a great impact on Sochi, its outskirts, the Krasnodarsky Krai both international and domestic, which will lead to an
region and Russia as a whole. After the Games have finished, increase in the population’s income.
the city has the potential to be a year-round world-class
7. The additional Winter Paralympics which will:
resort, greatly enhancing local economic growth.
• Increase awareness, acceptance and appreciation
The key components of the government plans for the for Paralympics in Russia
Sochi 2014 legacy include:
• Necessitate a new accessible infrastructure in all the
1. Development of alpine, sliding and ski jumping facilities, Olympic facilities
which will: • Ensure the renovation of existing infrastructure in
• Help to broaden the interest and participation of facilities and transportation systems for accessibility
Russian youth in these popular winter sports • Serve as a model for greater inclusion and accessibility
• Provide world-class training facilities for Russian in Russia.
athletes
• Provide, for the first time, venues for national and
international alpine competitions in Russia.
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS | 15
8. The development of environmentally friendly facilities Finally, complex city redevelopment will lead to
will set new standards for Russia: the transformation of Sochi’s urban and economic
infrastructure. The core regional industries (tourism and
• The improvement of environmental standards and
hospitality) will develop and increase their capitalization.
the extension of protected areas in the Sochi
Moreover, PR campaigns and the development of the
region
resort infrastructure will make the city more attractive to
• The heightening of environmental awareness both international and domestic tourists alike.
in Sochi and throughout the rest of the world’s
largest country.
POST-GAMES OWNERSHIP
Competition Venues Use of Venues Ownership
Venue Name Sports and Current Post-Games Current Post-Games
(Existing/New) Disciplines Use Use Ownership Ownership
Coastal Cluster – Sochi Olympic Park
Multi-purpose
Bolshoi Ice Palace Ice Hockey 1 New sports, concert and n/a Krasnodar Region
entertainment center
Multi-purpose
Maly Ice Palace Ice Hockey 2 New sports, concert and n/a Krasnodar Region
entertainment center
Exhibition Hall
with joint use as a
Olympic Oval Speed Skating New n/a Krasnodar Region
competition and
training center
Exhibition Hall
Sochi Olympic Figure Skating, Short with joint use as a
New n/a Krasnodar Region
Skating Center Track Speed Skating competition and
training center
Russian National
Olympic Curling Olympic and
Curling New n/a Rossport
Center Paralympics Training
Center
Mountain Cluster – Krasnaya Polyana
International
Russian National Bobsleigh, Skeleton, competition center
New n/a Rossport
Sliding Center Luge and national training
center
Biathlon, Cross-
Russian National
Psekhako Ridge Country Skiing, Ski Resort Gazprom Gazprom
Training Center
Nordic Combined
International
competition venue,
Roza Khutor Alpin Skiing,
Ski Resort training facility and Interros Interros
Alpine Resort Snowboard
year-round tourist
resort
International
Alpika Service competition center, Alpika Service Alpika Service
Freestyle Skiing Ski Resort
Mountain Resort training facility and Company Company
tourist resort
International
Russian National Ski-Jumping, Nordic competition center
New n/a Rossport
Ski-Jumping Center Combined and national training
center
CUSHMAN & WAKEFIELD STILES & RIABOKOBYLKO | RESEARCH16 | SOCHI
APPENDIX:
THE OLYMPIC VENUES
The new Sochi Olympic Stadium will be within walking include both skating competition venues and a skating
distance of the Olympic Village and its capacity will be practice hall, all within 360 m of each other. The venue
40,000. The stadium walls and roof will be one continuous is currently in the planning stage. The projected delivery
glass surface. The bowl will open to the north, allowing date is 2011. Investment will amount to $32.8m, including
for a direct view of the Krasnaya Polyana Mountains, and temporary work for the Olympics.
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 The Bolshoi Ice Palace will include both ice hockey
temporary work for the Olympics. The projected delivery competition arenas and a two-rink practice hall, all within
date is 2012. The facility will serve as a training centre and 300 m of each other. It will be purpose built as a state-
venue for the Russian national football team after the of-the-art, world-class ice hockey, multi-sport and
games. entertainment venue. The arena will have 12,000 seats.
The projected delivery date is 2009.
Centrally located within the Olympic Park sports venues,
the Medals Plaza will be near the Olympic Stadium, the The Maly Ice Palace will include both ice hockey competition
Black Sea coast and the Cauldron. The stage will remain venues and a practice hall, all within less than 300 m of
after games, allowing future visitors to stand on the stage on each other. The venue will have 7,000 permanent seats,
which the names of all the medal winners will be permanently only 105 m from the practice hall, which will have two
recorded. This temporary venue will accommodate 30,000 rinks. The projected delivery date is 2013. Investment will
seated and 10,000 standing spectators. amount to $27.2m, including temporary work for the
Olympics.
The Olympic Curling Centre will be a 3,000-seat multi-
purpose arena, only 1.5 km from the Olympic Village. It is The International Broadcast Centre (IBC) and the Main
currently in the planning stage. After its completion, it will Press Centre will both be in the Main Media Center,
host all the curling events at the 2014 Winter Olympics. planned as an integral component of the Sochi Olympic
Investment will amount to $14m, including temporary Park. This state-of-the-art exhibition and retail centre
work for the Olympics. The projected delivery date is will include 45,000 sq m of one-storey space for the IBC,
2011. After the Olympics, it will remain as a sports arena. while the MPC will be on two levels with 25,000 sq m. The
IBC and MPC will share common services, while additional
The Olympic Skating Centre will seat 12,000 spectators dining areas will be provided for each. The MMC will be
and include both skating competition venues and a skating served by an external transport mall with space to park
practice hall, all within 360m of each other. The projected 30 buses and 1,000 cars. An Olympic Park internal shuttle
delivery date is 2012. After it is complete, it will host service will take press and broadcasters directly to their
the short track speed skating and figure skating events. venues within the secure zone of the park. The MMC Hotel
Investment will amount to $43.9m, including temporary will provide 600 rooms within the park. After the Games,
work for the Olympics. After the Olympics it will be used the MMC will become an integral part of the Imeretinskaya
as an exhibition hall. 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 | RESEARCHTHE IMPACT OF THE 2014 WINTER OLYMPICS | 17
120 Olympic jumping hills, as well as three smaller jumping accommodate all alpine skiing disciplines, with two separate
hills (of K-60, K-40 and K-20) for training and youth finish areas surrounded by a large, temporary grandstand
development. The venue will be within walking distance of that will seat 8,000 spectators; the venue has the capacity
the main spectator transport mall where buses and trains for an additional 10,000 standing spectators.
will deliver spectators to Krasnaya Polyana (approx 750 m
away). The “Mountain Live Site” will be just outside the The new Russian National Sliding Centre will feature one
venue with views of the Krasnaya Polyana Mountains. The of the longest and most challenging tracks ever designed.
venue will have temporary seating for 5,000, with terraces Advanced track shading devices will allow precise and
that will provide viewing for an additional 10,000 standing consistent control of the track’s temperature. The venue
spectators. will have 500 permanent seats, 500 temporary seats and
space for 10,000 standing spectators.
Planned for construction in the existing Alpika Service
Mountain Resort, the freestyle skiing venue has been The Psekhako Ridge will be a combined venue offering
designed to accommodate 14,000 spectators, including spectacular views of the peaks of the Krasnaya Polyana
temporary grandstand seating for 4,000, and space for an Mountains. The venue will provide two separate and distinct
additional 10,000 standing spectators. The spectator bus competition areas with separate sets of tracks, start-finish
drop will be less than 50 m from the venue entry, far closer zones, athlete support facilities and tribunes. The Biathlon
than in recent Winter Games. stadium will have temporary seating for 7,000, with space
for an additional 13,000 standing spectators. The cross
The Roza Khutor Snowboard Venue has been designed country stadium will feature temporary seating for 5,000,
to accommodate all three snowboarding disciplines in one with space for an additional 11,000 standing spectators.
venue. Snowboarding is one of the most popular winter The venue will also include a permanent Competition
sports in Russia, so the venue will accommodate 15,000 Management Building, a scoring and timing tower with
spectators, with temporary grandstand seating for 5,000 clear views of both biathlon and cross country courses, and
and space for an additional 10,000 standing spectators a sports centre adjacent to the finish areas with training
along the courses. The venue is also easily adaptable to and medical areas, federation offices, meeting areas, dining
host ski cross. areas, and storage.
The Roza Khutor Alpine Skiing Venue is designed to
SCHEME OF OLYMPIC PROJECTS ON THE COAST
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