Just five years ago the name of the city of Sochi was barely known outside Russia. Then suddenly in June 2006, the Russian city won the right to host the 2014 Olympics in a competition with Saltzburg, Austria and Pyeongchang, South Korea. It is only two years until the Winter Olympics in Sochi, but many people are asking themselves the same question: why Sochi?
From the outset the project was fraught with politics. In the eyes of the rest of the world, Russia is primarily known by its two largest cities, Moscow and St Petersburg. The two cities enjoy the most international tourists; they are the hubs that attract the most significant portion of all financial flows and greatest number of talents from the rest of the country.
A few years ago the Federal Government set a course for the development of new regional points of growth by means of conducting mega-events. Not the cheapest strategy for developing new regional brands that position Russia internationally. Already this year Vladivostok, a city at the Far East of Russia, will host the APEC Russia 2012 summit. In 2013, the Universiade will take place in Kazan. In 2018, in eleven cities in Russia—the list of which will be finalised in March 2013—will be hosting the FIFA World Football Cup. Yekaterinburg recently submitted a candidacy application for the right to host World Expo 2020.
In light of the above, the Sochi 2014 project appears to be justified. Sochi is a resort with a unique climate and a century of history behind it. Its proximity to both the sea and the mountains allows it to be open for year-round tourism. Sochi’s coastline stretches for almost 150 kilometres, and 80 percent of the land around the city is a nature reserve. It is the most popular vacation destination for Russians. Annually, over 4 million tourists come here. In addition, the summer residence of the Russia’s President is located in Sochi. So, since the Soviet era it was the most prestigious holiday spot for Russian political elites, government monopolies, and large corporations. However, after the collapse of the USSR the city suffered from underdeveloped infrastructure and couldn’t compete for international tourists.
The idea that Sochi will be reborn as an internationally significant resort after 2014 has been one of the key components of the strategy for the legacy of the Olympic Games. The Sochi-2014 project should deliver sustainable and positive changes in the wide scope of dividends, from governance to new construction standards. After the Games innovative projects that will first be realised in Sochi are expected to be implemented throughout the rest of Russia. (Read more about the strategy of the Games).
The Olympics in Sochi is projected to be the most expensive event of the entire history of the Winter Olympics. Today, the total costs to prepare to this mega-event are estimated to be more than 30 billion US dollars. Besides the construction of new sports venues, the Olympic Park in Imeretin Valley, and ski resorts in Krasnaya Polyana, a great deal of investment will be channelled toward improving the city’s infrastructure.
New roads and high-speed trains will help bring together the virtually unconnected territories of Greater Sochi. The highways and the railroad will provide fast link between Sochi’s downtown area with the Olympic Village on the Black Sea coast, the mountain range for ski events, and a new international airport. The capacity of the city’s power infrastructure is estimated to increase by 2.5 times. The broadband connection will bring high-speed internet and new quality of telecommunication services to the city. New hotels will be built, the embankment will be redeveloped, and a marina for 400–500 sailboats will also be constructed.
Source: Sochi 2014 Organising Committee
The intangible legacy of the Games is even more important than the development of infrastructure. Special attention has been paid to implementing standards of steady development such as green building standards, and zero-waste and climate-neutral approaches. This is particularly important in light of the overall low level of awareness of problems of environmental preservation in Russia.
A great deal of efforts is being put into making Sochi a tolerant and accessible city for international guests of the Games. The entire service personnel is undergoing intensive training in English to break down the language barrier. As the host of the Winter Paralympic Games, Sochi will be able to welcome, and fully cater to, people with disabilities. What’s more, Sochi will also become one of Russia’s cultural hubs. Since 2010, the city has been holding the Cultural Olympiad for Russian and international music, stage, and film stars.
Source: Sochi 2014 Organising Committee
Needless to say, all this positive news does not alleviate the healthy scepticism of observers toward the projects that are being initiated by the Russian government. The main question is: will Sochi become a “white elephant”, a fail of an Olympic host city?
So far, the market’s reaction has been positive. Ever since Sochi has been approved as the host of the 2014 Winter Olympics, real estate value has skyrocketed. Today, Sochi enjoys one of the highest costs for residential property in Russia, averaging at over $3,000 per square meter (10 square feet). (For comparison, the average cost of one square meter in Moscow is slightly over $5,000.) It is unclear how the cost will be affected by the emergence of residential housing in the Olympic Village and mountain cluster on the market which is already available for purchase.
The development of hotel businesses in Sochi also looks very promising. Until recently Sochi only had cheap (1- or 2-star) hotels, and a very few deluxe hotels. Now large hotel chains are expanding their presence in the city. In the end of January 2012, Marriott International announced that it would be opening three hotels in Sochi. The Rezidor Hotel Group will open a Radisson Blu Resort & Congress Hall for 500 rooms in 2013. The construction of two hotels of the Group—Radisson and Park Inn Radisson—in the mountains, and two hotels under the Park Inn by Radisson brand in downtown Sochi, is already underway.
Taking into account the fact that Sochi is already one of the most popular locations for conferences and exhibits, seasonability will not be an issue after the Olympics. The big congress and exhibition centre and amusement park will be the main anchors of post-Olympic development of Imeretin Valley. More exotic options for stimulating year-round high-capacity operation of hotels are being discussed. For example, hosting events of the Formula One.
Let us not forget that currently most of the investors in Olympics venues are big Russian corporations. Participation of international capital in Russian megaprojects is often hindered by the lack of transparency and rule of law in the country. Will Sochi set a positive example in this regard? This will become clear in the very near future.
Find out more about the relationship between sports and urban development in this month’s Urban Intelligence newsletter, with new exclusive content from cities expert and blogger, Greg Clark.
Source top image: Olympstroy State Corporation