2009 - CRE

96
South Region:
Author:­­
Pavel­Chernyshov
...................
Photography:­archive­CRE
The Fate of Southern Giants
Greater­Sochi
Olympic­ sites­ seem­ to­ be­ in­ the­ mostadvantageous­position.­It­should­be­notedthat­
just­ a­ short­ time­ ago­ even­ tendersoffering­contracts­with­guaranteed­financing­sometimes­failed­here.­Quite­revealingare­the­words­of­Kuban­governor­Alexander­Tkachev­who­complained­that­Kuban­builders­
did­ not­ hasten­ to­ participate­ in­ thetenders­for­the­development­of­the­future­
Olympic­ capital­ and­ money­ flow­ out­ toother­
regions.­ Yet­ the­ political­ will­ andgrowing­
financing­ problems­ helped­ thegovernment­to­crush­the­obstinacy­of­themarket­participants­fearing­political­risks.As­noted­by­Julia­Nikulicheva,­strategicconsulting­and­appraisal­director­at­Jones­Lang­LaSalle,­now­all­projects­related­to­thedevelopment­of­the­Olympic­infrastructurego­on­developing.­“Talking­of­private-public­partnership­projects,­their­participantsdo­their­best­to­overcome­financial­problems,­even­though­they­try­to­curtail­theirprograms,”­she­believes.­The­government'ssupport­came­in­handy.­Thus­a­creditingline­to­the­tune­of­$750­million­has­alreadybeen­
advanced­ to­ Interros­ by­ the­ statecorporation­The­Bank­of­Development­and­
External­ Economic­ Activity­ for­ the­ construction­and­operation­of­the­Roza­Khutorski­resort.­Now­Interros­is­planning­to­usethe­first­$50­million­from­this­amount.In­the­near­term­Olympstroy­hopes­tofind­
investors­ for­ such­ properties­ as­ the­
Small­ Ice­ Arena,­ the­ Palace­ of­ Figure-
Skating,­the­Big­Ice-Hockey­Arena­and­the­
Skating­ Center.­ Dmitry­ Kozak,­ a­ deputyprime­minister­noted­that­in­spite­of­thecrisis­some­projects­rouse­keen­interest.
The­IOC­decision­ also­brought­ to­lifequite­a­few­projects­that­are­not­directlyrelated­to­the­Olympic­Games.­Most­note
­ Until­recently­hardly­any­discussion­about­the­Russian­South­missed­“theinvestment­boom”­cliche.­Indeed,­a­tremendous­deficit­in­most­commercialreal­estate­segments,­well-disposed­local­authorities­and­a­number­of­politicaldecisions­resulted­in­a­situation­where­the­region­was­literally­bursting­withprojects,­each­claiming­the­status­of­the­largest,­if­not­across­the­country,­thenat­least­in­the­region.­Scarcely­enough­time­had­lapsed­for­the­investmentboom­to­materialize­when­the­crisis­began­blowing­money­from­the­region.­
Which­megaprojects­have­the­chance­to­survive­under­the­new­conditions?
worthy­among­them­are­manmade­islands,such­
as­ Federation­ Island,­ Sakura,­ Young­
Moon,­ a­ complex­ development­ project­
by­ Base­ Element­ on­ 800­ hectares­ in­
Gelendzhik­anticipating­the­constructionon­
commercial,­ residential­ and­ recreational­
functions­ as­ well­ as­ the­ projectsto­
be­ delivered­ by­ the­ Savings­ Bank­ in­
Krasnaya­Polyana.­Talking­of­the­bulkiestprojects,­they­will­take­a­long­time­to­getoff­
paper.­ “First­ and­ foremost,­ these­ areprojects,­whose­construction­has­not­yetcommenced,­or­whose­territory­is­encumbered­
with­ existing­ buildings­ and­ structures,”­
points­ out­ Elena­ Lisina,­ assistantconsulting­
of­ the­ appraisal­ departmentat­CB­Richard­Ellis.­Thus­construction­onthe­Federation­Island­project,­the­epitomeof­Sochi’s­big­way,­will­be­postponed­tillbetter­times,­by­all­appearances.­Architect­Erick­van­Egeraat­already­abandoned­theproject­
and­ the­ developer,­ M-Industria,refused­
any­ comments.­ Consideringthe­
scale­ of­ the­ project­ and­ the­ changing­
makeup­ of­ the­ Federation­ subjectsinvolved,­construction­on­the­Federation­
Island­can­be­completed­only­after­2014,”­
Lisina­diplomatically­remarks.­The­Sakura­
and­ Young­ Moon­ islands­ are­ in­ a­ similarsituation.­The­conservation­of­most­complex­
development­ projects­ appears­ quitereasonable.­As­noted­by­Julia­Nikulicheva,it­
won’t­ be­ easy­ to­ realize­ large-scalecomplex­development­projects­in­greater­
Sochi.­ “A­ considerable­ part­ of­ the­ territory­
is­ given­ to­ residential­ developmentbut­in­times­of­crisis­people­do­not­caremuch­about­their­second­homes,”­arguesthe­expert.Developers­in­Moscow­or­St.­Petersburgwould­most­likely­think­of­re-conception.­
In­ this­ case­ either­ the­ construction­ iseither­scaled­down­(the­gross­built­spaceis­
cut),­ or­ the­ functional­ redistributionof­its­constituents­is­done­–­the­share­ofcommercial­
space­ is­ downsized­ in­ favorof­the­residential­function­(apartments).­However­the­South­has­its­own­specificity.­
“We­ currently­ have­ no­ informationregarding­the­re-conception­of­projects­ingreater­Sochi­and­this­turn­of­events­seemsvery­unlikely.­To­begin­with,­the­land­is­soexpensive­in­Sochi­that­any­such­downsizing­
may­ have­ a­ critical­ impact­ upon­ theproject­recoupment.­Secondly,­space­redistribution­in­favor­of­the­residential­func-
tion­and­to­the­detriment­of­the­commercial­
function­ won’t­ be­ effective­ becauseof­the­already­existing­redundant­supplyin­
the­ business-class­ housing­ segment.­
(Talking­of­the­business­class,­we­bear­inmind­
that­ most­ properties­ positioned­ asluxury­in­Sochi­fall­short­of­luxury­class­inreality­and­fall­under­the­generally­accepted­criteria­of­business­class­housing).­Thenumber­of­deals­with­residential­real­estatehas­been­very­low­over­the­last­18­months­(since­August­2007),­as­there­is­a­lack­ofdemand,”­according­to­Lisina.
Azov­games
One­more­political­project,­even­if­not­soeye-catching,­
is­ the­ development­ of­ thesouthern­
gaming­ area.­ We­ should­ recallthat­pursuant­to­the­federal­law,­from­July­1,­2009­all­Russian­gambling­houses­mustbe­
withdrawn­ to­ four­ gaming­ areas:­ thearea­
striding­ the­ Krasnodar­ and­ Rostovregions,­
the­ Primorye­ region,­ Altai­ andthe­
Kaliningrad­ region.­ From­ the­ verybeginning­gambling­operators­were­ratherskeptical­
about­ the­ possibility­ of­ creating­Russian­gaming­centers­a­la­Las­Vegasor­Macau.­The­southern­project,­Azov­City,­