Winter Olympics 2014

Winter Olympic Games: Long-Term Lessons for Sochi

With the start of the Winter Olympics in Sochi around the corner, Colliers International’s latest white paper takes a look at the potential legacy impact of the Sochi Olympics.

By examining the legacy aspects of the five most recent cities to host the Winter Olympic Games: Lillehammer, Norway [1994], Nagano, Japan [1998], Salt Lake City, United States of America [2002], Turin, Italy [2006] and Vancouver, Canada [2010] and considering the impact of some more recent mega-sporting events, Colliers looks at what this may mean for Sochi based on what has been planned and built for the event and as a longer-term legacy for the area.

The report addresses the motivation behind the desire to host, analysing the pros and cons of the host role in an attempt to draw down some of the lessons to be learned and understand how this can potentially impact the local economy, occupational and investment markets. Some of these pros and cons are listed below:


Potential Legacies for Sochi – The Pros

  • Upgrading shore infrastructure – has helped to deliver building materials required for construction and has created docking capabilities for yachts, international cruise and passenger ships.
  • Transport and IT infrastructure – new transportation routes, including railway terminal, new trains and lines, bridges, tunnels, road networks, a new airport terminal and extension plus extensive power infrastructure and new/upgraded telecommunications. A new high capacity railway connection between Sochi and alpine cluster has also been constructed.
  • Infrastructure and new real estate development – has stimulated further property development and private investment, including numerous shopping malls, apartment buildings and Olympic hotels.
  • Tourism and branding – the Games has acted as a catalyst for attracting other major cultural and sporting events to Sochi including the Formula 1 Grand Prix seven year series and the 2018 FIFA World Cup.
  • National centre for winter sports – 11 new winter sporting venues have been constructed as well as a world-class alpine resort which might become the best one in Russia.
  • Two Olympic villages – constructed as four-star resort hotels and will be used as tourist resort accommodation post-Games.
  • New media centre – new IBC building (45,000m²) and main press centre (25,000m²) have the potential to be used as a media hub long term as well as for the upcoming FIFA World Cup and Formula 1 Grand Prix seven year series.

Potential Legacy Issues for Sochi – The Cons

  • Governance of expenditure and democratic accountability – there is a risk that with such a massive level of public expenditure focused on the Olympics/mega-event that funding to other local government, and other public agencies (e.g. health, education, social welfare) will be negatively impacted.
  • Legacy of debt – high cost of Games preparation can potentially lead to higher taxes or levies, particularly when there has been a significant overspend on original estimates as in the case of Montreal Summer Games in 1976 and London in 2012.
  • Risk local sports participation / community sport – focus on elite sports can begin to outweigh local/community level sports participation, as well as sponsorship and funding from local government.
  • Legacy of new infrastructure – can also leave behind a collection of older sporting venues and transport infrastructure that are still operational but now lack funding for improvement.
  • Potential complications from private/public partnerships – tight deadlines in construction of venues and infrastructure can potentially create property right title issues later.
  • Underutilised sporting facilities / new infrastructure – as well as high cost of maintaining facilities to a world-class standard, venues are constructed for specialised sports that potentially are not traditionally active in the host city or, where the population does not exist to use them afterwards.
  • Environmental / ecological damage – rather than brownfield or underutilised industrial areas, preparations for Sochi have involved using wetlands for some of its Olympic developments speculating a loss to greenery and wildlife.
  • Tourism security / branding – potential security fears can affect the reputation of the host country and impact tourism.

Damian Harrington, Regional Director of Research for Colliers International, Eastern Europe, said: “While hosting the Olympics will raise the stature of the city and its home country, it is clear based on observations from previous Winter Games and other mega-events, that the host needs to have the framework to support it, not just logistically but intrinsically with finance and investment as well as public and private support which can take years.”

The plan and bid for Sochi appears to have taken many of these factors into account. The development of new facilities should help boost tourism short-term via winter sports and longer term through the redevelopment and re-use of the facilities for the Grand Prix and future World Cup.

In terms of definable real estate benefits, new infrastructure development will help improve facilities in the city and hinterland for local and regional occupiers. This should contribute to the improvement of Russia’s tourism development, stimulating latent and growing demand beyond the short term stimulus of the games.

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