State-owned shipping company Sovkomflot is getting into the real estate business, investing as much as 9 billion rubles ($280 million) into the construction of a marina and coastal infrastructure in the port of Sochi, the company said Wednesday.
Sovkomflot's project includes a marina for 250 yachts, reconstruction of the historical terminal building, a four-star hotel with a convention center, a shopping center and an office building — a 2 billion ruble investment to be completed by March 2013.
Another five-star hotel, a boardwalk and a luxury apartment hotel is to be added by 2016. Construction on the first stage is expected to start in February.
The shipper is looking for co-investors who can take over the noncore projects while it maintains control over the marina, said Konstantin Sakharov, head of Sochi Grand Marina, a company created by Sovkomflot to develop the project.
"This is not really our line of business," Sovkomflot deputy director Alexander Kurtynin said of the real estate developments.
The future of the marina at the heart of the development would depend on whether the government delivers on its pledge to construct a massive harbor that would protect the marina from Sochi's stormy sea. Construction has not yet begun on the harbor, which has to be completed in 2013.
The project is part of a vast reconstruction of the Port of Sochi that aims to boost passenger volume and add a cruise terminal, said Vladimir Derkunov, director of Port of Sochi, the Sovkomflot subsidiary that operates the port. The port expects to receive 160 to 180 cruise ships a year by 2020, he said.
But before the wealthy rush to moor their own boats in Sochi, the port has some issues to work through. The popularity of the marina among yacht-owning Russians, many of whom keep their yachts in Turkey or Crimea, will depend on whether the rules governing the Abkhaz border are changed, said Artur Grokhovsky, an editor at Boats and Yachts magazine.
"Two weeks ago I went out to sea in Sochi, and it took six hours to get the permit. Border guards came to inspect the yacht," he said.
In addition, the Sochi marina is likely to be comparatively expensive because of the cost of construction.
The Black Sea coast is unique in that there are no natural bays that can be used to moor yachts, and frequent storms make extensive pier and breakwater infrastructure necessary, but since the harbor is so deep, such infrastructure is very expensive, Grokhovsky said.
He estimated that one meter of a breakwater would cost at least 750 million to 800 million rubles.