Changes in the residential real estate market in Sochi on the eve of the Olympics

Recommendation points

• Impact of the status of the capital of the future Olympics on the real estate market
• The cost of real estate in various districts of Sochi
• Prospects for the development of the real estate market in Sochi after 2014

Throughout its existence as a city, Sochi attracted interest primarily as an excellent vacation spot on the warm Black Sea coast. Sochi was granted the status of a city only in 1917, although the first resort – “Caucasian Riviera” – was opened back in 1909, and the first mentions of settlements in this area date back to pre-antique times..

Alexander Otroshko. Sochi landscape. 2011

Massive reconstruction of the city began in 1934, it was then that the features of the future large metropolis emerged – the central Kurortny Avenue, originally called the Riviera-Matsesta highway, was laid. In 1961, the so-called Greater Sochi already included the main regions – Central, Lazarevsky, Khostinsky and Adlersky. These areas of Sochi are now the center of the real estate market of the resort city, it is in the Adler district and the settlement of Krasnaya Polyana and Imeretinskaya Bay that large-scale construction of facilities for the 2014 Olympics is underway.

The period of the most active development of the real estate market in Sochi and the growth in the cost per square meter of living space was observed from 2003 to 2007. It was then that the construction of elite residential real estate began in the Central and Khosta districts of the city, and the Krasnaya Polyana ski resort began to attract the attention of investors. The 2008 financial crisis had a significant impact on the real estate market in Sochi and led to the fact that the construction of many residential properties was frozen, and the cost of finished housing in the primary market decreased by an average of 30%. The secondary real estate market in Sochi did not react to the financial crisis so sharply, since in this market segment there was no massive decrease in demand and the price per square meter in an ordinary Khrushchev building fell by only 10-15%.

However, already in 2010, the value of real estate in Sochi has stabilized and has now almost reached the 2007 level. Economy-class housing in the primary market is offered on average at a price of 40-70 thousand rubles, a business-class apartment can be purchased at a cost of 80-110 thousand rubles per square meter, and the price of elite apartments reaches 110-120 thousand rubles per 1 square meter.

Impact of the status of the capital of the future Olympics on the real estate market

Immediately after the announcement of Sochi’s victory in the competition for the right to host the 2014 Winter Olympics, the city saw a sharp jump in property prices. Interestingly, more than 50% of all residential real estate was purchased (this trend continues to this day) by investors who want to capitalize on the increase in the cost of housing on the eve of the Olympics. In the first half of 2007 alone, the cost of 1 square meter of residential space in Sochi increased by 60% and reached 3-4 thousand dollars, elite housing rose in price to 5500 thousand dollars per square meter.

However, such a boom did not last too long, and already in 2008, in fact, even before the start of the global financial crisis, the demand for residential buildings and apartments in Sochi fell somewhat, which led to a significant decrease in prices.

Currently, there are no sharp jumps in the value of the residential real estate market in the southern capital of Russia, but analysts predict an increase in prices on the eve of 2014, when the bulk of the Olympic facilities in Sochi will be completed and the city will acquire a new look and a more developed infrastructure..

The cost of real estate in various districts of Sochi

Traditionally, the most expensive luxury apartments of the future Olympic capital are located in the Central District, which is the historical center of the city. It is here that the main administrative buildings of Sochi, the most expensive hotels and fashionable mansions are located.

Nikolay Pavlov. The mountains. Sochi. 1992

The second place in the cost of housing is occupied by the Khostinsky district, where apartments located in the area of ​​the Svetlana boarding house and not far from the Arboretum park are especially valued.

The value of real estate in the Adler district is growing at the fastest pace, which is associated with the development of the Krasnaya Polyana ski resort and the construction of Olympic facilities.

In the Lazarevsky district of Sochi, the private sector predominates, the cost per square meter of living space is generally much lower here than in the other three districts of Greater Sochi, since this district does not have a sufficiently developed infrastructure and is separated from the center of Sochi by a serpentine road through which it is rather difficult to travel by car.

The greatest demand continues to be used for housing in ready-made new buildings.

On average, the cost of 1 square meter in the primary market in the Central and Adler districts reaches 120-180 thousand rubles per 1 square meter of elite housing and from 80 thousand rubles for business-class housing. In the secondary market in these areas, you can buy an apartment, paying from 50 to 80 thousand rubles per square meter. In the Lazarevsky district, the cost of housing is much lower – from 30 to 40 thousand rubles in the secondary market and from 60 thousand rubles in the finished primary real estate market.

The residential real estate market in Sochi is also subject to seasonal changes – in the summer, housing prices traditionally rise, while in winter there is a decline in demand and a slight decrease in value. Housing in ready-made new buildings continues to be in the greatest demand, since most investors prefer not to take risks, investing at the very beginning of construction, as well as apartments and private houses in the secondary market, which are often purchased by Russians as a place of residence in the summer.

Prospects for the development of the real estate market in Sochi after 2014

If until 2014 all analysts predict a stable increase in the cost of 1 square meter of living space in Sochi, then the market prospects after the end of the Olympics are more vague. It is likely that prices for Sochi real estate will decrease slightly, but most experts assume that, having risen to a maximum level before 2014, in the foreseeable future, the cost of housing in Sochi will remain one of the highest in Russia.

Sochi’s climatic conditions make it the ideal and most popular resort city in the country, so one can hardly expect the attractiveness of real estate investments in Sochi to drop sharply after the end of the Olympics. In addition, the government has already signed an agreement to host the famous Formula 1 racing championship in the southern capital in 2014-2020, so Sochi will remain attractive not only for vacationers, but also for fans of bright sports competitions.