Mega Tourism Resort Project in North Caucasus Mountains Becomes First Russian Entry to Win MIPIM Award


OJSC Northern Caucasus Resorts Company Presents Project at Hong Kong Industry Event Invites Asia-Pacific Investors for $30-billion Regional Economic Renewal Project

The development company overseeing construction of a massive system of ski, beach and natural heath spa resorts covering 50,000 sq km in the North Caucasus Mountains, stretching 1,200 km from the Caspian Sea to the Black Sea and bordering Asia, was named the first Russian winner ever of a renowned MIPIM global real estate competition.

Northern Caucasus Resorts Company (NCRC) executives will accept the award, based on innovative, technical, environmental and architectural merits, in the Central & Western Asia Futura category at the annual MIPIM Asia awards ceremony here on Nov. 16. MIPIM, short for Le Marché International des Professionnels d’Immobilier, is the premier world promoter of the international property trade. Eighty entrants from 15 countries are involved in the contest, including China, Japan, Indonesia, Taiwan, Malaysia and the UAE.

“Asia-Pacific investors seeking to diversify outside their domestic markets to mitigate risk and secure higher returns will find great opportunity within our unique plan for developing a sustainable tourism industry in the mountains on our country’s southern border with Asia,” said NCRC Chairman Akhmed Bilalov. “We expect many also will be attracted to the chance to participate in the first major step in a proposed new national strategy to use public private
initiatives in tourism to spur much-needed economic growth in depressed regions of the Russian Federation.”

Moscow-based NCRC was established last December to drive the massive tourism project, which will create up to 300,000 new jobs. A collaboration with the federal government, the development is part of a long-term strategy to address the economic lag that underlies social tensions in the North Caucasus region. The plan includes industry, agriculture and youth vocational training reform.

With the explicit support of President Dmitri Medvedev, the federal government initially capitalized the bold undertaking with a $2.0-billion allocation for development of transportation, communications, electrical power and other infrastructure. NCRC is actively pursuing investment from financial institutions and global property developers. The ten-year project is anticipated to require up to $30 billion to complete all phases, including a cluster of five world-class skiing and five modern seaside resorts, as well as an array of health spas that will take advantage of the area’s legendary healing mineral and hot springs.

To facilitate international and domestic investment, the Russian government has designated the entire 50,000-sq-km development area a special economic zone (SEZ). State guarantees will cover up to 70 percent of investments for three to ten years. The state will impose no corporate or transportation taxes for the first ten years, no land taxes for five years and no VAT tax will be applied on equipment imported into the SEZ. The project offers opportunities for foreign companies interested in hospitality, health and wellness, food and beverage, retail, real estate, logistics and warehousing industries.

“The success of this grand and important project depends on investment being thoroughly diversified and international,” said Laurent Vigier, director of European and international affairs for Caisse des Dépôts et Consignations (CDC). The French state-owned banking group and long-term investor has signed a strategic joint venture with NCRC to provide advanced technical, legal, planning and environmental expertise to support the project. “The current outreach to the Asia-Pacific investment community is a major and critical step toward generating a broad and effective portfolio of investors for the North Caucasus,” added M. Vigier, who will join NCRC executives here to present the tourism project.

About 20 French companies have already expressed interest in investing in ski lifts, hotels, airports, mountain tunnel and other construction projects. The first investment from Asia came Nov. 2 in the form of a joint venture with Korean Western Power Company to build up to five power and heating plants in the region, integrating renewable energy sources from wind and solar generation. The investment is worth approximately $1.0 billion.

NCRC’s skiing resorts, the centerpiece of the overall project and including the tallest peak in Europe, Mt. Elbrus, will open between Dec. 2012 and Dec. 2015, in time for the 2014 Olympic Winter Games in the neighboring Black Sea coastal town of Sochi. Once completed, the North Caucasus ski cluster will become the world’s third-largest ski destination, rivaling famed resorts located in the European Alps and the North American Rockies. With over 2.9 billion people in Russia, Europe, the Middle East and Southeast Asia living within a five-hour flight from the ski resorts, over ten million tourists of various income levels are expected to visit the mountains annually.