Rest & Relaxation

05 July 2005

At the the MDM-Bank office where I go every month to pick up my pay from Moscow, there hangs a picture. Against a background of dark green trees stand three modest houses. As the cheerful bank clerk told me, these are the cottages of the management. True, she wouldn't tell me exactly where they're located. There are a few isolated spots left out there - in Karelia, in the Vyborg region of Lenoblast, in Priozersk, in Vsevolozhsk. But in the popular and fashionable Resort Region, you'd be hard pushed to find a quiet corner where you can luxuriate by a lake or in a secluded forest without being plagued by packs of mushroom pickers out on the prowl. The powerful seasonal flows wash over the rural areas surrounding St. Petersburg. According to rough estimates, about half a million Petersburgers prefer to spend the summer months somewhere not too far off. Maybe a week will be spent abroad, but the rest of the season will be spent just a few miles out of town. The city environment, in St. Petersburg at least, is inert and conservative in nature. Around a local building somewhere, which an investor has got his eyes on to turn into an apartment-hotel, you'll find crowds of picketers with placards reading: "Hands Off!" Out in the 'burbs, however, the changes are taking place on a different scale, although they may be less easily noticed. And, most importantly, the radical changes are now, with increasing regularity, the result of the demands of clients, rather than the whims of the local administration.  True, these demands haven't yet become fully structured, and the market is quick to meet the most varied and colorful of demands. You want a mansion in the late Baroque style for two or three million bucks? No problem - head for Lakhta, to the "Northern Versailles." They're building about fifty of the things out there, and some have already been bought. If you're budget is a little more modest, you can get a plot of land on the swampy side of the Mga River - it will cost you about a grand, although doing the paperwork and getting it registered will probably set you back about as much. The bulk of year-round (and predominantly expensive) housing is to be found within 50 km of Petersburg. But even seasonal inhabitants and tourists are now looking for something that was previously something of a rarity - a landscape pleasing to the eye combined with high levels of comfort. The wild shores of a lake are great, but you also want an en suite bathroom, or at least a plumbed-in lav...There are probably about 100 tour bases, small hotels and other short term accommodation establishments in the reasonably close vicinity of the city which provide an alternative to camping. Some are private, some are owned by the city, some are state-owned. The range on offer in the short-stay market is just as varied as that in the market for properties for sale. You can stay at the President Hotel for $400 a night, or in Kolokoltsevo in a "lux" room for 400 rubles a night. Both are just a two-hour drive from the city. The surrounding natural environment is the same, although the levels of service do differ somewhat. There are tennis courts at the President, whereas Kolokotsevo makes do with a table-tennis table. The rooms do have en suite bathrooms at both, however. The tourist industry is not lying idle. The investment flows running through the surrounding towns and villages are transforming the usual routes taken. As a rule, those resting and relaxing on the cheap pack everything they need in their rucksacks, and spend little along the way. Those in search of rest traveling in a jeep, however, can be a source of income, and entrepreneurs are keen to cater to their needs. The skiing centers are where the changes are most visible. It's a sport that's relatively cheap (after all, it's not yachting), but it also attracts those with cash to spare. About 70 kilometers out of the city, between Orekhovo and Sosnovo, ten slopes are being developed, with a drop over sea level of 120 meters. This, the Igora skiing complex, isn't being limited to skiing however. There will also be a hotel, twenty comfortable cottages, a gym, bowling, sports shops and even a riding school. The first stage of the project will completed and open to skiers this winter. The organizers promise that it will surpass the current leader in the field, Korobitsyno. On the downside, however, there are no lakes in the vicinity, and the Baltic is too far off, so the summer season will be quiet - a problem shared by all the winter centers. Those close to the project have hinted that there are plans to dig an artificial lake for surfing and skiing, and the investors in the project (including the Severstal group and AKB Rossia) are estimating that Igora's total cost will be around $50 million. The project is being implemented by the Investement Culture company. At Igora's presentation, I asked one of the investors when he expected to make his money back on the project. He looked at me like a total idiot, and gloomily turned his back on me. Later, someone filled me in on the background to the project: a recommendation from the president, the social responsibility of business... Well, it will pay its own way some day, like the reconstruction of the Leningrad cinema, which has the same investors. They're unlikely to recover the 20 million price tag through the renting out of go-carts, but who are we to question their business logic? Another project is underway in Toksovo. A sports complex - skiing stadium, a run with shooting range for the biathlon, several jumps, an ice rink, a sledge track - is being built on the eastern shore of the Kurgolovskoe Lake, covering an area of 167.6 hectares. The project will also comprise a 200-300 room hotel and a cottage village, and will cost around $50 million (that magic number again!). The project is being overseen by the Department for Presidential Affairs, and one imagines that investment is being sought along the lines of the reconstruction of the Konstantinovsky Palace - voluntary contributions from big businesses. Who cares, as long as they build the thing...The owner of the Yarkoe tourist base Sergei Khapov isn't holding out for a strategic investor, however. An island in the Vuoksa lake system covering eight hectares, a couple of dozen little Soviet-built houses that can cater for 120. Around $10 a night per person. Even though you can only get here across water, it's usually about 60%-70% full in the high season. The turnover is small, but then expenditure on upkeep isn't that high either, with only six members of staff. Khapov has already built four new cottages, but admits that he's miscalculated slightly. Rather than building houses for 6-10 people, he should have limited them to families of three or four. The manager of the base, Valentina, notes "We get a lot of enquiries. I tell them honestly - if you're looking for comfort, you've come to the wrong place. If you're looking for nature, you'll be welcome." The clientele is for the most part made up of amateur fishers and mushroom-hunters, many of them en famille, and many of them returning year after year. It's the corporate clients, however, that bring in the bulk of the profits. A Petersburg lawyer, not put off by the complete absence of roads, bought a winter house with a large plot on a neighboring headland which can only be reached across the Gulf of Finland. He planned to use it for visits with friends, and this has been a noted trend in recent years, with new locations being given newer, higher levels of status by the development of a tourist infrastructure. In the opinion of the general director of SKS-PADAMS, Boris Tomalak, the use of a location's image and the developing infrastructure gives developers a chance to make very good returns on their projects. There's the "Russian Switzerland" village by the Orlinaya Gora park, or the village of Honka cottages not far from Okhta Park. The complex on Mednoe Lake has been planned as a combination of recreation zone and housing center. The general director of Adveks-ROSSTRO, Vladimir Gavrilchuk says that this blend should produce great synergy. If the right approach is taken, it will all add up to a long series of plusses. The neighborhoods of Semagino, Leninskoe, Ilichovo and Reshetnikovo, as well as the southern shores of the Nakhimovske and Glubokoe lakes will be developed as centers for rest, relaxation and sports. Another case is the shore of the Finnish Gulf. A different tourist, different entertainments, and a corresponding level of prices. The famed Dunes sanatorium has now got its own golf club, and there are plans for the further construction of a small but very expensive village. Around the world, housing next to a golf course is extremely expensive. And those interested in a very expensive game of golf are also interested in very expensive exotic healthcare procedures. In fact, there are several projects in the Resort Region to the north of the city that include the construction of spa centers. There are plans to build one on the territory of the former sports camp in Serovo, where the Chyornaya Rechka flows into the Finnish Gulf. The experts of the Serovo company, which currently rents around 15 hectares here, are currently considering the plans, and trying to determine exactly what the finished product should be - should they build another cottage village, or perhaps a yacht club, or keep the spa-hotel as the focus of the complex? In any event, the project, with its working title of "Golden Mile" is estimated at costing $30-$50 million, a figure in keeping with the excellent quality of the location. It's now not just the name of the location that sets the price - the level of development of the entertainments and recreation industries in the surrounding area is also a major factor. A plot not far from the Scandinavia hotel, or close to the Staraya Melnitsa restaurant and recreation complex is bound to be expensive. In fact, such plots simply can't be bought, as there are none currently on offer, all of them having long since been snapped up. The differences in prices for plots on the front line of the Gulf and for those just set a little way back from the water can be drastic. If you're not going to have a golf club in the Resort Region, where are you going to have one? That's right - close to the Konstantinovsky Palace. Or in Tsarskoe Selo or Petrodvorets. That also makes for a brand - a combination of luxury and historical legend. Some head off into the backwoods with a rucksack, a box of matches, and a fishing rod; some order food to be brought up to their room, and wonder if they can summon up the energy to book themselves in for another session at the spa center. For now, there's room for both out in the suburbs and beyond. Especially as it's often one and the same person.

Prices for Plots of Land (second quarter, 2005)

Information provided by Swiss Realty Group