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Russia: Investment Potential 2008

Following the break up of the USSR, which left Russia as an independent federal state, Europe's largest country has experienced the fastest period of change and growth in its history. This has opened up a wealth of new markets and opportunities both for native Russians and overseas investors. This combined with Sochi's successful bid for the 2014 Winter Olympics promising massive investment into infrastructure and tourism, Russia is beginning to present itself as an attractive location for property investment.

"With record price increases of around 100% in one year in Moscow and St Petersburg, the Russian property market is naturally attracting a great deal of interest."

Russia is the largest country in the world, covering 17,075,200 square kilometres and 10 different time zones, stretching from Western Europe to the Pacific Ocean. The country now ranks tenth in the world as a tourist destination, spurred by internal competition between the regions within the new market economy, striving to attract the wealthy visitors entering the country. Russia's election as a member of the Executive Council of the United Nations World Tourism Organization (UNWTO) in November 2007 will give Russia unique advantages within the travel and tourism industry as well as confirming their increasingly positive image within the European market.

Of particular interest is the Krasnodar region, which includes Sochi, the destination for the 2014 Winter Olympics. This area is home to the 'Russian Riviera' a stretch of coastline extending for around 1,000 kilometres (621 miles) between the Azov and Black Seas. Here tourism is increasing at an incredible rate of around 20% per year (Source: Russia Profile.org). Following Sochi's successful Olympic bid, Moscow is budgeting $12 billion to turn the area into a world-class winter sports complex, with eleven new sports venues, athletes' housing, hotels, offices, and transport links, with as much as $19.4 billion directed to the Krasnodar territory as a whole, to create new highways and reconstruct the existing transport links, reported the Financial Times. The investment potential of this undeveloped area is clear both for the games themselves, and the long term future of this now world famous winter sports resort.

With record price increases of around 100% in one year in Moscow and St Petersburg, the Russian property market is naturally attracting a great deal of interest. "Russian property is underdeveloped with large potential for investments," advises Investment Week, while Knight Frank predicts that, "Moscow, has the potential for more growth and will rival London as the most expensive world city within five years." Add to this the massive investment opportunities in and around Sochi, the real estate market presents a number of interesting opportunities.