Russia developing resorts in the North Caucasus.

EPA - Foreign companies have invested over 3 billion U.S. dollars to develop resorts in the North Caucasus. Russian investors have contributed almost a similar amount. Russian President Dmitry Medvedev revealed these figures addressing a conference in the southern Russian city of Krasnodar dedicated to promoting tourism in the North Caucasus.

Several resort zones in Southern Russia united under the “Resorts of the North Caucasus” will be turned into winter sports and year-round resorts. These zones are Lagonaki, a beautiful plateau located in Krasnodar region and Adygee, Arkhyz in Karachaevo-Cherkesia, Elbrus-Bezengi in Kabardino-Balkaria, Mamison in Northern Ossetia-Alania, Matlas in Dagestan and Tsori and Armkhi in Ingushetia. A network of resorts will also appear along the Caspian Sea shore in Dagestan.

The “Resorts of the North Caucasus” are a grandiose project in terms of territory and the amount of construction work. The overall length of Alpine ski runs exceeds 1,100 kilometers. Despite difficulties, many investors, especially foreigners, expressed readiness to go into this project. This has become possible owing to the businesslike work of the government which has done a lot to attract investors and partners, says Dmitry Medvedev.

“A government mechanism supporting the project was developed and amendments were made to the federal law on special economic zones in the Russian Federation. This law paves the way for solving the most difficult tasks. There was no such mechanism before. The residents of tourist and recreation type economic zones in the North Caucasus enjoy tax and duty breaks. Concrete results of this activity can be seen even now. The construction of the year-round resort of Arkhyz is in full swing, and it plans to receive tourists in the winter season of 2012. Construction of other resorts is now underway,” says Dmitry Medvedev.

At present, some of the tourist projects in the North Caucasus have already worked out their business plans with leading foreign companies. Among these are the French bank Caisse des Depots et Consignations, South Korea’s state-run energy company Western Power and companies in Singapore. The prestigious MIRIM Asia Awards-2011 International Developers competition assessed the project, describing it as the best project for the future.

Despite the rosy picture there are many problems related to the involvement of investors and the launch of construction, says Dmitry Medvedev.

“Among these problems are providing the resorts with contemporary infrastructures, their transport accessibility, the construction of roads, railways and airports. All this is very important for the attraction of tourists to the North Caucasus and the Caspian Sea. We will have to reconstruct at least 6 existing airports and build four new ones. It’s crucial to increase the passenger flow. At present, the capacity of the airports in North Caucasus is about 20,000 passengers a day. But this figure has to be increased five times to implement the large project, Dmitry Medvedev said.

The “Resorts of North Caucasus” is a very expensive project. It is financed under the principle of government and private partnership. At present, only a part of the necessary amount has been collected. According to experts, investments in the North Caucus tourist project will be paid off in 5-10 years. In short, the profitability of the project is up to 15 percent.