Public Sports Centers Planned
Red Fox Company, one of the Russian leaders in the production and sale of sports equipment, is to create a swimming pool network in St. Petersburg's bedroom communities. Basseiny (Swimming Pools) Ltd., Red Fox's affiliate, has already been allocated eight land plots in the Frunzensky, Krasnogvardeysky and Primorsky districts for planning and will begin construction this fall. The total cost of the program is estimated by experts at $120 to $150 million in borrowed and existing capital investments, and the project should be completed by 2010.
A company source told RBC Daily newspaper that the investor will construct at least 20 complexes, including three swimming pools, one of which will be a 25-meter pool with up to 12 lanes, as well as pools for children and for aqua aerobics.
The amount of investment has not been disclosed by Red Fox's representatives, but according to Advecs Real Estate Corporation CEO Vladimir Gavrilchuk, it may total $150 million.
Red Fox should not expect to make a quick buck with this business project, market analysts say, emphasizing that the turnover of sports facilities is long-term and the profitability is normally less than average.
"The payback in this sector will be reached in about ten years, with estimated profitability fluctuating at around eight percent," said Andrei Tetysh, head of the board of directors at the Real Estate Research and Development Agency.
St. Petersburg City Hall is now turning to sports facilities developers and even favoring some of the projects. According to statistics from City Hall's sports committee, of ten companies that are currently involved in the construction of swimming pools in St. Petersburg, three are city contractors with state investments, and the other seven developers raise funds themselves. Many land plots are now allocated on the condition that a sports facility is to be completed, says Anton Vikharev, chief consultant of the sales department at Maris | Part of the CBRE Affiliate Network, who is positive on the trend.
"Mid-range and economy-class sales spaces with low profits are in surplus now, and the owners will most likely turn to providing sports services."
In Vikharev's opinion, Red Fox's CEOs should consider several factors, including competition, pricing and demand in the target market to ensure the success of the swimming pool network project and minimize losses. "The concept should be 110 percent customer-oriented. Since the capital investments are considerable and the turnover is long-term, the company should leave no margin for error," he said.
Growing wealth is fuelling the demand of Russians to keep fit, but the sports infrastructure remains underdeveloped. According to Konstantin Zheludkov, deputy head of City Hall's sports committee, there are 80 public and private swimming pools operating in St. Petersburg which meet just 25 percent of customer demand. "In three years, when most of the planned projects are complete, we intend to match European standards," he said.
Some experts suggest that the extra financial support from City Hall for sports projects may be due to more than concern about the health of the city's residents. If the city were to launch a successful bid to host the Summer Olympics in the future as has been suggested, unprecedented sums of investment would pour in, which may explain the boom in construction of sports facilities.
St.Petersburg Times By Yevgeny Rozhkov