Italy to Invest 1 Bln Euros in North Caucasus Hotels

Italian developer Rizzani de Eccher plans to invest up to 1 billion euros in building hotels in Russia’s North Caucasus resorts, after signing a letter of intent on Monday with Northern Caucasus Resorts, which operates the regional tourist cluster.

The Italian construction firm is interested in North Caucasus hotel projects due to the lucrative tax holidays on offer. The Russian government may exempt participants in North Caucasus hotel projects from property tax for ten years and from land tax for five years, Kommersant business daily reported on Monday quoting sources close to Northern Caucasus Resorts.

The Russian Finance Ministry may also refund up to 70 percent of the developer’s invested capital in case of force majeure, the paper added.

The Russian government launched its project to create an up-to-date tourism cluster in the Northern Caucasus region in 2010. The plan includes construction of five new world-class resorts with service and technical standards comparable with the most popular sport resorts in the world from 2011–2020.

The total value of the project is estimated at 451.4 billion rubles, including 60 billion rubles from federal budget funding.

Northern Caucasus Resorts has already signed contracts worth 16 billion euros with France’s Caisse des Depots et Consignations state bank, South Korea’s Korea Electric Power Corporation and China’s Dalian Wanda and China Oceanwide.

The resort’s 2,500-square kilometer territory will have enough hotels to accomodate 83,500 tourists.

With an 1 billion euro investment, Rizzani de Eccher could build hotels with a capacity of 10,000 rooms, CBRE Russia commercial real estate’s deputy development director Stanislav Ivashkevich told Kommersant, adding hotels occupancy rates in the region would be no higher than 35 percent a year and pay-back period could exceed 20 years.

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