St. Petersburg’s Building Boom and the China Connection
The real growth in foreign investments is focused in one area of the economy: real estate, both housing and commercial. In 2010, foreign investment in real estate amounted to $181 million, whereas in 2011 this number grew to $751 million. Most of these investments are connected to such large-scale real estate projects as the reconstruction and modernization of the Pulkovo airport and the construction of the housing complex “The Pearl of the Baltic”.
The modernization of the Pulkovo airport is much needed. The last time new facilities and buildings were added there was in 1986. Since then, the service has nearly doubled, so that the current infrastructure is overused. Also, Pulkovo is the sole airport serving St. Petersburg, which is the largest city in Europe with just one airport providing both local and international flights. The surrounding area is also to undergo modernization and much needed constructions, with hotels, exhibition pavilions, conference and business facilities to be added.
Another major construction project underway in St. Petersburg is the building of a new housing development dubbed “The Pearl of the Baltic” on the southwest shores of the Gulf of Finland. The territory of this development will be 205 hectares, and the apartment complexes are meant to house 35,000 people. Before the building of the actual housing can proceed, however, re-enforcement of the coast must be completed to prevent the water-logged soil from washing into the Gulf of Finland. More than a third of the newly constructed square footage will be given to commercial real estate: shopping centers, office buildings, hotels, restaurants, sport facilities, and so on. There will be schools, hospitals, and sports facilities built, as well as parks and promenades.
The developer behind this project is a subsidiary of a Shanghai corporation, and the issue of Chinese investment has been approved at the very top of the Russian and Chinese governments. Many in St. Petersburg, however, view this massive Chinese investment as part of Chinese economic expansion. (Curiously, the project’s website is available in Russian and Chinese, while the English version is defunct.) Some even worry that it might lead to the creation of the first Chinatown in Russia. Another major debate surrounding this project involves transportation issues: the earlier planned “overland express” project has been frozen before the construction even began, and it appears that even if it is ever built, it will connect the Moscow train station in the center of the city with the Pulkovo airport, rather than serve the newly built housing in the southwest of the city, as was originally proposed.