Wednesday, May 11, 2016

Rio's Olympic Building Spree Fails To Enthuse

Rio’s Olympic building spree fails to enthuse

An economic crisis is prompting many in Brazil to query the benefits of hosting the games
Rio’s athletes’ village
Rio’s athletes’ village © Getty
It had been hailed as the most beautiful cycle lane in the world. Opened in January as part of Rio de Janeiro’s preparations to host this year’s Olympics, the 3.9km-long track clings to the city’s rugged coastline, connecting the upmarket Leblon beach to the hang gliding spot of São Conrado. It was one of the best ways to take in the city’s stunning views — that was until one Thursday morning in April when a large wave ripped out part of the track, causing two men to plummet to their deaths.
It marked a new low for Rio, which has been hit by recession, the bankruptcy of its most famous businessman and advocate Eike Batista, and the vast corruption scandal at Petrobras, the Rio-based oil major.
When Rio was chosen in 2009 as the first South American city to host the Olympics, Brazil’s then-president Luiz Inácio Lula da Silva effused about how the games would usher in a new golden age for Rio. Naturally, the decision had property executives salivating at the prospect of a bonanza of residential and commercial developments.
As Brazil has sunk into its worst recession in more than a century, however, many people are not only asking whether the games’ R$40bn ($11.6bn) price tag is justified, but also whether they will deliver a legacy of improved transport and residential infrastructure when the games have gone.
Eleven workers have died so far building Olympics-related structures and, after the cycle lane’s collapse, photos of other seemingly shoddy work have gone viral on social media.
Others fear a mass outbreak of Zika — the mosquito-borne virus linked to birth defects — while worries are growing about a possible terrorist attack, adding to the soul-searching over the wisdom of taking on the event. For the Workers’ Party (PT), the games are set to be a particular disappointment — Mr Lula da Silva’s protégée, President Dilma Rousseff, is expected to be impeached before the Olympics begin.
Work on a handball court
Work on a handball court © Bloomberg
Hosting the games is a risk for any country but even more so for developing nations, says Professor Andrew Zimbalist, a sports economist at Smith College in Massachusetts, whose book Circus Maximus looks at the economic gamble of hosting the football World Cup, which Brazil did in 2014, and the Olympic Games.
One of the major legacies will be the tremendous amounts of debt
Professor Andrew Zimbalist
“It requires extraordinarily effective planning, which is difficult in the best of circumstances and almost impossible in an emerging country, especially one that has a dysfunctional political system, which Brazil has,” he says.
Even developed countries struggle to get it right, adds Prof Zimbalist. Barcelona’s Olympics in 1992, which Rio’s government has cited as a model for its preparations, left the Spanish government $4bn in debt.
While the London games of 2012 have been praised for their regenerative effect on parts of east London, the surrounding area was already showing signs of a more natural revival before hosting the event, critics suggest.
Aquatic centre
Aquatic centre © Bloomberg
In the case of Rio, at least the Olympic venues are set to be ready on time. The Olympic Park, which is expected to house schools and private developments after the games, is 98 per cent completed. A series of new highways and a light railway line are also nearly ready.
The extension of Rio’s metro to Barra da Tijuca, the upmarket neighbourhood in western Rio that will host much of the games, has raised the most concern about hitting deadlines but is still scheduled for completion by July.
Private property developers have more cause for pessimism as demand for residential and commercial space has slumped in the recession. One of Barra’s most ambitious new developments is Ilha Pura (Pure Island) — a vast luxury residential complex being built by construction groups Odebrecht and Carvalho Hosken that will house the Athletes’ Village. With less than three months to go until the games, only 40 per cent of an initial lot of 600 apartments have been sold — just under 7 per cent of the total 3,604 apartments on offer, Odebrecht says.
“There is a crisis of confidence in the market,” notes Ulisses Conceição Chagas, a property broker in Rio, drawing a comparison with Vila Pan-Americana, a similar complex built to house athletes in the 2007 Pan American Games. “Vila Pan-Americana was sold out in the same day.”
An aerial view of Maracana and Maracanazinho districts
An aerial view of Maracana and Maracanazinho districts © Getty
On the other side of Rio in the port region, parts of which have been redeveloped in time for the Olympics, the situation is just as dismal. Porto Vida, set to be one of the area’s first new residential developments, lies abandoned after construction work came to a halt two years ago. Nearby, property developers MRP International and Even, in partnership with Donald Trump, planned to build Trump Towers — five 150m-tall towers that would be the biggest office development in emerging market countries. However, construction has been delayed.
There is little doubt that the city will impress tourists during the Olympics by putting on a characteristically Rio party-filled event — as it did for the World Cup two years previously and as it does every year for carnival. The expansion of the metro and other improved transport links will be welcomed by many — but government funds deployed would have been better spent elsewhere, says Prof Zimbalist.
Rio’s health system, for example, is at breaking point as a budget shortfall has left hospitals without basic supplies. “It’s very hard to identify any positive legacies,” Prof Zimbalist adds. “One of the major legacies will be tremendous amounts of debt.”