Anyone familiar with the New York or Miami real estate markets knows the buying power of Russia’s moneyed class – from super-rich to the merely well-off. But two alarming trends in the Russian Federation – the steady build-up of jingoistic rhetoric from President Vladimir Putin and a sharp downtown in the economy – are significantly altering the investment decisions of Russia’s wary elite.
In 2011, a trust linked to the eldest daughter of potash fertilizer magnate Dmitry Rybolovlev paid $88MLN for a four-bedroom penthouse at 15 Central Park West – the most expensive New York City apartment purchase ever. The same year. Composer Igor Krutoy also broke records when he bought a $48MLN condo at the Plaza Hotel – one of three units he owns in the building.
Now it is mainly a flight to safety in American markets.
The oligarchs who acquired massive wealth during the privatization of Russian state industries in the 1990s, and from high oil prices thereafter, have long sought safe investment in the West.
The trend has accelerated as Russia’s $2 trillion economy is now in virtual free fall.
The rating agency Standard & Poor’s Friday cut Russia’s sovereign debt rating to just one step above “junk” status, citing the destabilizing effects of capital outflow from Russia, which it said had reached nearly $51 BLN in the first three months of 2014. The ruble is significantly down ($1= 60 Rubles, used to be at $32-$33) and the stock market has plunged.
On top of that, the US and European Union may widen economic sanctions to include key financial and energy sectors in Russia, which they blame for stocking unrest in Easter Ukraine, a charge Moscow denies.
In 2014 Russian purchases shifting from ultra luxury to $3-10MLN residential purchases for personal use more easily disposable investments designed to generate rental income. The trend confirming by Miami and Luxury real estate agents. It includes a flight to safety by “highly exposed clients” who are now lying low. If you are in Russia, you don’t want to announce large, visible purchases in a country you are virtually at war with.
In Miami Russian millionaires made headlines with their taste for giant waterfront mansions.
Russian millionaires luxury real estate purchases are always in news: