Article originally published in the Miami Herald on July 21, 2008. Full article text provided by Newspapers.com below.
By Christina S.N. Lewis, The Wall Street Journal
The Russians are coming.
As many of America’s wealthy are roiled by the credit crisis and general financial gloom, a growing number of rich Russians are house-shopping — and buying — in costly U.S. enclaves.
Fertilizer mogul Dmitry Rybolovlev agreed to pay $95 million to Donald Trump for an oceanfront mansion in Palm Beach, Rybolovlev confirmed. Last year, Oleg Baibakov, president of GSC City, a Moscow construction-management and consulting firm, bought a condo at Manhattan’s Time Warner Center for $13.5 million, according to public records.
And in Snowmass, Colo., perhaps the most famous Russian oligarch, Roman Abramovich, paid $36.4 million in April for a 200-acre ranch. The property’s massive, split-level house is five minutes away from an $11.8 million ski-in, ski-out house that Abramovich, owner of England’s Chelsea soccer team, purchased two months earlier, records show.
While the number of Russians with the means to buy trophy homes is relatively small, they represent an important but little-known demographic group for U.S. real estate. Several years ago, the weakening dollar began to draw more overseas buyers but Russians were scarce. Now, Russia’s economy is booming amid soaring energy prices. Moscow real estate is among the world’s costliest, making property elsewhere a relative bargain.
RUSSIANS IN LEAD
In New York City, foreign buyers now make up about 15 percent of the market, with Russians the largest contingent, says Hall Willkie, president of real-estate firm Brown Harris Stevens. “A few years ago we didn’t see any Russians,” Willkie says. “But now, especially at the high end of the market, they are buying big apartments … so they are a significant factor.”
In some ways, America is just the latest stop on a Russian grand tour. In London, so many Russians have bought property in one neighborhood that it has been dubbed Moscow on the Thames. Vacationing Russians for several years have frequented resorts in the south of France, where some have purchased large homes.
CALIFORNIA BARGAINS
Sergey Skaterschikov, a Moscow-based private-equity investor, is shopping for a house in Palo Alto, Calif., because his son will attend school in the area. With a budget of $3.5 million to $5 million, the five- and six-bedroom houses the 36-year-old Skaterschikov has looked at struck him as cheap compared with Moscow real estate, which he called “insane.”
The Miami area in particular is drawing Russians with its upscale shopping, hip nightlife and an escape from Moscow’s harsh winters. In Miami Beach, a Russian paid $10.6 million in April for an unusual white concrete house with five boat sails on its roof and two curved terraced pools, according to the seller, developer John Turchin. Nelson Gonzalez, a broker with Esslinger, Wooten, Maxwell Realtors in Miami, says he has shown several Russian shoppers a house on Indian Creek Island with a $35 million asking price, one of the area’s most expensive listings.
Miami first became popular with Russians in the mid-1990s, when a coterie of Soviet-era pop stars purchased condos there and Russian media covered their new homes. Newer residents of nearby Sunny Isles Beach include Irina Allegrova, a pop singer who bought a two-bedroom condo for $1.4 million in January, records show. Reached on her Miami cellphone, Allegrova declined to comment. Rock star Leonid Agutin and his wife, singer Angelika Varum, own two Miami condos, including a three-bedroom one they bought for $790,000 in 2004 after Agutin recorded a CD in Miami with guitarist Al Di Meola. “I liked it there so much I bought the apartment next to the hotel,” he says. “My wife and I spend three months a year there in-between our tours.”
In Manhattan, former Kremlin insider Boris Berezovsky bought a high-rise condo on Central Park West for $3.2 million in 2001, records show, the same year he fled Russia after clashing with then-President Vladimir Putin. Last November, Len Blavatnik, whose investments include metals, chemicals and oil, paid Seagram heir Edgar Bronfman Jr. $50 million for a town house off Manhattan’s Fifth Avenue, just a few blocks from a $31.25
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