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"Russian Buyer Is A Thing Of The Past" - Oligarchs Rush To Sell US Real Estate

Tyler Durden's picture




 

For uber-wealthy Russians, "an apartment in Miami, even the most glorious beachfront apartment, is not a priority right now," warns one real estate attorney, as The New York Observer reports Russian buyers no longer felt they had the liquid assets to carry on with the transaction and were looking to break closed real estate contracts. "Your average Russian buyer tends to be someone who works in the $5, $10, $15 million range. Obviously very wealthy people, but also people who are much more likely to feel a pinch given the economic situation and the exchange rate," and with maintenance costs sky-high, the trophy apartments have shifted from 'safe-deposit-boxes' out of reach of sanctions to burdensome drains.

 

As The New York Observer reports,

Just before the holidays, a handful of unusual business proposals made their way to the desk of Marlen Kruzhkov, an attorney at New York’s Gusrae Kaplan: Russian buyers were looking to flip closed real estate contracts.

 

...

 

The buyers who approached the attorney and his clients had placed sizable down payments on the apartments but following Russia’s increased economic woes, no longer felt they had the liquid assets to carry on with the transaction.

 

...

 

“They were offering to sell the contract at a loss, willing to take a fifty percent loss on a down payment as not to take a hundred percent loss. Due to the exchange rate, they did not have the liquidity to finish the transaction,” Mr. Kruzhkov told the Observer. Second and in some cases third homes of this kind stopped being a priority for Russian buyers. “An apartment in Miami, even the most glorious beachfront apartment, is not a priority right now.”

 

Troubles with Russian buyers have also found their way to the New York real estate market, materializing in a slightly different way as buyers look to escape contracts during the negotiation process. Several wealthy Russian buyers canceled deals based on Russia’s increasingly strained relationship with the western world. “I have had Russian clients who were about to purchase properties in New York change their minds within days of Russian occupying Ukraine,” attorney Petro Zinkovetsky told the Observer. One of the buyers was purchasing a $10 million home; another was looking to spend over $17 million. Mr. Zinkovetsky promptly canceled both deals.

While the stereotypical Russian buyer is a billionaire handing over a briefcase of cash for a park view penthouse, the true buyer is a millionaire who considers both financing options and bustling downtown lofts. Billionaires unaffected by the stumbling ruble are, in fact, infrequent buyers in the American real estate market compared to mid-range millionaires.

“Your average Russian buyer tends to be someone who works in the $5, $10, $15 million range. Obviously very wealthy people, but also people who are much more likely to feel a pinch given the economic situation and the exchange rate,” Mr. Kruzhkov explained.

 

As that pinch becomes increasingly uncomfortable, Russian buyers consider less expensive apartments they can rent out more easily in neighborhoods that may have previously been overlooked.

Even Russian buyers who purchased trophy apartments in the city years ago are now looking to rent them out.

A client of Mr. Zinkovetsky’s has owned a New York apartment for two years but spent only five collective weeks in the space. Last month, he decided it was time to rent it in an effort to level out the increasingly burdensome maintenance costs. “[Russian buyers] view United States real estate as a ‘safe deposit box’ that occasionally comes with a good view. Their objective is to move money out of their home country and safeguard their assets by placing them in the U.S. real estate… [But] at this point, it becomes expensive to maintain a ‘safe deposit box’.”

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Sanctions blowback?

 

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Wed, 01/14/2015 - 22:55 | 5663226 alexdg
alexdg's picture

how ironic, they are the first ones out of the re-RE bubble! sanctions working again!

Wed, 01/14/2015 - 22:58 | 5663237 WillyGroper
WillyGroper's picture

tuff shitsky.

Wed, 01/14/2015 - 22:59 | 5663245 Keyser
Keyser's picture

What self-respecting Russian oligarch would want to tie up capital in a soon-to-be radioactive condo in NYC? 

 

Wed, 01/14/2015 - 23:06 | 5663269 Latina Lover
Latina Lover's picture

Any russian with a brain will get their money out of the USSA before the feds steal it over some phony sanction pretext.

Wed, 01/14/2015 - 23:13 | 5663295 kliguy38
kliguy38's picture

yes that's the real reason they're gettin' the hell out

Wed, 01/14/2015 - 23:15 | 5663296 A Nanny Moose
A Nanny Moose's picture

speak of which...where the hell is Boris?

In Soviet Amerika, the Real Estate sells you.

Wed, 01/14/2015 - 23:19 | 5663310 Jack Burton
Jack Burton's picture

The US is famous for freezing assets of people and nations it does not like. This breaks every law and practice of international trade and finance. But law is not an American concern. Iran, many years ago was simply stripped of billions on the whim of a president. Russians would be totally mad to let assets or money remain inside a jurisdiction of Washington DC. The Imperial Rulers of Washington, the world's dictator can and will strip every penny of Russian money they can lay their hands on. This will also send a clear signal to rich Chinese, that when Washington takes aim at China, the stripping of Chinese assets and deposits is liable to happen. So, let the temper tantrums inside the imperial palace of the White House carry on like this, more and more foreign entities and citizens will view the US as a dictatorship and common thief. And they will be right.

Thu, 01/15/2015 - 00:09 | 5663457 yogibear
yogibear's picture

"Any russian with a brain will get their money out of the USSA before the feds steal"

Exactly. Won't bode well for those cities with overpriced real estate. 

Thu, 01/15/2015 - 00:23 | 5663490 Karlus
Karlus's picture

>>Won't bode well for those cities with overpriced real estate.

Govt doesnt care, they are just looking to strip and auction the asset

Thu, 01/15/2015 - 00:54 | 5663563 Handful of Dust
Handful of Dust's picture

We better move quick to sanction the Russkies and confiscate their property in the USA before they wise up. Later, when we have a row with China over some tiny islands, we can slap them with sanctions and do the same with the Billions of RE the Mainlanders purchased here.

"Confiscate" is the Buzzword for 2015.

 

 

Thu, 01/15/2015 - 02:13 | 5663709 JuliaS
JuliaS's picture

When you're russian, there's no time for stalin.

Thu, 01/15/2015 - 07:02 | 5663941 dicksburnt
dicksburnt's picture

China over some tiny islands, we can slap them with sanctions and do the same with the Billions of RE the Mainlanders purchased here.

Would China then confiscate American corporate interests in China?  GM loses all its manufacturing facilities?

Thu, 01/15/2015 - 01:38 | 5663674 NihilistZero
NihilistZero's picture

It'll bode well for the non-oligarchs who live in said cities though :-)

Thu, 01/15/2015 - 00:37 | 5663515 Harrison
Harrison's picture

Now that their rubles have been nationalized by First Comrade Putin, they can no longer afford to pay their mortgages. How sad.

Wed, 01/14/2015 - 23:04 | 5663265 post turtle saver
post turtle saver's picture

Cash... Is... King

Thu, 01/15/2015 - 00:25 | 5663493 Karlus
Karlus's picture

I would say thats not right, it can get sanctioned, frozen or Putin'ed away. I would say gold might be a good oligarch idea.

Wed, 01/14/2015 - 23:20 | 5663315 junction
junction's picture

Real estate blowback that is the result of the Obama administration's plan to go to war with Russia, on orders of his New World Order handlers.  The false flag operations run by the dark core of the CIA to provide a justification for repealing the Bill Of Rights are one significant part of the Obama war plans.  Another part is creating and funding ISIS in Syria and Iraq.

http://www.veteranstoday.com/2015/01/14/media-complicit-and-indispensabl...

Wed, 01/14/2015 - 22:57 | 5663241 dexter_morgan
dexter_morgan's picture

Sanctions didn't work in Cuba, NK, Iraq........but this time is different.

Wed, 01/14/2015 - 23:01 | 5663246 Mister Minsk
Mister Minsk's picture

Goodbye Amerika! Enjoy your downward spiral...

Wed, 01/14/2015 - 23:34 | 5663353 Anusocracy
Anusocracy's picture

We're getting close to the outlet in the bottom of the toilet.

Wed, 01/14/2015 - 23:09 | 5663276 NOZZLE
NOZZLE's picture

Saw this crap article yesterday, pointed out GDP to debt ratios, gold reserves, etc. in the comment section, got insulted by at least 20 Americans most of whom called me a rascist onbango hater.

Wed, 01/14/2015 - 23:18 | 5663303 shovelhead
shovelhead's picture

I'd be proud to be called a racist Onbango hater.

Thu, 01/15/2015 - 01:47 | 5663683 Nobody Important
Nobody Important's picture

Same here.

 

Thu, 01/15/2015 - 02:10 | 5663708 JuliaS
JuliaS's picture

I say in that discussion you were the only real American.

Wed, 01/14/2015 - 23:25 | 5663307 JustObserving
JustObserving's picture

After the Russian exit from America, Chinese may be reluctant to buy given the US pivot to Asia whose aim is to box China. Relationships between countries can shift rapidly making real estate investments vulnerable. There will also be a Russian exit from London.

 

In other news, France has arrested 54 people for speech offenses in just the last week. All of them appear to face multiple years in prison. The comedian Dieudonne faces 7 years in jail and a 100,000 euro fine for rather innocuous comments that can be misinterpreted ("As for me, I feel I am Charlie Coulibaly").  They attack us because they hate us for our freedoms:

France Arrests Comedian Dieudonné for Condoning Acts of Terrorism on Facebook


54 arrested in crackdown; Interior Minister promises ‘total severity’ against free speech the government doesn’t like

http://reason.com/blog/2015/01/14/france-arrests-comedian-dieudonn-for-con

 

 

Wed, 01/14/2015 - 23:22 | 5663317 heywood2
heywood2's picture

Good riddance to bad rubbish.

 

Thu, 01/15/2015 - 08:31 | 5664153 Max Steel
Max Steel's picture

Meanwhile good americans will be living on streets . 

Wed, 01/14/2015 - 23:22 | 5663322 Eternal Complainer
Eternal Complainer's picture

Sanctions Blowback?
..and rightfully so..

Wed, 01/14/2015 - 23:25 | 5663330 williambanzai7
williambanzai7's picture

The Russians Are Going!

Thu, 01/15/2015 - 02:17 | 5663714 JuliaS
JuliaS's picture

Historians say Revere probably would not have been yelling, "The British are coming," since at the time most colonists still thought of themselves as British. His actual cry was, "I say, representatives of the King's army will be arriving on our shores to do most grievous harm to us, their fellow subjects under the crown, so be mindful and watchful on this night!" Over the course of his 12-mile gallop he managed to complete the phrase three times.

- Jon Stewart

Wed, 01/14/2015 - 23:31 | 5663341 q99x2
q99x2's picture

All the long legged Russian girls are gone from college. Now that's some mean sanctions bitchez.

Wed, 01/14/2015 - 23:31 | 5663344 Eternal Complainer
Eternal Complainer's picture

Well there may soon be be some real nice deals for the Russian's in Calgary and Edmonton

Wed, 01/14/2015 - 23:32 | 5663345 TuPhat
TuPhat's picture

If they are that rich and they have to rent out their apartment, do I care?  Only if their amerikan counterparts feel the pain as well.  Then I like it.

Wed, 01/14/2015 - 23:33 | 5663349 Barnaby
Barnaby's picture

If I had a Russian passport I'd buy a nice Crimean sloop and write novels about the end of the world.

As it is I have two passports and private jets, so fuck all of the paradigms. I write what I want.

(It's about freedoms.)

Wed, 01/14/2015 - 23:51 | 5663403 Anusocracy
Anusocracy's picture

Freedom: being free from your own, and everyone else's, innate behaviors.

Thu, 01/15/2015 - 00:14 | 5663470 willwork4food
willwork4food's picture

Jesus? Is that you?

Wed, 01/14/2015 - 23:38 | 5663368 jm
jm's picture

Well, that's just another set of bullets aimed at Putin's head, yes?

Wed, 01/14/2015 - 23:45 | 5663390 MEFOBILLS
MEFOBILLS's picture

“I have had Russian clients who were about to purchase properties in New York change their minds within days of Russian occupying Ukraine,” attorney Petro Zinkovetsky told the Observer

 

A big lie, if told often, will sieze the mind of the sheeple.  Or, is a supposedly highly educated "attorney" a sheeple?

Thu, 01/15/2015 - 10:23 | 5664594 zzzddd1
zzzddd1's picture

Attorney name is Ukie: Petro last name sounds Jewish,

so he is really impartial here in his Ukranian situation appriaisal...

I am surprized he handles transactions for  Russians. 

Wed, 01/14/2015 - 23:59 | 5663422 Keyboard Kommando
Keyboard Kommando's picture

Rubles, bitches!

Thu, 01/15/2015 - 00:12 | 5663468 yogibear
yogibear's picture

And the Russians can make it tough for the EU by shutting off their gas. China has plenty of uses for Russian gas.

Thu, 01/15/2015 - 00:45 | 5663534 post turtle saver
post turtle saver's picture

I'd say if you're looking for large quantities of Russian gas, you've come to the right place...

Thu, 01/15/2015 - 01:08 | 5663589 cornflakesdisease
cornflakesdisease's picture

As we speak "The Boys" at Dollar, Inc are buying up Russian assets on the cheap via proxy. 

Thu, 01/15/2015 - 01:21 | 5663630 angel_of_joy
angel_of_joy's picture

Niet ! Proxy crap doesn't work in Russia...

Thu, 01/15/2015 - 08:12 | 5664104 Paul451
Paul451's picture

Who cares?

 

All it means is that there will now be more properties available in NY for the Chinese to purchase.

Thu, 01/15/2015 - 10:20 | 5664560 rwe2late
rwe2late's picture

 Inasmuch as there exists a possibility for equitable trade relationships to promote communication and shared interests,

the implication could be ominous.

Fewer Russians who invest and trade with the US means fewer who will have interest in good relations with the US. Insofar as we are speaking of Russian oligarchs, it may be a good thing for Russian foreign policy to free itself from US efforts to contain and roll back Russia (sanctions, NATO, CIA-NGOs etc.).

US investors will also be threatened and curtailed by US trade sanctions against Russia. In a ripple effect, US trade with EU businesses and nations who want to (are) trading with Russia may also be negatively affected.

The greater the success of sanctions in reducing the number who have an interest in maintaining harmonious relations with Russia, the more paranoid and destructive we can expect US policy to become.

As a further note, the sanctions warpath taken leads eventually to the US imposing sanctions against CHINESE businesses who trade with Russia.  Remember, sanctions come into force when even a PART of a final end product is traded with Russia or produced with any Russian input - or produced with any US input.

(e.g., That's how US sanctions deterred OTHER countries from trading with Cuba.)

That's why we care enough to be interested.

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