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Real Estate

25 November 2013

Room for rubles 

Wealthy Russians, citizens of former Soviet Republics and other Eastern Europeans are increasingly on the prowl for luxury property in New York City, says international real estate consultant Gennady Perepada.

Beyond hot-and-cold running water, they also want concierge-style services and pampering – ranging from access to exclusive night clubs and private shopping at luxury boutiques to the provision of medical services that include hip replacements, cosmetic surgery and even delivery of babies in the “right” maternity clinics.

Lawyers and property brokers estimate that East Europeans have spent more than $1 billion on U.S. residential real estate in the past four years. The Russian government believes as much as 5% of the capital fleeing the country – a whopping $84 billion last year alone – has found the same home.

A trust linked to Ekaterina Rybolovlev, the 22-year-old daughter of a Russian fertilizer magnate, set a new price record for a New York City apartment in February, acquiring a four-bedroom penthouse on Central Park West from former Citigroup Chairman Sandy Weill for $88 million.

Along with full-service buildings featuring on-call concierge service, Central Park views are a high priority for Russian buyers. Perepada, who says his clients are “regular millionaires” rather than stupendously rich oligarchs, reports that they do not seek the Park or Fifth Avenue addresses prized by previous generations of plutocrats.

Why does location seem to matter less to this new class of buyers?  In part because those condominiums require more financial disclosure on the part of purchasers than the Russians are comfortable with. 

Eastern Europeans are also attracted by opportunities to invest in buildings that are new or under construction. That is prompting some developers in New York to take their sales roadshows all the way to Moscow.