Rich Russians are returning to the US property market, lured by distressed sales and the ruble’s rise against the dollar, it is claimed.
With oil prices more settled they are looking at worldwide investments in real estate with Miami and New York proving popular hunting grounds for their big purses, according to lawyer Edward Mermelstein whose firm has an office in Moscow.
‘The way many look at the US right now is that it’s a bargain. All of a sudden in the last three months activity has picked up,’ explained Mermelstein, who has arranged about 300 real estate deals for buyers from the former Soviet Union since 2007.
He has closed two purchases for $1 million and $3.8 million in the last month in New York and bid for 20 more residential and commercial properties in New York and Miami for Russian and central Asia clients in the past three months, compared with no deals or offers in January.
Sellers are cutting property prices by up to 40%, Manhattan apartment prices have dropped for the first time since 2002, and the has ruble rallied about 13% against the dollar from this year’s low in February to provide a combination of factors that make the US appealing.
More than half of the 15 or so Russians he’s helping find US property are new clients, he said. ‘In the next six months to a year we’ll definitely see some high-profile transactions in terms of number and in terms of trophy assets,’ Mermelstein said.
The increase in Russian interest in the US property market mirrors what’s already happening in other countries, especially London where luxury property prices increased in June for the first time in more than a year as Russia and Italian buyers took advantage of the pound’s weakness.
Many Russians considering buying are influenced by celebrities and financiers including Chelsea football club billionaire Roman Abramovich and telecommunications billionaire Mikhail Friedman, Mermelstein explained. ‘Russians are very much of a pack-mentality,’ he added.
But not everybody is ready to jump in. Metals and banking magnate Mikhail Prokhorov, named by Forbes as Russia’s richest man with a fortune of $9.5 billion, isn’t interested in the US. ‘Why do I need a house an eight-hour difference away? I spend 90% of my time in Moscow and it makes no sense to have a private home so far away,’ he declared.