There is no end in sight for the real estate market slump in the United States. Things may have improved marginally since the recession, but the optimism of 2007 remains far away. Fortunately for realtors in the United States, Russian billionaires have evinced a keen interest in the American luxury housing market. In recent times, Russian buyers have been regularly picking up high-end real estate in the big cities of America.
Millionaires and billionaires from overseas have been making big buys in the American luxury housing market. According to the National Association of Realtors, foreign buyers have picked up an estimated $82 million worth of luxury real estate in the United States over the year ending 31 March 2011. That is a rise of 24 percent over the previous 12 months. Many of the big international buyers have been Russian.
Status Symbols
Billionaire Roustam Tariko made one of the most high-profile transactions in the American luxury housing market this year. Tariko, the owner of Russian Standard Bank and Russian Standard Vodka, bought a $25.5 million luxury mansion on Miami’s Star Island this year.
Jorge Uribe, a real estate agent associated with One Sotheby’s International Realty in Coral Gables, Florida, revealed that luxury property in America is regard as status symbols in Russia. Miami is yesteryear’s Ibiza or Monaco for contemporary Russian millionaires.
As it turns out, Tariko is not alone on Star Island. Fellow Russian Vladislav Doronin, the chairman of Russian real estate development firm Capital Group, bought Shaquille O’Neal’s former Star Island home for $16 million in 2009.
Bargain Deals
Why are Russians looking westward? The economic slump and a weakening US dollar present a fine opportunity to find big bargains. Russians are not alone in this. Wealthy investors from Brazil, China and India have also been putting their money in American luxury real estate. Emerging markets hold great potential for the luxury property sector in America.
Meanwhile, the weakening US dollar also means that the value of other currencies has increased against it. According to Bloomberg, the Russian ruble has strengthened against the dollar by 9.4 percent, even as the Brazilian real grew by 13 percent and the Chinese yuan by 5.2 percent.
Edward A. Mermelstein is a real estate attorney associated with Rheem Bell & Mermelstein. According to him, Russian property buyers are heading to America for two reasons. One, they want to own high-profile real estate. Two, they are looking for long term value for their investment.
Investing in the Best
However, not everyone is after a bargain. Take the case of Yuri Milner. The founder of DST Global, a Moscow-based company, recently paid $100 million on a 25,500-square-foot luxury mansion located in Los Altos Hills, California. The deal made news for being the costliest purchase of an American single-family home in the past year.
The other big buy of the year is Russian composer Igor Krutoy’s $48 million Plaza Hotel apartment. Months earlier, Krutoy and his wife bought $12.85 million Hampton home.
Beverley Hills broker Sally Forster Jones revealed that 75 percent of buyers interested in homes valued above $20 million are from overseas, specifically China, Indonesia, Korea and Russia. The bargain factor and the sheer availability of beautiful luxury homes is bringing foreign buyers to the market. And of course, they have the money to spare.
Via: Business Week
