Following in the footsteps of the oil-rich Arabs and the Japanese, the latest group of super-rich foreigners buying up coveted Manhattan real estate are the Russian oligarchs, according to Institutional Investor.
Edward Mermelstein, an international real estate attorney, says that the Russian infatuation with residential New York City properties is a “very serious trend… We’re seeing the very high end of Manhattan purchases — and I mean $30 million and up — going to the Russians. It’s incredible,” he says. He says that growing political unrest across the republics of the former Soviet Union is causing a flight to financial safety among the richest families there.
In fact, Russia’s Deputy Economy Minister Andrei Klepach speculated that $80 billion will be leaving his country in the next few months. He has originally estimated that amount to be $65 billion. In 2011, Russian billionaires buying second and third homes in New York City purchased real estate totaling more than $181 million.
For example, Ekaterina Rybolovleva, the daughter of Russian billionaire Dmitry Rybolovlev, is expected to pay $88 million for the penthouse in 15 Central Park West belonging to former Citi chief Sandy Weill. Alexander Rovt paid $33 million for an apartment on East 68th Street known as the Sloane Mansion. Then there’s Igor Kruoy, who dropped $48 million for an apartment in The Plaza. And Andrey Melnichenko paid $12.2 million for the penthouse apartment at 110 Central Park West.
But the latest wave of apartment hunting among his well-heeled clients is unmatched in terms of its market value. So is the scope of clients, he says. Ten years ago, he was familiar with the major families of the former Soviet republics. But now there are more people who have profited from the vast wealth connected with natural resources on the Asian continent.
What’s even more interesting is that unlike the Japanese real estate acquisitions in the 1980s, these high-profile purchases are intended for the families of the oligarchs. “These aren’t investment properties so much as they are for personal use. They’re being used as second or third homes,” says Mermelstein. The Upper East Side of Manhattan is still a popular address, but it’s being given a run for its money by the Columbus Circle neighborhood, he says.