It’s been easy to shrug off the U.S. sanctions against Russia as something that only impacts people half a world away. That could be changing. Anecdotal evidence suggests that wealthy Russians, who have become a big part of the luxury real estate market in places like New York and Miami, may be sitting on the sidelines while our two countries duke it out on the diplomatic stage.
Julie Satow, a contributor to The New York Times, took a closer look at the issue and told The Daily Ticker about a member of Russia’s parliament who “was looking for a $25 million-$52 million purchase and he sent [his realtor] an email after the invasion saying ‘I’m sorry. I’m pulling out.’”
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The unidentified rich Russian isn’t the only one. Satow notes that anti-American propaganda runs rampant in Moscow and it may not be the best time for Russian citizens to flaunt the fact that they are making a big splash in the New York real estate market.
Gone are the days, perhaps, of record breaking buys like that of the daughter of billionaire Dmitriy Rybolovlev, who purchased an $88 million condo in 2011. While that was the highest-priced example, Russians and other wealthy international clients have long used U.S. real estate as a shelter for their cash. Satow says 40% of the New York real estate market is made up of foreigners and 50% of new construction is snapped up by clients overseas.
So will frosty relations between Moscow and Washington send Russian money elsewhere for good? Probably not. While there may be a “momentary freeze” of such big purchases, Satow suggests the safety of the American market may soon bring in “more buyers...but they may not want to do the super high profile penthouses.” Instead, she says, they might opt for more "conservative" $2 million apartments that won’t make the papers here and back home.
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If things go south at the Kremlin and elsewhere in the country a whole other scenario could play out stateside. “They may end up thinking about emigrating and if they do they’d bring their families - it would be a far different thing - they’d want a more permanent residence here," Satow says.
While this trend certainly hasn’t reached “crisis” level for big city real estate, the strained U.S/Russia relationship is proving to be more than theoretical and has begun to have a real world impact that some Americans can feel.
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