Has Donald Trump tempted Russia’s rich back to the U.S. property market?

Before 2014, when political relations between Russia and the U.S. worsened, demand among Russian citizens for elite American real estate was very high. Photo: Manhattan borough of New York, U.S.

Before 2014, when political relations between Russia and the U.S. worsened, demand among Russian citizens for elite American real estate was very high. Photo: Manhattan borough of New York, U.S.

Reuters
In the last month inquiries among Russians about homes in the United States have grown by more than a third, giving the U.S. a chance to take back its place among the five most popular countries for Russian buyers of foreign real estate. In 2015, due to the deterioration of political relations between Moscow and Washington, the U.S. did not even make it into the top 10.

Since the U.S. presidential elections the number of inquiries made about purchasing elite real estate in New York and Miami among Russian customers have risen by 35 percent, in comparison to the same period last year, according to estimates by the Knight Frank real estate consultancy group based on analysis of information from last month. Almost 90 percent of the requests were for residential real estate.

Clients are interested in homes both for themselves and as investment. The profitability of renting out elite real estate in New York, for example, is estimated at 3-7 percent. Half of the potential buyers are interested in small apartments and studios starting at 40 square meters that cost between $500,000 and $2,000,000.

Twenty-five percent of the inquiries, meanwhile, concerned two-bedroom apartments worth $2 million and penthouses costing $4 million. For now commercial real estate makes up no more than 10 percent of inquiries. Customers are showing interest in commercial centers and street retail facilities in New York that cost $15 million and up. However, there have still not been any deals in this segment.

Victim of politics

Before 2014, when political relations between Russia and the U.S. drastically worsened over the Ukrainian crisis, demand among Russian citizens for elite American real estate was very high – about 15 percent of all the requests for foreign purchases that Knight Frank received in Russia involved the U.S.

Demand was highest for apartments in New York, Miami and Los Angeles, but the purchasing budget was higher than it is now. Requests for real estate costing $5 million and over prevailed, but occasionally there were also deals worth $15-20 million.

In 2013-2014 the U.S. was one of the five most popular countries among Russian customers of elite real estate. Besides the U.S., the top five included the UK, France, Italy and Germany. But last year the U.S. was not even on the list of top 10 countries in terms of deals, and the number of requests in this region fell by more than three times. In certain months there were no requests for real estate in the U.S. whatsoever.

Director of International Sales at Knight Frank Moscow Marina Kuzmina says that many of the company's clients spend their winter vacation in the U.S., which has resulted in an increasing number of inquiries about buying real estate.

"At the end of this year Miami will host the famous Art Basel exhibition, which many of our clients who are considering buying real estate intend to visit," notes Kuzmina, adding that some inquiries concern Donald Trump's development projects. "There are also inquiries from U.S. developers who wish to improve relations with Russia. They see potential in Russian customers."

First published in Russian by Kommersant

Read more: Rich man’s world: Who was on the ‘Forbes List’ of tsarist Russia?>>>

Subscribe to get the hand picked best stories every week

All rights reserved by Rossiyskaya Gazeta.

More exciting stories and videos on Russia Beyond's Facebook page

This website uses cookies. Click here to find out more.

Accept cookies