The mass protests that have sent shock waves across Russia's political landscape over the last month appear to have fueled Russian activity in the U.S. luxury home market. The spike in interest builds on a trend that has steadily gained steam over the last few years.
The political turmoil in Russia, says Edward Mermelstein, an attorney and consultant who guides Russians through real estate transactions in the U.S., is "definitely" leading wealthy Russians to make purchases outside of a region that "is being perceived as to some degree tumultuous, whether it's political or economic."
Russian interest in U.S. real estate has steadily risen over the last few years, according to market observers, but the last six months are a different story, Mermelstein says. Inquiries to his company from well-heeled Russians have doubled in that time, he says. Realtors who work in the luxury market note a similar jump in interest.
While the mass demonstrations protesting the allegedly rigged parliamentary elections only began in December, upper-crust Russians probably were able to anticipate the tide of unrest, Mermelstein speculates. That accounts for why the attorney and other real estate professionals first noticed the increase in activity months before the protests.
"They have somewhat advance notice on many things that will happen or are about to happen," Mermelstein says of super-wealthy Russians.
A revised estimate of money that will flow out of Russia over the next few months also suggests that the political upheaval may be spurring Russians to buy up U.S. properties. Russian Deputy Economy Minister Andrei Klepach recently said that he expects Russians to invest $80 billion outside of Russia over the next few months, up from the $65 billion that he predicted originally.
Until now, investment in the U.S. only accounted for a small fraction of that number. But that may be changing. Mermelstein expects Russian real estate investment in the U.S., both commercial and residential, to double from its current share of 5 percent of Russian investment abroad to 10 percent in 2012.
Many of the buyers reportedly fit the mold of the high-flying Russian oligarch. They are swaggering industrialists, market observers say -- tycoons who have cornered markets and are not afraid to flaunt their wealth. Dmitry Rybolovlev (pictured above), the father of the 22-year-old Russian who purchased the $88 million Manhattan condo, for example, is a fertilizer titan. Many members of this privileged cohort work in commodities like metal and oil, Mermelstein says. Often the U.S. homes purchased by them are their fifth or sixth residential properties.
"They're hunting for trophy properties," says Frances Katzen, a Realtor who describes herself as currently working with two wealthy Russians looking to buy high-end properties in Manhattan. "Purchases of these residential properties are not necessarily for the purpose of profit," Mermelstein adds.
Katzen, who is managing director of Prudential Douglas Elliman Real Estate, heralds 2012 as the "Year of the Pied-a-Terre." Mega-rich buyers are now jostling for extremely expensive Manhattan properties, she says. And leading the charge are Russian silver-spooners.
"They're coming to look a lot more," she says. "They are the big ones looking."
Though Katzen says that her Russian clients have not mentioned the political upheaval in their country, she also attests to a conspicuous rise in market activity among wealthy Russians over the last six months.
"I've seen a new flux," she says.
Realtor Bob Hurwitz, who showed $30-million-plus California properties to a few Russian billionaires last year says that he's noticed the "recent phenomenon" as well. And he has heard murmurings in the industry that the unrest may be the cause of it. In early December, he said, the agent of one Russian buyer expressed as much, albeit obliquely.
"They're pretty closed-mouthed about things," Hurwitz says.
Russian Billionaires Invading U.S. Real Estate Market?
After bidding farewell to 2011, Realtors, investors and regulators the world over are no doubt wondering: Will 2012 be the year the real estate market finally rides out the aftershocks of the housing bust and mounts a full-on recovery?
But even if home prices don't trend up nationwide, certain markets seem almost guaranteed to do well. Looking at a variety of sources, AOL Real Estate brings you 10 of this year's most promising housing markets for 2012.
MSN Real Estate lists Pittsburgh as one of the best housing markets in the U.S., pointing out that the steel town suffered practically no price decline following the housing bust and that its prices are projected to begin gaining ground relatively soon.
This brick colonial typifies the sort of deal that you can expect to find on the higher end of Pittsburgh's market.
Tech companies are driving job growth in Worcester, according to MSN Real Estate. That may help real estate prices, which slipped 3 percent this past year, but are expected to tick up 2 percent in 2013.
Spanning a generous 2,730 square feet, this alternatively colored home was built in 1987 and is equipped with its very own "game room," according to the listing.
The home features hardwood floors and a well-equipped kitchen, with ample cabinetry. There's also a sliding glass door that leads to a porch overlooking the back yard.
Realtor magazine ranks Kansas City, Kan., as the most promising housing market of 2012. HousingPredictor, which the magazine used for its rankings, estimates that the Midwestern city will see its real estate prices appreciate by 5.8 percent in 2012.
Priced at $94 a square foot, this four-bedroom delivers everything you need.
Kansas seems to have fared better than most through the real estate storm. Another one of the state's major cities, Topeka is predicted to post the second-highest increase in real estate prices, according to Realtor magazine.
Here is a sprawling home in Topeka, one of the ritzier houses in town. The $429,000 home offers five bedrooms and 4,782 total square feet.
El Paso is one of a host of Texas real estate markets that have fared well during the housing crisis. HousingPredictor projects a 3.2 percent increase in home prices this year.
On the hunt for new digs in a market that's turned the corner of the housing slump? Look no further than Huntington, W.Va. HousingPredictor expects the town's real estate prices to climb by 4 percent this year.
Throw down $175,000 for this handsome 1/3-acre property, and enjoy a thoughtful interior as well as verdant surroundings.
Charleston clocks in at third on Realtor magazine's rankings of this year's most promising real estate markets. HousingPredictor expects a 4.5 percent increase.
Search this town and you may find yourself mulling a neat property like this 3,716-square-foot four-bedroom.
Bismarck, N.D., is also expected to perform well in the real estate market this year. HousingPredictor estimates a 3.6 percent increase in home prices there.
This home's exterior reminds us that along with some serious deals there's a tradeoff: You're going to have to cope with some very harsh winters.
A tip of the hat to DailyFinancefor directing us to Tacoma, Wash., a city whose real estate prices are set to skyrocket, according to a Fiserv prediction. The financial services information provider projects that prices in Tacoma will jump a staggering 24.9 percent.
Located in University Place, a suburb just outside of Tacoma, this listing offers a taste of the sort of homes that may benefit from the price boom.
Fistserv also ranks Memphis, Tenn., as one of the most promising real estate markets of the year, predicting that the city's real estate prices will appreciate by 10 percent.
This pricey home will bring you an acre of lush land, plus a down country five-bedroom that dates back to the 1950s.