Instead of feeling a ‘pinch’ in their pocketbooks, perhaps they’re letting the tide recede before the tidal wave comes in. A forewarning, if you will, that Russia soon plans on somehow retaliating and killing the U.S. market in one way or another — something of which is very possible given the vulnerabilities and complacency of America today. Russia, unlike America very seldom issues warnings. Their thinking is entirely different from that of Americans, who tend to think this is another turn in the market and not that economic warfare could be in play.
For uber-wealthy Russians, “an apartment in Miami, even the most glorious beachfront apartment, is not a priority right now,” warns one real estate attorney, as The New York Observer reports Russian buyers no longer felt they had the liquid assets to carry on with the transaction and were looking to break closed real estate contracts. “Your average Russian buyer tends to be someone who works in the $5, $10, $15 million range. Obviously very wealthy people, but also people who are much more likely to feel a pinch given the economic situation and the exchange rate,” and with maintenance costs sky-high, the trophy apartments have shifted from ‘safe-deposit-boxes’ out of reach of sanctions to burdensome drains.
As The New York Observer reports,
Just before the holidays, a handful of unusual business proposals made their way to the desk of Marlen Kruzhkov, an attorney at New York’s Gusrae Kaplan: Russian buyers were looking to flip closed real estate contracts.
“They were offering to sell the contract at a loss, willing to take a fifty percent loss on a down payment as not to take a hundred percent loss. Due to the exchange rate, they did not have the liquidity to finish the transaction,” Mr. Kruzhkov told the Observer. Second and in some cases third homes of this kind stopped being a priority for Russian buyers. “An apartment in Miami, even the most glorious beachfront apartment, is not a priority right now.”
Even Russian buyers who purchased trophy apartments in the city years ago are now looking to rent them out.
A client of Mr. Zinkovetsky’s has owned a New York apartment for two years but spent only five collective weeks in the space. Last month, he decided it was time to rent it in an effort to level out the increasingly burdensome maintenance costs. “[Russian buyers] view United States real estate as a ‘safe deposit box’ that occasionally comes with a good view. Their objective is to move money out of their home country and safeguard their assets by placing them in the U.S. real estate… [But] at this point, it becomes expensive to maintain a ‘safe deposit box’.”
Full article: “Russian Buyer Is A Thing Of The Past” – Oligarchs Rush To Sell US Real Estate (Zero Hedge)