Tens of billions flock back to Russia again,

[Wiz]

Tens of billions flock back to Russia,

"Everyone now realizes that the safest place to keep capital is in your own country,"

Three years after the war with Ukraine, Russia’s wealthiest are increasingly bringing their money home, fueling an unlikely rebound in high-end real estate in Moscow.
Faced with fewer options for spending abroad as international sanctions force banks to freeze large amounts of capital, many Russians are repatriating cash and seeking the safe haven of domestic assets.
Others are using real estate as a hedge against inflation that has been fueled by the invasion of Ukraine, forcing the central bank to raise interest rates to record highs.
“Everyone is now realizing that the safest place to keep capital is in your own country,” says Ekaterina Rumyantseva, founder of Moscow-based luxury real estate firm Kalinka Ecosystem.


The influx of cash is helping Moscow offset a slowdown in other real estate markets from London to Hong Kong.
Sales of luxury apartments priced at 1.95 million rubles ($26,703) per square meter and above in Moscow rose by almost 40 percent last year, according to NF Group, formerly known as Knight Frank Russia.
And prices rose by 21 percent, pushing the Russian capital into the same price bracket as Paris and London.
A series of luxury apartment and villa projects springing up across Moscow offer a glimpse into Russia’s uneven economy as the war drags on.
Government spending related to the invasion has boosted growth, but also inflation and higher interest rates.
At the same time, expanding sanctions are stifling the opportunity for Russians to invest abroad, forcing them to repatriate cash and seek a safe haven within their borders.
And while many large Russian estates have been slashed in recent years, the latest momentum is driving some high-end real estate to the impressive levels more often seen in Dubai or London.

Iconic Projects

Take the 12,500-square-foot Art Nouveau mansion at the Levenson project, built in the early 20th century by prominent architect Fyodor Schechtel and located in a renovated mansion in Moscow’s historic core.
The project includes nearly 25 apartments and is being built by Vesper, one of Moscow’s largest luxury real estate developers.
The house is located near the Patriarch's Ponds, where Leo Tolstoy's family used to skate in the winter, and was among the most expensive properties sold last year for about 3.8 billion rubles, according to Kalinka.
Many of the high-end projects being developed are located in central areas near the city’s major attractions and feature vast parks.
“Developers have started to offer unique, expensive lots in elite homes more often,” said Dmitry Khalin, managing director at Intermark Intown Sales, which previously operated in Russia under the Savills brand.
“We see a lot of demand for expensive homes with good views.”
The Kamishy project, based in the exclusive suburb of Zhukovka on Moscow’s western outskirts, is a flagship of the new developments to come.
It includes 11 two-story villas with floor-to-ceiling windows and minimalist interiors, surrounded by gardens and bordered by the Moskva River.
Prices start at $25 million and go up to $45 million.
Five have already been sold. The architect is Yury Grigoryan of Meganom, who designed the “skinny” 262 Fifth Avenue skyscraper in New York.

The elite of buyers

While it is difficult to find exact details about the identity of the buyers flooding the market, Kalinka said the majority are between 40 and 50 years old.
Typically, they are owners of large industrial companies or top executives, but they also include clients in the IT, show business and sports sectors.
In the volatile economic environment of the war, they see real estate as a refuge from the swings in local assets, including the ruble.
While the Bank of Russia’s key interest rate of 21% offers attractive rates on deposits, the local currency has plunged about 25% last year.
People are taking “a balanced approach to asset diversification,” according to Andrey Solovyev, a partner at NF Group.
The dynamics in Moscow’s real estate market contrast with other global cities traditionally popular with the Russian diaspora.
London, for example, earned the nickname Londongrad after attracting residents like Roman Abramovich and Mikhail Fridman.
The UK’s top capital market had a miserable year in 2024 and is forecast to fall this year.
To be sure, wealthy Russians are not completely turning away from foreign property, with the Indonesian island of Bali and Thailand seen as among the most sought-after.
But they are quickly falling below the leaderboard of buyers in places like Dubai, a notable development given that it was a magnet for many after the invasion.
Russian passport holders fell to No. 9 last year in the top 10 property buyers there, after holding No. 1 in 2022, according to local real estate agent Betterhomes.
This comes as the city sees a huge influx of global wealth.
Overall, demand among wealthy Russians for foreign property fell 24% last year compared to 2023, according to Intermark.

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