Ruble-Laden Russians Seek Property Abroad

Buying London mansions is latest trend for new rich

REALTOR Sergei Komlev, still fresh from a recent real estate training seminar in San Diego, picks up an oversized brochure and gazes longingly at the glossy photo.

The contemporary California mansion has its own horse-racing facilities, with 98 fully equipped stalls and a 3/4-mile track. The 257 sculpted acres include a dazzling network of crafted stone ponds, several tennis courts, a putting course, and a pool. There is a billiards room, a wine cellar, and a guest house with enough bedrooms to comfortably accommodate even a horde of visiting relatives from Siberia.

``It's a palace, simply a palace,'' breathes Mr. Komlev, getting overly excited in his starched suit and immaculately knotted tie. ``Come on, Anatoly, it's only $20 million,'' he jokes to a fellow agent in the cramped Moscow office of his Universal Business Consulting real estate firm. ``Let's buy it.''

Fed up with ever-changing tax and property laws and scared of displaying their wealth too ostentatiously, most members of Russia's nouveau riche shun domestic investment. While some content themselves with building large country homes in the suburbs, many opt instead to plunk their money into safe havens abroad.

As stunning profits from Russia's fledgling banking and business communities choke the streets with Mercedes-Benzes and BMWs, the trend of overseas ownership is one that's catching on fast. According to some statistics, an estimated $1 billion flows out of Russia for investments in Swiss bank accounts and Miami condos every month.

`Better to buy in Florida'

``If you work in Tajikistan and make $100,000, what are you going to do with it?'' asks Vladimir Friedson, editor in chief of the Russian-language Real Estate Abroad weekly, which lists property from all over the world.

``First you buy a Mercedes, but then it gets stolen. Then you decide to buy a villa, but you know the mafia will burn it down. You want to put the money in a commercial bank, but either the bank collapses or the laws change, and your account is frozen,'' he says. ``It's better to buy in Florida.''

Before the end of the cold war, summering in Nice, France, or the Hamptons on Long Island, N.Y., was not an option for most Russians. But now many are choosing travel over emigration, while others are supplementing already bloated incomes by investing in overseas gas stations, nightclubs, and restaurants, which they manage from a distance.

And as a Spanish villa costs as much as a Moscow apartment these days, investing abroad makes economic sense.

``It's an unavoidable evil. All that money is doing is helping the Western economy,'' says Mikhail Berger, economic commentator for the daily Izvestia newspaper. ``I've talked with Austrian businessmen who were very excited about the fact that some Russians are buying up whole streets.''

Catering to nouveau riche

A tricolor tabloid with half-page photos, Real Estate Abroad is Moscow's premier overseas listing, with a circulation of 100,000. It caters to the new breed of Russia's rich, for whom prestige is the name of the game.

``Your Neighbor is Michael Jackson!'' screamed a recent listing, advertising multimillion-dollar estates in southern California.

``Your Second Home in Switzerland!'' read another, above a photo of tanned young people carrying tennis rackets in front of a large, modern high-rise apartment building.

``Russians don't shop around. We select a good bunch for them, they make up their minds, and that's it,'' says Taru Oksman-Ison, director of the London-based Chic Investments Realty, which services wealthy clients from the former Soviet Union.

``They have been known to see a picture in the paper, contact an agent, say `I want to buy that,' and that's it,'' she said in a telephone interview from London. ``They go via Harrod's [department store] with all their goodies in a shopping bag and move right in.''

Like the name of her firm suggests, Ms. Oksman-Ison sells houses only in London's most chic suburbs, such as Hampstead and Highgate, and also helps enroll her clients' children in exclusive private boarding schools. She says the average price a Russian customer pays for a home is about $400,000.

``They always pay in cash,'' she says, explaining that, as few Russians have credit histories, obtaining a mortgage is next to impossible. ``Their reputation makes the banking communities take a cautious approach to clientele from that part of the world. They don't trust them.''

Komlev's Universal Business Consulting, which is registered in Liechtenstein and works alongside its San Diego-based partner Gala Real Estate, acts as the middleman to provide client loans.

Sitting in his high-security office, Komlev says he knows very little about his customers, except that most come from resource-rich regions outside Moscow and are involved in either business, banking, or the arts. Some have been known to carry around briefcases of cash.

``We ask clients for a contact telephone where they can be reached, but of course we don't ask where they work or anything,'' he says. ``We aren't interested. We don't want to know.''

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