In Istanbul and Dubai, Russians huddle on property to shield themselves from sanctions

  • Some buy for investment, others are looking for a house
  • Both the UAE and Turkey maintain flights to Russia
  • Some Russians may have prepared before the invasion.

ISTANBUL/DUBAI, March 28 (Reuters) – Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates, seeking a financial haven following Moscow’s invasion of Ukraine and Western sanctions, according to many property companies.

“We sell seven to eight units to the Russians every day,” said Gul Gul, co-founder of real estate company Golden Sign in Istanbul. “They buy in cash, they open bank accounts in Turkey or they bring gold.”

In Dubai, Thiago Caldas, CEO of real estate firm Modern Living, has hired three Russian-speaking agents to satisfy Russian interest, which he says has increased tenfold.

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Sanctions imposed since the February 24 invasion include Russia’s exclusion from the SWIFT banking system and targeting individuals such as oligarchs considered close to President Vladimir Putin.

While Turkey and the United Arab Emirates have criticized the Russian offensive, Ankara opposes UN sanctions against Russia and both countries have relatively good ties with Moscow and still operate direct flights, which could offer routes for the Russians and their money.

“They are rich Russians, but not oligarchs,” said Gul of Golden Sign, one of a dozen real estate firms interviewed by Reuters. “They are finding ways to bring their money to Turkey.”

“There are clients who buy three to five floors,” Gul added.

The Russians have been big buyers of Turkish properties for years, behind the Iranians and Iraqis, but property players said there has been a surge in demand in recent weeks.

Although it is still early, the industry figures reinforce their accounts; In February, as troops massed on the Ukraine border before advancing, the Russians bought 509 houses in Turkey, nearly double the number they bought last year, according to the country’s statistics office.

That data still predated Western sanctions, and real estate agents said they expected the numbers to grow further, boosting demand already buoyed by the global emergency of the COVID-19 pandemic.

Ibrahim Babacan, whose Istanbul-based company builds and sells real estate mainly for foreign buyers in Turkey, said that in the past many Russians wanted to live in resorts like the Mediterranean region of Antalya. Now they were buying apartments in Istanbul to invest their money.

Reuters contacted some Russian home buyers, but they declined to grant interviews due to the sensitivity of the situation.

THOUSANDS AND MILLIONS

Both Turkey and the United Arab Emirates offer residency incentives for property buyers. In Turkey, foreigners who pay $250,000 for property and keep it for three years can obtain a Turkish passport. For a slightly smaller sum, Dubai, a major business center in the Middle East, offers a three-year residency visa.

Apartments worth Dh750,000 ($205,000), the threshold for visa entitlement, have seen the most demand, but pricier properties on man-made islands like Dubai’s dazzling Palm Jumeirah have been bought for up to 6 million dirhams, according to real estate professionals. .

“Investors are looking for both capital protection and the opportunity to receive a residential visa in the UAE for temporary relocation,” said Elena Milishenkova of Moscow and Berlin-based real estate brokerage Tranio, which focuses on on Russian clients buying property abroad.

His company received nearly three times as many applications for apartments in Dubai in the first three months of 2022 compared to the same period last year, he said.

Some companies say the demand is even higher.

“Right at the beginning of the Ukraine invasion, we launched a campaign in the region and the number of people who contacted us was… at least 10 times higher than usual,” said Caldas of Dubai’s Modern Living.

The chief executive, who hired the Russian-speaking agents last week, said the really wealthy buyers seemed to have been making their preparations and taking funds out of Russia even before the war broke out a month ago.

CASH AND CRYPTOCURRENCY

For Russians with bank accounts in Dubai, the process is relatively simple, said Elena Timchenko of Dubai-based broker Royal Home Real Estate.

Others turned to friends or contacts for help, but for some, the challenge of raising the money for a purchase has so far been too much, he added.

“The desire to buy in Dubai is one thing, the ability to do so is another,” he said, referring to difficulties in getting funds to the Gulf state.

Some Russian newcomers to Turkey have had trouble making deposits and transfers at banks that are wary of breaking sanctions. The additional layers of compliance and exclusion from Visa and Mastercard add to the difficulty. Read more

The UAE issued guidelines to banks last year to tighten procedures that identify suspicious transactions in a bid to stem illicit financial flows. That did not stop the country, like Turkey, from being added to a list of countries monitored by the FATF global financial crime watchdog. Read more

A senior Emirati bank executive said the bank was doing the same checks on customers as before and had received no new instructions from the central bank.

Meanwhile, in Istanbul, builder and real estate seller Babacan said so far the Russian clients he dealt with were paying through banks with no problems.

Caldas and Alex Cihanoglu, a real estate agent also based in Turkey’s largest city, said some Russians were using cash converted from cryptocurrency now that sanctions had made financial transfers more complex.

“I would say that most of the transactions that we are seeing are in crypto,” Caldas added. “Crypto, especially for this market now, in the difficulties that they are facing, is the channel that is being used.”

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Additional reporting by Ceyda Caglayan and Jonathan Spicer in Istanbul, and by Saeed Azhar, Riham Alkousaa, Lisa Barrington, and Alexander Cornwell in Dubai; Written by Ezgi Erkoyun and Dominic Evans; Edited by Pravin Char

Our standards: The Thomson Reuters Trust Principles.

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