According to numerous property companies, wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates, seeking a financial sanctuary in the aftermath of Moscow’s invasion of Ukraine and Western sanctions.
“We sell seven to eight units to Russians every day,” said Gul Gul, co-founder of the Golden Sign real estate company in Istanbul. “They buy in cash, they open bank accounts in Turkey or they bring gold.”
Thiago Caldas, CEO of the Modern Living property firm in Dubai, has employed three Russian-speaking agents to meet increased Russian interest, which he claims has increased tenfold.
Since the February 24 invasion, Russia has been barred from using the SWIFT banking system, and individuals such as oligarchs considered close to President Vladimir Putin have been targeted.
While Turkey and the UAE have condemned Russia’s incursion, Ankara opposes non-U.N. sanctions against Russia, and both nations have relatively excellent ties with Moscow and still provide direct flights, potentially offering avenues out for Russians and their money.
“They are wealthy Russians but not oligarchs,” said Gul of Golden Sign, one of a dozen real estate companies interviewed by Reuters. “They are finding ways to bring their money to Turkey.”
“There are customers buying three to five flats,” Gul added.
For years, Russians have been the second-largest buyers of Turkish property, trailing only Iranians and Iraqis, but real estate agents say there has been a surge in interest in recent weeks.
Though it’s still early, industry stats back up their claims: in February, as Russian forces massed on Ukraine’s border before advancing, the country’s statistics office reported that Russians acquired 509 houses in Turkey, nearly double the amount they bought the previous year.
That data was collected before Western sanctions were imposed, and real estate professionals predicted that the numbers would continue to rise, boosting demand already fueled by the world’s recovery from the COVID-19 pandemic.
Ibrahim Babacan, whose Istanbul-based company specialises in building and selling real estate to foreign purchasers, said that in the past, many Russians desired to reside in resort areas such as the Mediterranean Antalya region. They were now investing their money by purchasing apartments in Istanbul.
Due to the sensitivity of the subject, Reuters approached some Russian homebuyers, but many declined to provide interviews.
Property purchasers can take advantage of residence benefits in Turkey and the United Arab Emirates. Foreigners can obtain a Turkish passport in Turkey if they pay $250,000 for a house and keep it for three years. Dubai, a prominent Middle Eastern economic hub, offers a three-year resident visa for a significantly lower fee.
According to real estate agents, apartments costing 750,000 dirhams ($205,000) – the visa eligibility barrier – have seen the most demand, although more expensive property on artificial islands such as Dubai’s glittering Palm Jumeirah has been purchased for up to 6 million dirhams.
“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 real estate brokerage Tranio, based in Moscow and Berlin, which has a focus on Russian clients buying property overseas.
In the first three months of 2022, her company got nearly three times as many requests for flats in Dubai than in the same period the previous year, she added.
Demand, according to other businesses, is much higher.
“Right at the beginning of the invasion of Ukraine, 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 CEO, who hired the Russian-speaking agents last week, said the very affluent purchasers looked to be making plans and transferring funds out of Russia even before the war began a month ago.
The process is pretty simple for Russians who have bank accounts in Dubai, according to Elena Timchenko of Dubai-based broker Royal Home Real Estate.
Others have sought assistance from friends or contacts, but the challenge of putting together the funds for a purchase has proven too great for some, she noted.
“The wish to buy in Dubai is one thing, the ability to do so is another,” she said, referring to the difficulties of bringing funds to the Gulf state.
Some freshly arrived Russians in Turkey have had difficulty depositing and transferring money at banks that are leery of breaking sanctions. The difficulty is compounded by additional layers of compliance and Visa and Mastercard exclusion. find out more
In an effort to limit illicit cash flows, the UAE issued guidelines to banks last year to tighten procedures for recognising questionable transactions. That did not prevent the country, like Turkey, from being included to the FATF’s global financial crime watchdog’s list of countries to be monitored.
A senior official at an Emirati bank stated that the bank was conducting the same checks on customers as before and that the central bank had provided no fresh guidance.
Meanwhile, in Istanbul, real estate developer and seller Babacan claimed that so far, the Russian customers he has worked with had paid through banks without issue.
Caldas and Alex Cihanoglu, a realtor also based in Istanbul, said that now that sanctions have made financial transfers more difficult, some Russians are utilising cash converted from Bitcoin.
“I would say most of the transactions that we’re seeing are in crypto,” Caldas added. “Crypto, especially for this market now, in the difficulties they’re facing, is the channel that is being used.”
(Adapted from Reuters.com)