The Real Deal New York

A rise from the ruble

With immigrant demand, Brighton Beach and other surrounding Brooklyn neighborhoods hold steady

October 01, 2010 07:00AM
By C. J. Hughes

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Leon Rakhlis, principal with Kora Developers

When the Soviet Union loosened its grip on its citizens more than two decades ago, culminating in the breakup of the nation in the 1990s, one of the bigger beneficiaries might have been Brighton Beach in Brooklyn.

A neighborhood wracked by crime, desolation and high vacancy rates saw its fortunes quickly improve, as Russian immigrants took over buildings and opened shops in the shadow of elevated subway trains.

Today, property values are about eight times what they were in the Brezhnev era, according to brokers, developers and residents. While prices also shot up in other parts of the city over that time, Brighton’s transformation is starker, residents say, because it was so decrepit to begin with.

And while there have been stumbles — high-rises built to attract big-spending Russians sometimes sit empty, as new-money arrivals, like New Jersey Nets owner Mikhail Prokhorov, skip the area altogether — values in Brighton and the newly Russian areas nearby have held steady or even improved through the downturn.

That may be because many children of those 1970s immigrants are sticking close to home in those Brooklyn neighborhoods, community leaders say.

They “have the mindsets of Americans in the ’50s. They really like being with their parents, and have respect for their grandparents,” said Pat Singer, founder of the nonprofit Brighton Neighborhood Association, which was formed in 1977 to combat crime, blight and negligent landlords.

Like many of the first wave of Russian arrivals to Brighton Beach, Singer’s relatives hailed from the Odessa region, today part of the Ukraine. Nowadays, immigrants tend to hail from a wider range of locations in the region, like the “Stans” — Uzbekistan, Kazakhstan and Kyrgyzstan, for instance — but also Moscow and Georgia.

alternate textAnother explanation is that many relocators who tried outlying areas and soured on them are now deciding to return to a place where signs are written in Cyrillic, near restaurants with Russian menus, like the types that sit chock-a-block along bustling Brighton Beach Avenue.

“They thought they were getting something that was cheap and nice and bigger” in the New Jersey suburbs, but they didn’t like it so much, said Eric Zhukovsky, a broker with Citiwide Brokerage in Sheepshead Bay.

About a half-dozen of those returning families a year, he said, end up at Oceana Condominium and Club in Brighton Beach, a 15-building, 855-unit luxury complex built by Muss Development along the boardwalk, with a gym, pools and water views. One-bedroom resales at the complex, which was developed between 2001 and 2007, start at about $600,000. Yet there are about 30 sponsor units still available, said Zhukovsky, adding that the complex is 90 percent Russian.

Valeriy Savimkin — a 55-year-old former computer programmer who moved to Brooklyn from the Ukraine in 1996 and who goes by Larry — was renting a floor-through, three-bedroom apartment in a Midwood house in 2004. Then, he and his family paid $650,000 for a three-bedroom, three-bath unit in Oceana for their first home purchase.

That there was finally a stylish new type of building in a largely Art Deco area appealed to him. But he also liked the cuisine in the area, he said, explaining that the cafés there serve “traditional, authentic Russian-style” food.

These days, demand in the area is coming from Russian buyers who already live in the country. Although results of the 2010 census are not yet available, many expect that the number of immigrants will be lower than in 2000, when about half of the U.S.-born residents of Brighton Beach claimed Russian or Ukrainian ancestry, and 73 percent of those born overseas said the same thing.

What most people agree with, though, is that those Russians and former Soviet Republic residents have given values in southernmost Brooklyn a clear boost.

“When you see one nice house on your block, does that improve values? I think so. What about when you see a house remodeled? I think so,” said Leonid Sklyar, a broker with Re/Max Metro who immigrated to the U.S. in 2000. “The Russians have definitely improved this area.”

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Shoppers browse stores along Brighton Beach Avenue
In Brighton Beach in the first six months of 2010, the average price for a standalone house was $649,000, up from $530,000 in the same time frame in 2005, according to data Sklyar compiled from the Brooklyn New York Multiple Listing Service.

Even more significant, perhaps, was that the average home price in nearby Coney Island, which also has a large Russian population, was $422,000 in the first half of this year, versus $298,000 in 2005, the MLS data shows.

Meanwhile, next door in Gravesend — the area roughly between Ocean Parkway and Ocean Avenue, which also has Russian pockets — the average house price was $626,000 in the first half of 2010, versus $604,000 in the same period in 2005.

Condo values, though, may have slipped. Of the 20 that sold in Sheepshead Bay, a newly Russian area, in the first half of the year, the average was $382,000, the MLS data shows. In contrast, the 15 condos that sold in the first half of 2005 averaged $407,000.

Also, not all attempts at upgrades and redevelopment have been immediately successful. Among the bungalows that line the narrow streets away from the water in Brighton Beach are stalled, half-built projects on the sites of teardowns, like one on Brighton Third Street, whose steel frame has sat behind ratty plywood for months.

In addition, some soaring new high-rise condos are selling slowly, like a pair on Brighton Sixth Street by developer Leon Mikhlin. One, No. 3047, which has 24 units, is 20 percent sold since June, Mikhlin said; the other, at No. 3015, is awaiting state approval for its 36 units, where one-bedrooms will start at $330,000.

Still, he’s hopeful they will trade. “A lot of the kids want to buy these for their parents, because it is the best place to live for old people, in Little Odessa,” he said, using the neighborhood’s historic nickname.

Despite signs that some blocks might be overbuilt, other developers are plowing ahead. In April, Leon Rakhlis, the principal of Sheepshead Bay-based Kora Developers, will debut an eight-unit condo at 129 West End Avenue, on the border of Brighton Beach and Manhattan Beach, where one-bedrooms will start at $400,000.

“The American way is kids go somewhere for college and never come home,” said Rakhlis, who came from Kiev in the Ukraine in 1989, with his wife and three children, and $500 in his pocket. “But Russian kids take their education and then come back.”

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