The Real Deal New York

Russian clients go cool on New York as tensions heat up

Fear of internal reprisals, sanctions has investors holding off on property purchases in NYC
March 28, 2014 02:20PM

Wealthy Russian buyers are no strangers to New York City real estate, and in recent years have dominated the city’s luxury market. But with tensions brewing between Russia and the U.S. over the recent annexation of Crimea, economic sanctions and visa restrictions could soon block these deep-pocketed buyers from the market.

Brokers told the New York Times that they are already seeing Russian buyers back off deals due to concerns about the potential diplomatic standoff. One such client — with a budget range of $25 million to $52 million — was eyeing listings at The Plaza Hotel and Ziel Feldman’s the Marquand at 11 East 68th Street, then cancelled a planned visit this month after the Crimea annexation.

“Due to relations with the U.S., he was canceling his trip,” Victoria Shtainer, a Douglas Elliman broker, told the Times. Via email, her client said “he wanted to wait until things quieted down.”

Real estate represents a relatively safe option for foreign investors looking to move assets overseas without a great deal of scrutiny. That’s particularly true in new development transactions orchestrated directly with a developer. But the prospect of internal reprisals for moving assets to the U.S. — along with the specter of monetary sanctions — has many hitting pause for the moment.

“Putin has drawn a red line — he has made it clear that ‘you are either with us or against us,’” Mark Reznik, a broker with A & I Broadway Realty, which has a number of clients from the former Soviet Union, told the Times. “There is so much propaganda in Russia, people are scared to do business here.” [NYT]Julie Strickland