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.
“Every day, we sell seven to eight units to Russians,” said Gul Gul, co-founder of Istanbul’s Golden Sign real estate company. “They buy in cash, open bank accounts in Turkey, or bring gold,” says the seller.
Thiago Caldas, CEO of the Modern Living property firm in Dubai, has hired three Russian-speaking agents to match the tenfold increase in Russian interest, he claims.
Since the February 24 invasion, Russia has been barred from using the SWIFT banking system, and individuals associated with President Vladimir Putin, such as oligarchs, have been targeted.
While both Turkey and the United Arab Emirates have condemned Russia’s offensive, Ankara opposes non-UN sanctions against Moscow, and both countries have relatively excellent ties with Moscow and still maintain direct flights, potentially providing avenues out for Russians and their money.
“They are affluent Russians, but not oligarchs,” said Gul of Golden Sign, one of dozen real estate firms. “They’re figuring out how to get their money into Turkey.”
“Customers are buying three to five flats,” Gul explained.
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 specializes 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, reporters approached some Russian homebuyers, but many declined to provide interviews.
THOUSANDS AND MILLIONS OF DOLLARS
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 searching for capital protection as well as the possibility of obtaining a residency visa in the UAE for a temporary move,” said Elena Milishenkova of Tranio, a real estate agency located in Moscow and Berlin that specializes in Russian clients buying property abroad.
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.
“We launched a promotion in the region right at the start of the invasion of Ukraine, and the number of people who contacted us was… at least 10 times higher than typical,” 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.
CRYPTOCURRENCY AND CASH
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 purchase has proven too great for some, she noted.
“Wishing to buy in Dubai is one thing; being able to do so is another,” she explained, referring to the challenges of transferring 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.
In an effort to limit illicit cash flows, the UAE issued guidelines to banks last year to tighten procedures for recognizing questionable transactions. That did not prevent the country, like Turkey, from being included in 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 utilizing cash converted from Bitcoin.
Caldas continued, “I would say the majority of the transactions we’re witnessing are in crypto.” “Crypto is the avenue that is being used, especially for this market today, with the troubles they’re having.”
