Who buys
Contrary to the common myth, Russians are not the leaders in this market. The most real estate in the US is bought by Canadians – almost a quarter. The second quarter with a little extra goes to Mexico, as well as China, India, and the UK. Next come Brazil, France, Germany, and several other Western European countries. Russians have become famous for leading the market in ultra-expensive luxury housing together with the Chinese, generously overpaying for particularly favored mansions. At least, real estate experts, discussing the purchase of a $100 million mansion in Silicon Valley by Russian businessman Yuri Milner, claim that he overpaid twice.
With no less passion, other high-profile acquisitions are savored: a penthouse in New York bought by the daughter of billionaire Dmitry Rybolovlev for $88 million, a condominium in the same city owned by composer Igor Krutoy for $48 million – a city record for this type of housing. The most expensive deal in Miami is the purchase by the owner of "Russian Standard" Rustam Tariko of an estate for $25.5 million. In total, according to American brokers, over the past four years, Russians have left more than a billion dollars in this market.
At the same time, according to estimates from the marketing portal Prian.ru, interest in the American market among our compatriots is steadily growing: if in 2008 only about 5% of potential Russian buyers considered the possibility of purchasing, then in 2010 the figure rose to 12% and brought America to third place on the list of countries preferred for such acquisitions (after Bulgaria and Italy).
How they buy
"Two factors contribute to the growing attractiveness of the American housing market for foreigners," says Washington real estate agent Sergei Korsakov, "the crisis-driven drop in prices and the ease with which transactions are made." The cost per square meter is still at a historic low. The starting price for apartments in Miami near the ocean starts from $110,000. In Orlando, similar apartments go for $70,000. My former Washington neighbor Patrick Bodnar, who moved to Florida and became a real estate agent there, says that his Russian clients are speechless at such prices because in Moscow similar housing goes for a million dollars.
Any foreigner, whether an individual or a legal entity, can freely become the owner of a house or apartment anywhere in the US, even arriving on a tourist visa. Buying housing in New York or a villa in California is not difficult – just have the money. The exception is Oklahoma, where they don't sell to outsiders.
At the same time, it is absolutely impossible to hide the act of completing a transaction. In most cases, a standard agreement is used, which all American lawyers have at hand. Registration of ownership is carried out through the Title Company agency. It controls the transaction, checks documents, holds deposits, and after the buyer pays the full amount, hands over the documents on the transfer of ownership and an insurance policy on the property title. An official document guaranteeing the right of ownership is also issued in the owner's name – a Warranty Deed, which is assigned a unique registration number.
Real estate is also registered in another specialized institution – the real estate registry. It is from this registry that it is easiest to obtain information about the owner of an apartment or house, date of purchase, price, exact area, and even debt. The registries are publicly accessible. This transparency of American practice has tripped up some Russian deputies who did not want to declare their foreign real estate.
Why they buy
"If we do not take into account exotic motives," says Sergei Korsakov, "then there are three reasons for foreigners to buy real estate in the US: for residence, as an investment, and for family use." It is hard to say which of these factors prevails. For example, the same beach or ski house can be for family use and also rented out when the owners are not living in it, that is, be an investment. Either way, caution should be exercised in choosing a purchase.
Sergei Korsakov tells that a Russian-speaking lady from Kazakhstan approached him with a request to sell a new house that she, on the advice of some friends, built in Washington to make a profit. The house, according to the realtor, was good, but the area was chosen incorrectly: around the almost million-dollar mansion stood shacks of poor African Americans. It was not even possible to recover the invested money.
By the way, in America, mainly representatives of the Russian middle class purchase housing, not billionaires or millionaires. Most transactions are up to $300,000. The number of such clients is 55%. 35% of our buyers are looking for business-class housing ($300-700 thousand), and only 10% require luxury real estate – from $700,000 and above. It is not surprising that almost half of Russian buyers are residents of Moscow and St. Petersburg.
Where they buy
The geography of purchases is wide. Market leaders – Canadians, for example, are active in the Chicago area and other cities of the Midwest. The Chinese and those from Hong Kong, who leave more than seven billion dollars a year in this market, prefer the coasts – the Pacific and Atlantic. But overall, half of the transactions are in four southern states – Florida, California, Texas, and Arizona, as well as New York.
Russians certainly prefer Florida – almost half of the inquiries are for it. And although in terms of volume of purchases the British, Germans, and the same Canadians are still ahead, Russians together with Venezuelans are quickly catching up to them. "A dacha in Florida is now the Russian dream," believes Patrick Bodnar, who himself lived in Russia and knows firsthand about the peculiarities of the Russian winter.
Moreover, according to Patrick, 'Florida is a rare combination of the pleasant and the useful. The price of real estate will not stay at a low level for long. The resumption of active demand and price increases are inevitable.' Russians have already felt this. According to the registries, the most luxurious acquisition in Florida is a house-palace at number 13 on Star Island, owned by vodka king Rustam Tariko. The palace of 1,400 sq. m houses 9 bedrooms, 9 bathrooms and a host of other rooms. One of Tariko's neighbors is businessman Vladislav Doronin, who bought a mansion on the same island in 2009 for $16 million.
Real estate of varying degrees of value is owned in Miami by athletes Maria Sharapova and Alexander Ovechkin, pop stars Philip Kirkorov, Valery Leontiev, Kristina Orbakaite... In some condominiums, entire floors are occupied by our compatriots of different social status and wealth. On the beach, on the streets, by the pools and in bars, the Russian language (often profane) habitually weaves into the multilingual polyphony...