In Istanbul and Dubai, Russians crowd into properties to hide from sanctions

  • Some buy to invest, others are looking for a house
  • United Arab Emirates and Turkey maintain flights to Russia
  • Some Russians may have prepared before the invasion

ISTANBUL/DUBAI, March 28 (Reuters) – Wealthy Russians are pumping money into real estate in Turkey and the United Arab Emirates, seeking financial refuge following the invasion of Ukraine by Moscow and Western sanctions, according to many real estate companies.

“We sell seven to eight homes to Russians every day,” said Gul Gul, co-founder of Istanbul-based real estate company Golden Sign. “They buy cash, they open bank accounts in Turkey or they bring in gold.”

In Dubai, Thiago Caldas, CEO of real estate company Modern Living, has hired three Russian-speaking agents to respond to Russian interest, which he says has increased tenfold.

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Sanctions imposed since the February 24 invasion include barring Russia from the SWIFT banking system and targeting individuals such as oligarchs deemed close to President Vladimir Putin.

While Turkey and the United Arab Emirates have criticized the Russian offensive, Ankara opposes non-UN sanctions against Russia and the two countries have relatively good relations with Moscow and still operate direct flights, offering potentially routes to Russians and their money.

“They are rich Russians but not oligarchs,” said Gul of Golden Sign, one of 12 real estate firms surveyed by Reuters. “They are finding ways to bring their money to Turkey.”

“There are customers who buy three to five apartments,” Gul added.

Russians have been big buyers of Turkish properties for years, behind Iranians and Iraqis, but real estate players said there had been an increase in demand in recent weeks.

Although it’s still early days, industry numbers are bolstering their accounts; In February, as troops massed on the Ukrainian border before advancing, Russians bought 509 homes in Turkey, nearly double the number they bought last year, according to the country’s statistics office. .

This data was still before Western sanctions were imposed, and real estate agents said they expected the numbers to rise further, pushing up demand already primed by the global emergence of the COVID pandemic. -19.

Ibrahim Babacan, whose company in Istanbul builds and sells property mainly for foreign buyers in Turkey, said that in the past many Russians had wanted to live in seaside resorts such as the Mediterranean region of Antalya. Now they were buying apartments in Istanbul to invest their money.

Reuters contacted some Russian home buyers, but they declined to give interviews due to the sensitivity of the situation.

THOUSANDS AND MILLIONS

Both Turkey and the United Arab Emirates offer residency incentives for property buyers. In Turkey, foreigners who pay $250,000 for a property and keep it for three years can get a Turkish passport. For a slightly lower sum, Dubai, a major business center in the Middle East, offers a three-year residency visa.

Apartments worth 750,000 dirhams ($205,000) – the threshold for obtaining a visa – have seen the bulk of demand, but more expensive properties on man-made islands such as the glitzy Palm Jumeirah of Dubai were bought up to 6 million dirhams, according to real estate professionals.

“Investors are looking for both capital protection and the possibility of receiving a UAE residency visa for temporary relocation,” said Elena Milishenkova of Moscow- and Berlin-based real estate brokerage Tranio, which focuses on Russian clients buying property abroad.

Her company received nearly three times as many applications for apartments in Dubai in the first three months of 2022 compared to the same period last year, she said.

Some companies say the demand is even higher.

“As soon as the invasion of Ukraine began, 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 Modern Living from Dubai.

The CEO, who hired the Russian-speaking agents last week, said the very wealthy buyers appeared to have made their preparations and transferred funds out of Russia even before war broke out a month ago.

CASH AND CRYPTOCURRENCY

For Russians with bank accounts in Dubai, the process is relatively straightforward, said Elena Timchenko of the emirate-based broker Royal Home Real Estate.

Others have turned to friends or contacts for help, but for some the challenge of gathering the money for a purchase has so far been too much, she added.

“The desire to buy in Dubai is one thing, the ability to do so is another,” she said, referring to the difficulties in bringing funds to the Gulf state.

Some Russians new to Turkey have struggled to make deposits and transfers at banks fearful of violating sanctions. Additional layers of compliance and exclusion from Visa and Mastercard add to the difficulty. Read more

The United Arab Emirates issued guidelines to banks last year to strengthen procedures for identifying suspicious transactions in a bid to stem illicit financial flows. This did not prevent the country, like Turkey, from being added to a list of countries monitored by the global financial crime watchdog FATF. Read more

A senior Emirati bank official said the bank was carrying out the same checks on customers as before and had not received any new guidance from the central bank.

In Istanbul, meanwhile, builder and property salesman Babacan said that so far the Russian customers it has dealt with have been paying through banks without problems.

Caldas and Alex Cihanoglu, a real estate agent also based in Turkey’s biggest city, said some Russians are using cash converted from cryptocurrency now that sanctions have made financial transfers more complex.

“I would say most of the transactions we see are in crypto,” Caldas added. “Crypto, especially for this market now, in the difficulties they are facing, is the channel that is being used.”

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Additional reporting by Ceyda Caglayan and Jonathan Spicer in Istanbul, and Saeed Azhar, Riham Alkousaa, Lisa Barrington and Alexander Cornwell in Dubai; Written by Ezgi Erkoyun and Dominic Evans; Assembly Pravin Char

Our standards: The Thomson Reuters Trust Principles.

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