Why the Ukraine Crisis is Healthy for U.S. Property Market
A country’s loss is another one’s gain and it seems to ring true in the context of the recent turmoil in Ukraine. According to a report on NBC News, the Ukranian crisis is leading Russian oligarchs and Ukrainians to channel their investments to U.S. real estate, pouring money into the safe and stable asset.
Moneyed Russians and Ukrainians—especially Russians—are no stranger to investing in the United States. However, the report noted that it was different this time as “they're trying harder than usual to get their money out of Ukraine and Russia as quickly as possible.” A large sum of these investments are being diverted to the U.S. property market.
Aginsky Consulting Group managing director Alexander Aginsky, who caters to Russian super rich, noted his transactions have tripled this year from last year. His clients mostly invested in properties in the West Coast, the report said. One of his clients, a Moscow-based investor, bought a whole building worth $1.5 million near Seattle. Two more bought $3.5 million and $8.5 million properties in California.
The report said that the trend has been driven by “a major fear among wealthy Russians that the state will seize assets and money if it is kept in or brought back to Russia.”
Western sanctions has also forced investors, including major brands like McDonald’s, to pull out resulting to massive layoffs that hurt Russia’s local economy. Banks are also making it hard for Russians to transfer their money to other countries, leading them to invest in tangible assets instead.
Russia’s elite started to court U.S. real estate in 2012, before mass demonstrations concerning the country’s allegedly rigged parliamentary elections. According to a report on Aol Real Estate, Russian billionaires were able to anticipate the previous crisis and started investing in the U.S. even months before the rallies.
While they are now overtaken by Chinese buyers in terms of buying activity, Russians still managed to place second in terms of closed deals in New York. They also placed 9th in terms of nationwide home buying activity, and were known for snapping up New York’s high-rise condominium units and Miami waterfront properties.
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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.