July 10 (Bloomberg) -- Josef Stalin built a massive luxury apartment compound across the river from the Kremlin to both reward and spy on his closest comrades. The one Vladimir Putin built for his clique is smaller and harder to find.
Tucked among a warren of Soviet-era structures about a kilometer from the Kremlin, between Tverskoy, Moscow’s first boulevard, and Tverskaya, its main shopping lane, stands a drab, gated, 11-story brick building that’s being watched over by the Federal Guard Service.
House No. 3 on Shvedskiy Tupik, or Swedish Blind Alley, is under the protection of Russia’s version of the U.S. Secret Service because many of its occupants are Putin’s most powerful allies, including OAO Rosneft Chief Executive Officer Igor Sechin, VTB Group CEO Andrey Kostin, Gunvor Group oil-trading billionaire Gennady Timchenko and former Finance Minister Alexei Kudrin, according to two residents who asked not to be identified because the information is private.
Two of the building’s three dozen apartments, one 1,000 square meters (10,800 square feet) and the other 846 square meters, have been vacant for more than a year and are priced at $50 million and $42 million, respectively, according to Justified Quality Estate and Mayfair Properties, the agents for the unidentified sellers.
That makes them the most expensive flats in Moscow per meter, said Alexander Pypin, chief analyst at real estate researcher Gdeetotdom.ru.
“Those prices protect the inhabitants from outsiders,” said Olga Kryshtanovskaya, a former member of Putin’s United Russia party who studies the elite at the Russian Academy of Sciences. “Residents are guaranteed to never meet anyone they would consider rabble.”
Putin’s cadre inherited a tradition that goes back to at least 1931, when Stalin’s secret police henchman Genrikh Yagoda oversaw the completion of the 505-apartment Government House, now known to Muscovites as the House on the Embankment. Almost all of Stalin’s top generals and officials lived there, including Red Army Marshal Georgy Zhukov and Nikita Krushchev, Stalin’s successor, according to Olga Trifonova, a novelist and curator of the museum dedicated to the complex.
Completed at a time when there was a shortage of quality living quarters in the Russian capital and offering an in-house restaurant, gym, food store, kindergarten, laundry and 24-hour ambulance, the building quickly became the most prestigious address in Moscow after the Kremlin, Trifonova said.
People wanted to live there so bad, they didn’t care that every concierge was a spy who had keys to each room and that a third of the residents became victims of Stalin’s purges in one way or another, Trifonova said in an interview in the museum.
“Lots of people were chasing flats in this house,” Trifonova said. “This place had the highest standards of comfort, security and infrastructure, and every single resident was convinced they deserved it all.”
While Vladimir Lenin and Stalin chose to live inside the Kremlin, and Putin lives at the new presidential residence just outside Moscow, leaders such as Leonid Brezhnev and Boris Yeltsin opted to stay under one roof with many of their closest allies, said Kryshtanovskaya of the Russian Academy of Sciences.
The Kremlin Property Department, where Putin, 60, got his first job in the federal government as deputy head in 1996-97, completed the Swedish Blind Alley building in 2002, two years after he succeeded Yeltsin as president.
The compound has central air conditioning, underground parking and a 2,000 square-meter garden with benches, a fountain and a children’s playground that can be seen through a 3-meter-high steel fence. Video cameras scan the perimeter.
The foyer is modest, with a mosaic floor, said one businessman who’s visited the building. A kitchen and a billiard room on the ground floor allow residents to entertain guests without inviting them into their homes, the person said.
Other Putin colleagues with apartments in the building include Foreign Minister Sergei Lavrov, Deputy Prime Minister Sergey Prikhodko, OAO Transneft CEO Nikolay Tokarev, OAO Sovcomflot Chairman Ilya Klebanov and former Communications Minister Leonid Reiman, one resident said.
Similar communes have been reported by Russian media, including one near the government’s headquarters, known as the White House, at Rochdelskaya 12/1. Foreign Intelligence Service chief Mikhail Fradkov, Kremlin Chief of Staff Sergei Ivanov and OAO Sberbank CEO Herman Gref all have homes in the building, the online news site Svobodnaya Pressa reported in 2010, without citing anyone.
A 200 square-meter apartment at Rochdelskaya 12/1 is currently being advertised for $3.5 million, according to the website of the Allflat real estate brokerage.
It’s not clear if Putin’s allies bought the apartments or got them for free. Once an official is assigned a flat, it usually remains state property for a year before the occupant is allowed to privatize it at no cost, Kryshtanovskaya said.
“Many people think having a car with a police light is the best privilege of being an elite,” Kryshtanovskaya said. “That’s wrong. Apartments are the biggest benefit the Russian elite gets from the Kremlin.”
The Kremlin Property Department won’t comment on its allocation of housing because it’s a “personal data” issue, Viktor Khrekov, a spokesman, said by e-mail. Kostin, Timchenko and Kudrin all declined to comment immediately about the property via their press services, as did Lavrov, Prikhodko, Tokarev, Klebanov and Reiman. Rosneft’s press service said Sechin has never lived in the building, declining to say if he’s ever owned an apartment there.
One of the benefits of living together is financial as having so many powerful people under one roof drives up the value of each residence. The $50 million price tag on the Swedish Blind Alley apartment is overpriced by about 20 percent, said Alexander Ziminsky, a department head at Penny Lane Realty in Moscow.
“It’s a good flat with a great view, but there’s nothing supernatural about it,” Fedor Solomatin, director of JQ Estate, said about the home. “The price set by the owner does not correspond to market realities,” Solomatin said by e-mail.
That apartment has 10 rooms, two chimneys and a spa with both Turkish and Finnish saunas, according to JQ Estate’s website. The $42 million penthouse has an “exclusive classical design” and roof access, according to Mayfair Properties.
Likely buyers are people who want to be close to decision makers for business reasons, said Gleb Pavlovsky, a former Kremlin political adviser.
“Russia’s elite loves to crowd into what the diplomats call settlements, or blocks isolated from the uncivilized tribes,” Pavlovsky said. “These strange crowding habits come from their self-perception of being unrecognized nobles.”
Link to Russian version of the story: Входной билет в элитный клуб Путина обойдется в $50 миллионов
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