Foreign oligarchs have gained a reputation for snapping up luxury apartments in global cities as investment properties—a theme that became tabloid news in New York in 2012 after Russian billionaire Dmitry Rybolovlev paid $88 million for a Central Park West penthouse owned by former Citigroup Chairman Sanford Weill. Purchases like that trigger complaints from local residents that foreign investors are driving up real estate prices in cities they have no intention of living in. Here’s one reason foreign investors are willing to pay those prices: Real estate buffers them from such events as the collapse of the ruble.
The value of Russia's currency dropped as much as 19 percent yesterday, Dec. 16, as plummeting oil prices and economic sanctions imposed by the U.S. and Europe have battered the country's economy. Despite efforts to halt the slide by Russia's central bank and finance ministry, the value of the ruble is down 52 percent for the year, prompting speculation that the government may block Russians from converting rubles into dollars. Many Russians have seen this movie before—following the global financial crisis in 2008 and in 1998, when Russia defaulted on government debt—and those with means have made a habit of saving in multiple currencies. Now real estate experts in New York and London (two favorite markets) say Russian investors ramped up purchases of foreign property over recent months, seeking safety from evident economic instability in the motherland.