{"id":22966,"date":"2022-12-14T16:41:00","date_gmt":"2022-12-14T15:41:00","guid":{"rendered":"https:\/\/iconicriviera.com\/?p=22966"},"modified":"2022-12-14T16:41:00","modified_gmt":"2022-12-14T15:41:00","slug":"saisies-de-villas-sur-le-march%c3%a9-immobilier-russe-de-la-c%c3%b4te-d%27azur","status":"publish","type":"post","link":"https:\/\/iconicalps.com\/fr\/russians-french-riviera-real-estate-market-villa-seizures\/","title":{"rendered":"Russes et saisies de villas sur la C\u00f4te d'Azur"},"content":{"rendered":"\n

From the early 1990’s until early 2022, the Russian community on the French Riviera has been varied — from uber-wealthy Russian oligarchs and their associates, to new-money Russians who’ve earned money legitimately, to middle-class Russians, to a large criminal \/ mafia contingent<\/a>. <\/p>\n\n\n\n

The 2022 sanctions and travel restrictions on Russians have driven away the oligarchs and new-money Russians along with many Russian tourists, most of whom are now trapped in Russia. The Russians who are able to leave Russia are still unable to fly to Europe, so most have gone to Dubai or Istanbul<\/a>. The Russian superyachts that can usually be spotted gliding across the French Riviera’s sparkling blue waters are nowhere to be seen.<\/p>\n\n\n\n

The French Riviera<\/a> is home to 20,000 Russians — a quarter of France\u2019s 80,000-strong Russian resident population. Monaco has 750<\/a> Russian residents (not <\/em>including those who grew up in Russia but have since traded their Russian passport for those of other countries, like Cyprus — as most have). And yet, in 2017, a banker from Nice was asked<\/a>\u00a0how many ultra-rich <\/em>Russians there are on the French Riviera — he estimated 20,000. Clearly, this is an over-estimation, but it demonstrates the larger-than-life reputation<\/a> that the wealthiest Russians have created on the French Riviera. He said: “They bring their [dirty] money from Russia through Cyprus into the Riviera. They’ve kept the [real estate] market moving for 10 years.”<\/p>\n\n\n\n

Wealthy Russians currently own more than 2000 villas<\/a> on the French Riviera, many of them belonging to Vladimir Putin\u2019s closest friends, girlfriends, and his offspring<\/a>. Because Russians often purchase villas anonymously, using a network of overseas holding companies and straw-men, the real number is likely far, far higher.<\/p>\n\n\n\n

According to<\/a> the regional tourism committee, the share of Russians and nationals of the former USSR amounted to 9% of French Riviera tourists in 2012 but had already fallen to 6% in 2019 due to the sharp decline in the ruble<\/a>, which decreased the purchasing power of Russians in the euro zone. As of 2022, it’s nearing 0%.<\/p>\n\n\n\n

The Local Russian Communities<\/h3>\n\n\n\n

The top tier of Russian society has long held a fascination with French culture. The Russian aristocracy used to mainly speak in French, and the Riviera became an established resort for its high society after the state\u2019s imperial family (Empress Alexandra Feodorovna) built a holiday home on the Mediterranean coast in 1856. <\/p>\n\n\n\n

The onion-shaped turrets of a Russian Orthodox Church <\/i><\/a> are a focal point in Nice. Built in 1900, this cathedral was paid for by the imperial family and other Russian nobles. A veritable Russian quarter sprang up around it, complete with streets such as Avenue Nicolas II <\/i><\/a> and Boulevard Tzarewitch <\/i><\/a>. <\/p>\n\n\n\n

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the Russian Orthodox Church in Nice<\/figcaption><\/figure>\n\n\n\n

The Russians who came here before the Bolshevik Revolution, whether to settle or just enjoy the fabled winter season, were cultivated aristocrats or royalty. After the abolition of the monarchy and the establishment of the Soviet Union in 1923, many of them returned penniless, forced to forgo their luxurious villas for boarding houses and drive taxis for a living.<\/p>\n\n\n\n

\u201cFor a long time after that, the serious money down here was all English and American,\u201d the late historian Francis O\u2019Hara said<\/a>, \u201cBut now the Russians have all the money again, along with the Arabs.\u201d<\/p>\n\n\n\n

But only since the fall of communism have extremely wealthy Russians descended on the French Riviera in large numbers and with plenty of money<\/a> to enjoy the best the region has to offer<\/a>. When the Soviet Union crumbled in 1991, and Putin helped Russian oligarchs drain money from the country’s public assets, it didn’t take long for big-spending Russians to show up on the French Riviera<\/a> and start buying up luxury properties. In 1994 alone, capital flight from Russia was estimated at $43 billion, with $24 billion of it legal, the rest from illegal sources, according to<\/a> the Economic Survey of Europe. <\/p>\n\n\n\n

A wealthy set of Russian oligarchs, expats, and tourists continued to visit every summer to enjoy the area’s Michelin-star restaurants, expensive nightclubs, luxury concierges, yacht dealers, designer boutiques, and private art galleries, while maintaining their Moscow connections despite the distance. While it had become risky to buy ostentatiously overpriced villas, extravagant spending continued via vacation rentals and 5-star hotels, until the invasion of the Ukraine in early 2022.<\/p>\n\n\n\n

How the Russian Oligarchs Changed Real Estate Prices<\/h3>\n\n\n\n

From the mid-90’s until sanctions started (more on that below), the French Riviera real estate market was used as a way for Russian oligarchs to move their ill-gotten gains out of Russia and launder their money. This was so prevalent that the prices of luxury villas was all-but dictated by Russian buyers, pushing the prices up so much that locals were soon priced-out of the market.<\/p>\n\n\n\n

Rich Russians gravitated here, where they can look out on what is called “Billionaire\u2019s Bay” or the “The Cove of False Money”, buying up the finest villas through an opaque system of shell companies and lawyers that inevitably attract the French tax authorities. <\/p>\n\n\n\n

One local real estate agent told us that she estimates that Russians own about 70% of the mansions on Cap Ferrat<\/a> alone. Because of Russians, Cap Ferrat has become a seasonal area, as 60%<\/a> of villas are now vacation homes.<\/p>\n\n\n\n

The Russian takeover of the French Riviera has been “dramatic for everyone” said<\/a> one construction specialist on condition of anonymity. “My village has lost its soul, there used to be a butcher and a hairdresser around here and now there’s only estate agents.” Nevertheless, “we shouldn’t criticize, it’s thanks to them that we can eat”, he added.<\/p>\n\n\n\n

Because of newly-wealthy Russian buyers, the prices of luxury coastal real estate on the French Riviera shot straight upwards from the mid-90s until 2008. Oligarchs and their buddies came with suitcases of cash and bought properties at crazy prices. This happened in many desirable areas around the world. <\/p>\n\n\n\n

Paying up to \u20ac50 million for a home, “they artificially inflated the market, they were prepared to over-pay for properties,” said<\/a> Benjamin Mondou of Century 21 Lafage Transactions.<\/p>\n\n\n\n

They used real estate as a way of laundering money and transferring wealth to other corrupt people. For example, in Florida, oligarch Dmitry Rybolovlev<\/a> (who is a resident of Monaco<\/a>) paid $95 million in 2008 for an 81,000 square foot Palm Beach mansion owned by Donald Trump \u2014 considered at the time the most expensive single-family residential sale in the country, and upwards of $50 million more than the sum Trump paid when he purchased the property in 2004.<\/p>\n\n\n\n

In Cap d’Antibes (like everywhere else where they bought real estate) Russian buyers caused property prices to skyrocket. A square meter of luxury property in that exclusive Riviera area went up from a maximum of about \u20ac20,000 in 2000-2001 to as much as \u20ac53,000 in 2005-2006, according to an estimation<\/a> from the French tax administration.<\/p>\n\n\n\n

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Worldwide, people heard the stories of Russian oligarchs buying up French Riviera villas, at any <\/em>asking price, as a way to get their dirty money out of Russia.<\/p>\n<\/blockquote>\n\n\n\n

Then came the 2008 economic and housing market crash, followed by the subsequent sanctions on Russians, which caused the number of Russian buyers to drop and French Riviera villa prices to flat-line. If you were lucky enough to sell property during that sliver of upwards pricing between the mid-90s and 2008, you might have made profit, but if you bought post-2008, you will likely have lost money, as real estate prices haven’t kept up with inflation.<\/p>\n\n\n\n

In response to Moscow\u2019s 2014 annexation of Crimea, the European Union banned more than 100 Russian officials and businessmen from entering its territory and froze their European assets. Alexander Kraft, chairman and CEO of Sotheby’s International Realty France, said that since then, the number of Russian clients has halved. “Since Vladimir Putin<\/a> introduced an obligation to declare money transfers to buy a property to the tax authorities, Russian customers are much rarer.”<\/p>\n\n\n\n

And yet, in 2017, there was<\/a> as much financial wealth held by rich Russians abroad than held by the entire Russian population in Russia itself.<\/p>\n\n\n\n

Putin used the threat of additional sanctions to encourage wealthy Russians to repatriate overseas assets, which exceed $1 trillion<\/a> by one estimate. Putin has made repeated calls to oligarchs, demanding that they bring their [read: Putin’s] money back to Russia “where it’s earned” to the benefit of the motherland [read: so Putin can more easily control it]. “It\u2019s toxic to be Russian,” said<\/a> Oleg Vyugin, a former senior central bank official who is now chairman of the Moscow Exchange, in 2018. “And the richer you are, the more toxic you are.”<\/p>\n\n\n\n

Many would argue that since the Russians artificially inflated prices, now that they will be leaving (which started in early 2022 and will continue for the years to come), that prices should deflate.<\/p>\n\n\n\n