In Istanbul, Russians pile into property to shelter from sanctions

Reuters

Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates, seeking a financial haven in the wake of Moscow's invasion of Ukraine and Western sanctions, according to many property companies.

"We sell seven to eight units to Russians every day," said Gül Gül, co-founder of the Golden Sign real estate company in Istanbul. "They buy in cash, they open bank accounts in Turkey or they bring gold."

Sanctions imposed since the Feb. 24 invasion include Russia's exclusion from the SWIFT banking system, and the targeting of individual such as oligarchs deemed to be close to President Vladimir Putin.

While Turkey and the UAE have criticised the Russian offensive, Ankara opposes non-U.N. sanctions on Russia and both countries have relatively good ties with Moscow and still operate direct flights, potentially offering routes out for Russians and their cash.

"They are wealthy Russians but not oligarchs," said Gül of Golden Sign, one of a dozen real estate companies interviewed by Reuters. "They are finding ways to bring their money to Turkey."

"There are customers buying three to five flats," Gül added.

Russians have been big buyers of Turkish property for years, behind Iranians and Iraqis, yet the real estate players said there had been a spike in demand in recent weeks.

Though it's still early days, industry figures bolster their accounts; In February, as troops massed on Ukraine's border before advancing, Russians bought 509 houses in Turkey, nearly double the number they snapped up last year, according to the country's statistics office.

That data was still before Western sanctions took hold, and real estate agents said they expected the numbers to grow further, driving up demand already primed by the world's emergence from the COVID-19 pandemic.

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

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

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 smaller sum Dubai, a major Middle East business hub, offers a three-year residency visa.

Some newly arrived Russians in Turkey have struggled to make deposits and transfers at banks that are wary of contravening sanctions. Extra layers of compliance and exclusion from Visa and Mastercard add to the difficulty.

Real estate builder and seller Babacan said that so far those Russian customers he dealt with were paying via banks without problems.

Alex Cihanoglu, a realtor also based in Turkey's largest city, said some Russians were using cash converted from cryptocurrency, now that sanctions had made financial transfers more complex.