For Russians, interest in luxury properties is as much evidence of conspicuous consumption as it is efforts to capture bargains, says Edward Mermelstein, a real estate attorney at Rheem Bell & Mermelstein LLP with offices in New York and Moscow.
"Those trophies, they're buying them to make a splash," Mermelstein says. "They'll definitely gravitate to a property that's higher profile as much as to a property with a long-term investment potential."
Yuri Milner, founder of Moscow-based DST, which invests in Internet companies including Facebook Inc., Twitter Inc. and Groupon Inc., paid $100 million for a 25,500-square-foot mansion in Los Altos Hills, Calif., according to property records. The transaction is the biggest for a U.S. single-family home sale this year.
Milner's spokesman, Leonid Solovyov, declined to comment on the purchase because it is private.
In Manhattan, Krutoy and his wife, Olga, bought their 6,000-square-foot condo at the Plaza hotel in March. The deal came six months after the couple completed the purchase of a $12.85 million home in Long Island's beach area of the Hamptons.
The Krutoys razed the Southampton mansion and are building a new house at the site on Gin Lane, where neighbors have included designer Vera Wang, shopping-mall magnate Alfred Taubman and New York Times publisher Arthur Sulzberger.
"He was looking at Gin Lane because that's what he knows -it's the Fifth Avenue of the Hamptons," says Susan Breitenbach, a senior vice president at Corcoran Group, the Krutoys' broker for the sale, one of five deals she handled this year involving Russian buyers. "That's what they really wanted and that's what they stuck with."
Krutoy bought the Manhattan property because he was seeking a home in the city, rather than looking to take advantage of a bargain, says Ilya Bykov, principal at Protax Services Inc., a New York-based firm that provides legal, tax and property-management services for international clients. Bykov represented Krutoy in his search, negotiation and closing for the Plaza apartment, and helped provide legal representation for the Hamptons home.
Russian buyers "have the money and they always want the best in everything," Bykov says of the people he represents. "Most of these people are buying pied-a-terres and it's quite common that the person would buy a luxury apartment in New York and a condo or penthouse in Miami."
$100 Million
Kirk Henckels, director of the private brokerage at New York's Stribling & Associates, says he was approached by a would-be buyer from Russia seeking to spend $100 million on a Manhattan home.