They landed with a boom, snapping up trophy properties in some of Manhattan’s most expensive locations. Now the Russians seem to be leaving with a whisper.

Several have inquired with brokers in recent days about the sale of multimillion-dollar properties in Manhattan as they attempt to liquidate assets before they are caught in a web of US sanctions. Most do this through discreet “whisper” listings with trusted brokers, as opposed to public sales, to minimize publicity.

But that’s not all: The Upper East Side mansion owned by Alfa-Bank co-founder Alexey Kuzmichev, which has been hit by US sanctions, recently went up for sale for $41 million, or $1 million less than he paid in 2016.

“All talk is about selling,” said Dolly Lenz, one of New York’s leading luxury real estate brokers. The big question, according to Lenz, is on what terms they’ll get away with it and how big of a hit they’ll have to take to make deals quickly.

“When buyers think you’re potentially distressed — and your whisper listing is a sign of that distress — that’s a problem,” Lenz said, noting that she’s already “inundated” with investment inquiries. investors hoping to recover property belonging to Russians. low cost properties.

Many Russian buyers are far removed – both in terms of wealth and political connections – from the infamous oligarchs who have captured the public’s attention, and they are unlikely to ever find their name on a sanctions list. Yet the concern is that they may also be motivated to sell due to a sudden hostile climate and a fear of what Lenz called “guilt by association.” They may also need to raise funds to deal with financial pressures elsewhere in their portfolio caused by Western sanctions.

Garrett Derderian, director of research at Serhant, a luxury real estate broker, predicted that New York, Miami and other markets would remain buoyant after posting a post-pandemic recovery last year. The number of Manhattan sales made in the fourth quarter, for example, increased 77% over the previous year.

These Russians looking to sell, Derderian said, were “a very small subset of individuals” compared to a larger number of wealthy Russians still seeking the security of American real estate. “Global markets like New York and Miami have become the destination of choice for the wealthy. At this time, there are no Russian-owned real estate sellouts in New York,” he said.

Russian oligarchs have become less visible in the US market after Moscow’s annexation of Crimea in 2014 soured relations with the West, according to real estate brokers and executives. As major Manhattan buyers, they were overtaken by the Chinese, who have since been held back by capital controls imposed by Beijing.

Yet no one seems to know how much property Russians actually own in the United States. Indeed, many have operated through shell companies that conceal their identities. Congress passed a law in 2020 requiring LLCs and other entities to disclose their beneficial owners. But the Treasury is still working out the rules.

In the meantime, Douglas Kellner, a New York real estate lawyer, predicted that authorities would have difficulty identifying the owners placed under sanctions. “It’s tough,” Kellner said. “The Department of Justice has people who are good at doing asset tracing. But it is complex work, time-consuming and often requires the cooperation of foreign governments.

Jamal El-Hindi, former deputy director of the Treasury’s Financial Crimes Enforcement Network, agreed. “There are ways to piece things together, but it’s difficult,” he said. El-Hindi, now a lawyer at Clifford Chance, recalled that financial institutions themselves were surprised to find out how much Libyan money they held after the United States imposed sanctions in 2011, to punish Muammar Gaddafi and his diet.

In addition to individual apartments, some Russian investors may also have invested money in development projects, according to Michael Romer of Romer Debbas, a New York-based real estate law firm. “I think it’s a dangerous onion. If you keep peeling it can get really messy,” Romer said.

As an investment, the appeal of New York real estate for wealthy Russians is the same as for other foreign buyers: it retains its value and can be easily traded. Russians, brokers say, prefer condominiums in newer buildings, like the old Time Warner Center, avoiding intrusive reviews by co-op boards in older buildings.

“A lot of money was poured into the new high-end development market because, to be honest, it was an easy place to park money,” Romer explained. “The peak was about 10 years ago, but these units still exist.”

The jaw-dropping scale of Russian wealth became apparent in 2007 when Andrei Vavilov, a financier, agreed to pay $53.5 million for two penthouses at the Plaza Hotel. Vavilov later backed out of the deal and sued the developer, complaining that the finished apartment looked like a “glorified attic”.

Vavilov was quickly overtaken by Roman Abramovich, the billionaire owner of Chelsea Football Club, who bought three adjoining townhouses on East 75th Street to create a single mansion. He transferred the property and two others nearby, totaling $92 million to his ex-wife, Dasha Zhukova, in 2018 as part of their divorce settlement. Abramovich has been placed under EU and UK sanctions in recent days.

Russian buyers were so attractive that developer Harry Macklowe sent a sales team to Moscow in 2013 to drum up interest in 432 Park, his super-tall tower.

Yet they also raised concerns that Russians were buying up properties simply to store suspicious wealth – instead of actually occupying it. In 2016, the Treasury responded by launching a temporary initiative requiring title companies to report shell company owners buying real estate in all-cash transactions in certain neighborhoods.

Bill de Blasio, then mayor of New York, complained to BuzzFeed in 2017: “I see Russian oligarchs as a problem. It manifests here in that a lot of people with ill-gotten gains are buying a lot of goods and I don’t like that at all.

South Florida has also become a magnet for Russian money. Fertilizer magnate Dmitry Rybolovlev bought a Palm Beach mansion from Donald Trump for a record $95 million in 2008. Rybolovlev then demolished the mansion and sold the property in three lots.

The region is generally considered a haven for well-to-do, but not outrageously wealthy, Russians. Sunny Isles Beach, for example, an enclave known as “Little Moscow,” offers beachfront condos in the $3-5 million range — often in brand-name buildings, such as the Porsche Design Tower. or the Trump Towers. “It’s extremely Russian but not the same band,” Lenz explained – not the “big fish.”

Even if the broader luxury market holds its own, the sanctions – or the threat of sanctions – pose tricky questions. If an apartment is actually frozen in a luxury building because of sanctions for example, could this affect the value of others? If the unit was not purchased outright, would the lender take a hit?

Meanwhile, residents could be saddled with higher common charges to make up for the landlord’s lost contribution under the restrictions. It can also be risky to buy a property if it can be tied up in legal action.

“The calls we get are: What does this mean to me? Will this impact the value of my property? said Romer. “Right now, if you’re a wealthy Russian resident in the United States looking to buy or sell anything, all eyes are on you.”