comscore Russian belts tighten, affecting tastes for the finer things | Honolulu Star-Advertiser

Russian belts tighten, affecting tastes for the finer things


RUBLOVKA, Russia » FOR SALE: Nine-bedroom, 15-bathroom, 84,000-square-foot family home with singular amenities: a 16-car garage, indoor-outdoor swimming pool, movie theater, wine cellar, dining table that seats 22, private dental suite and ambient heat throughout the 3.5-acre property to vaporize snow.

ASKING PRICE: 100 million euros, or about $110 million, though a real estate agent says that if you catch the owner on the right day, he might let the one-story behemoth go for a mere 80 million euros, given the lackluster interest seen during its year on the market.

Billboard-size pictures of children scattered throughout are not included, by the way; life-size naked female torso forged from small bullet casings is negotiable.

Sounds steep, but you can’t beat the location. With President Vladimir Putin and Prime Minister Dmitri A. Medvedev living a few miles down the forested road, the area is crawling with undercover FSB agents and zero reported burglars. Kremlin security will most likely remove the dial telephone that is part of its closed network, however.

The area, Rublovka, has long housed Russia’s elite: Soviet leaders like Leonid I. Brezhnev, celebrity writers, actors and filmmakers. On days when the police do not seal the leafy two-lane road to Moscow for hours so Putin can speed to the Kremlin unimpeded, it is only about a 40-minute drive to downtown.

A mixture of Greenwich, Conn., and Beverly Hills, Calif., Rublovka is a patchwork of gated communities combining vast wealth with often dubious taste — the roofs of faux French chateaus and Italian palazzos peek out amid high walls and even higher trees.

But Russia is slouching through a recession, and Barvikha Luxury Village — a neatly groomed shopping mall housing brands like Prada and Gucci as well as two car dealerships, Bentley and Ferrari/Maserati — is deserted most days. With the economy reeling from the oil-price crash and Western economic sanctions over Ukraine, the ruble has sunk precipitously, inflation is up sharply and real wages are shrinking for the first time in years, forcing Russians — even the wealthiest — to make do with less.

Putin and his Kremlin cohorts have tried their best to minimize the downturn, yet autonomous analysts present a darker picture, with only a halting recovery, if any, expected next year.

While Putin told Russians recently, "We have stabilized the situation, absorbed the negative short-term fluctuations and are now making our way forward confidently through this difficult patch," Rublovka’s sluggish real estate market tells a different story. Experts, including economists and real estate agents, said sellers are either desperate for cash or fleeing abroad, taking their money with them, while buyers are shunning the Rococo-style castles that are something of an area trademark.

"People do not think that they will make the same type of money in the future, so they don’t want to spend what they have now," said Leonid Krongauz, a founder of Kalinka Realty, which has been trying to sell the 100-million-euro villa. "The political and economic instability prevents everyone from buying real estate."

There are exceptions, he and others noted. Political and business barons from distant Russian regions still covet a prestigious Moscow address, as do Ukrainian tycoons seeking to escape the simmering war. (The deposed Ukrainian president, Viktor F. Yanukovych, is rumored to have taken up residence in town.)

Various real estate agents said no Rublovka clients wanted to speak publicly about emigrating lest they be labeled part of the "fifth column" supposedly undermining Russia’s interests. Yet the uncertainty convinces many that their savings will be safer abroad.

"I know a lot of people, even middle-income people, who are trying to invest money abroad — in Bulgaria, the Baltics, Montenegro," said Evgeny Gontmakher, a prominent economist often critical of government policy. "In this situation it is safer to sell in Rublovka, to take the money abroad and to live somewhere else."

Of course, many people remain perfectly happy in Rublovka, support Putin and have no intention of leaving.

A brick turret marks the entrance to Tagankovo, the gated community where Alexander Kulikov, 53, has lived since 1994. He has founded a half-dozen businesses, including an optic lens manufacturer, a popular fashion website and a wholesale housewares company that distributes Ace Hardware here.

Last fall, after the ruble crashed and the sanctions raised the cost of capital, businessmen borrowed money at 40 percent, he said, accepting zero profit or worse just to survive. The rate has since dropped to about 25 percent, and he renegotiates his financing monthly, he said.

He said the tone of conversation on Tagankovo’s tennis court has changed of late. "We used to talk only about how bad the situation was," said Kulikov, speaking in the secret den of an American neighbor that was hidden behind a concrete wall in his basement movie theater. "Lately, the volume of such discussions has gone down. We have started to talk about women again."

Another neighbor, Boris I. Chirkov, 77, led the team that once helped install the hotline linking the White House to the Kremlin. After the Soviet Union collapsed, he founded a telecommunications company and moved to Rublovka.

"This is what makes me uncomfortable," he said. "There used to be feta cheese from Greece. Now Belarus makes it, but it is not the same. Am I going to die from that? Of course not. I don’t know anyone whom the sanctions are killing."

Putin has wrapped the need to endure economic hardship in fervent nationalism.

"Optimistic words are used to describe a sinking economy," said Konstantin V. Remchukov, editor of The Nezavisimaya, a daily newspaper in Russia. "All this propaganda and patriotism casts a huge shadow on the situation. Seven out of 10 Russians say that they are willing to live under hardship rather than to accede to American pressure."

All kinds of spending habits have changed.

Kulikov used to seek out imports like American meat, now banned under Russian sanctions, but he said he and his Rublovka neighbors buy Russian these days, even when it comes to wine. "It might not be the same as the French or Italian wine that we are used to," he conceded, "but the wines have a very patriotic nose."

The luxury end of the market has suffered, however. One Russian executive for a U.S. company said the wealthy no longer accept paying three times the price for a Tiffany ring just for the convenience of buying it in Russia.

The manager of the local Ferrari dealer maintained bravely that the 43 percent nationwide drop in car sales in the last year has not affected luxury models, but that was belied by a showroom floor featuring 2014 models being sold at steep discounts, like a 458 Spider reduced to $317,000 from $410,000.

Ekaterina Rumyantseva, another founder of Kalinka Realty, said that in terms of high-end sales she could only recall one this spring, a $30 million house in Rublovka. "A house that was $50 million is now $25 million, or an $8 million house goes for $3 million," she said. "The market is overstocked."

In the boom years of 2010 and 2011, the company easily sold 100 houses a year, she said, but it is now down to somewhere between 30 and 50.

Kulikov and Chirkov speculated that anyone selling a huge home right now might be facing problems with the government, otherwise no one would try in such an anemic market. For many of those leaving, the official reason is moving closer to children studying abroad — in Switzerland, in the case of the 100-million-euro domicile.

A staff of 132 people still keep the place humming, with the workers filling out three round-the-clock shifts, said Krongauz, the real estate agent. He added helpfully, "You can do it with fewer."

The house, finished in 2012, is not officially listed, but a half-dozen potential buyers have inspected it in the past year, he said. Even with no prospective buyer in sight, members of the real estate team still ran through its sales pitch.

"This house is the best house in Russia," said one.

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