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Turkey will be the next safe haven for Russian oligarchs

With the “wave” of Western sanctions threatening them after Putin’s invasion of Ukraine, Russian oligarchs removed their luxury yachts from the ports of the European Union and Britain to avoid seizures. Some took them to Dubai, others found refuge in the Maldives. But now the most popular destination for Russian oligarchs’ yachts is Turkey.

At least eight yachts belonging to Russian tycoons – including the 162-meter Eclipse, valued at $ 438 million, and the 140-meter-long, 474-million Solaris, both owned by Abramovich – are currently moored in Turkish ports or have recently been evicted from them. The boats currently in Turkey are worth a total of $ 1.1 billion, according to VesselsValue yacht valuation experts.

Turkey is a popular choice for Russian oligarchs, not for its sunny weather and endless beaches in the Mediterranean: although the country is a member of NATO, Ankara has not embraced Western sanctions against Moscow and maintains close relations with the Kremlin. In addition, at the end of March, Istanbul hosted the delegations of Ukrainians and Russians for peace talks.

“Sanctions imposed by European countries and the United States have forced Russian billionaires to look for alternative investment markets,” said Zeynep Fıratoğlu, a communications manager at Space, a Istanbul-based luxury real estate company. “Turkey stood out as a viable option for Russian tycoons due to its geographical location, developed market and banking systems. At the same time, the neutral stance in the Russia-Ukraine conflict was assessed.”

According to the Turkish Statistical Institute, home sales to non-Turkish citizens increased by 55% in February 2022 on an annual basis. Russian buyers increased by 96%, while Ukrainian buyers by 85%. The boom continued in March, with foreigners buying 21% more homes than in February. “After the invasion of Ukraine, we saw a significant increase in demand from Russian buyers,” Fıratoğlu said.

The attraction for Russian oligarchs is the investment citizenship program, which gives a Turkish passport in 3-4 months to anyone who invests at least $ 250,000 in real estate or $ 500,000 in government bonds, companies, investment funds or a Turkish account. bank. The amount required is … pocket money for Russian oligarchs, which makes Turkey an attractive alternative for those seeking a second passport. Other countries in Europe may have “golden passport” programs with similar privileges, but these routes may soon be closed to Russians. Cyprus, a popular tax haven for Russians for many years, is now ousting the oligarchs: Forbes has found that 15 Russian billionaires also have Cypriot citizenship, but Nicosia has already revoked the passports of eight of them, including Putin Oleg Deripaska.

According to iferif Nadi Varlı, chief real estate agent of Vartur Real Estate based in Istanbul, Russian billionaires are looking for less luxury homes and more large investments that could bring them financial benefits, as well as a Turkish passport. “Their yachts are here, they spend time here themselves,” he added.

Nadi Varlı recently contacted a representative of a Russian client, who was willing to invest $ 100 million to buy a hotel on the Mediterranean coast of Turkey. “The hotels we manage to find buyers are located on the coastline from Antalya to Bodrum (s.s .: Alikarnassos)”, he emphasizes. “All Russian clients are trying to acquire Turkish citizenship through investment.”

Seaside towns such as Bodrum, Fethiye and Marmaris are the most popular destinations for Russian oligarchs who want to invest in Turkish real estate. Four of the eight yachts belonging to Russian oligarchs monitored by Forbes in Turkey have docked in Turkish cities in the region. In detail: Abramovich’s Eclipse and Alexander Nesis’s Romea – worth $ 110 million – are located in the town of Getzek near Fethiye. Andrei Molchanov’s $ 110 million Aurora is in Marmaris and Abramovich’s Solaris is in Yalikavak near Bodrum. Oleg Deripaska’s $ 58 million Clio left Getzek on April 16, while Iskander Makhmudov’s $ 55 million Predator set sail from the port of Kusadasi a month ago. In addition, Vagit Alekperov’s $ 8 million Space Station is located in Tuzla’s marina in Istanbul, while Arkady Rotenberg’s Rahil’s $ 38 million spacecraft was last seen in Tuzla before sailing on April 27 to Russia. resort Sochi.

Abramovich, the most famous oligarch who has found refuge for his yachts in Turkey, attended the peace talks held in Istanbul on March 29th. Its presence in Turkey dates back to ancient times. Nadi Varlı told Forbes that his company sold four apartments in Bodrum to members of the Abramovich family in 2007, but it was unclear if they still owned them. One of his private jets (a Gulfstream G650 registered in Luxembourg with the number LX-RAY) flew from Israel to Istanbul on March 14 and left for Moscow the next day.

In addition to real estate investments, the Russians have set up companies in Turkey. In particular, in March 2022, Russian citizens set up 64 companies in Turkey, a number almost four times higher than in February this year. That number is expected to rise as soon as the figures for April are released, according to Eray Sayin, an associate at Istanbul-based law firm Sayin Law & Consulting. Setting up a company in Turkey takes five days and the process costs about $ 3,400.

“Following the imposition of sanctions on Russia, the number of companies set up by Russian citizens in Turkey has skyrocketed,” said Sayin. His company has received 25 requests in the last 25 days from Russian customers wishing to open a company in Turkey.

Most of these companies are set up to invest in real estate, but some are also interested in the energy sector, especially renewables, as well as oil and gas. According to Sayin, some oligarchs may be among the Russians opening companies in Turkey, but it is not known how many are making this move. If Western sanctions against Moscow remain in place for months, Sayin estimates, Russian companies from other industries – such as fertilizer production, one of Russia’s main export activities – will build factories and invest hundreds of millions. dollars in Turkey.

“There are a lot of investors from the energy industry, but at this stage they are making modest investments because the climate is uncertain,” says Sayin. “But the amounts will increase,” he estimates.

However, Turkish banks are wary of Russians for fear of sanctions. Thus, they ask for documents proving that the Russian citizen or the Russian entity that opens a bank account has not been sanctioned. High demand for investment citizenship is likely to increase the cost of the program for those concerned: the Turkish government plans to increase the minimum investment in real estate to $ 400,000 from $ 250,000 today.

Turkey and Russia have deep economic ties that go beyond the connection with the oligarchs. Turkey is Russia’s fifth largest export market and Russia the tenth largest in Turkey. Vladimir Putin and Recep Tayyip Erdogan have also come closer in recent years, after a difficult period when the two forces supported different camps in the Syrian civil war. Tensions between the two countries escalated when Turkey shot down a Russian fighter jet over its airspace in November 2015, which resulted in trade restrictions and the suspension of visa-free travel. However, the two countries normalized their relations in 2016, while Putin and Erdogan have been in regular contact since the start of the war in Ukraine.

As long as Western sanctions are in place and Turkey refuses to adopt them, Russian oligarchs will continue to invest in the country. And it will be made even easier by those who have a Turkish passport and a company registered in the Turkish market.

“In the short term, we expect Russian citizens to acquire Turkish citizenship by buying a property in the country, in order to have an alternative if their Russian passport is a problem,” Fıratoğlu said. “In the medium and long term, we expect Russian tycoons to move their businesses and wealth to Istanbul and their families to relocate to either Turkey or other European countries.”

Source: Capital

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