Elite Nightclubs Empty as Crisis Hits Oligarchs

MT"If someone isn't able to buy a Bentley, or if some government bureaucrat has to sell his Gulfstream jet for $50 million … that's a good thing," Lebedev said.
At the Soho Rooms nightclub one recent evening, bankers partied with abandon to a decadent theme: "It's the end of the world."

As the country's stock market goes into free fall, the Kremlin struggles to shore up the ruble, and experts predict a wave of corporate bankruptcies, the party may be ending for Russia's super rich.

"The bell has started to toll," billionaire banker Alexander Lebedev said.

The country's oligarchs have acquired a reputation for flashy displays of wealth, overwhelmingly concentrated in Moscow, where residential real estate prices of $40,235 per square meter on Ulitsa Ostozhenka make it among the six most expensive streets in the world.

The number of Russian billionaires has shot up by one-third in just a year, from 53 in 2007 to 71 this year, according to the annual Forbes magazine ranking. Most made their fortunes in commodities in the age of easy credit and surging demand. But all signs point to a nasty economic hangover.

The markets are estimated to have lost around $800 billion since hitting highs back in May — with much of that loss coming in September.

The country is earning $400 million less per day from oil and gas than it was in early July, when it was raking in around $1.3 billion, said UralSib strategist Chris Weafer.

Exclusive nightclubs, where a decent table can cost tens of thousands of dollars, look set for a hard hit.

A tour of trendy spots this past weekend found uncrowded bars and empty VIP sections.

Fashionable clubs like Soho Rooms and Most — usually teeming with wealthy youth — echoed with the dance steps of the few who had bothered to turn up.

But many oligarchs and merely wealthy "minigarchs" — like businessman Vladimir Pirozhkov — appear loathe to ditch their hedonistic habits.

"Financial institutions will be affected," Pirozhkov, sporting designer stubble, shouted over the pulsating beat at the fashionable downtown Denis Simachev bar.

"But on the other hand, people will keep coming here," he said. "It's a very popular place; it's sort of a magnet of the city."

Lebedev appeared remarkably cool for a businessman who has lost around half of his estimated $3.1 billion wealth in the stock market plunge.

"I can only hope that what the people call a crisis will be a cold shower for a lot of hotheads on the Forbes list here," said the gray-haired Lebedev, 49, perched on a couch in his Moscow office.

Ranked by Forbes as the world's 358th richest man, Lebedev said he welcomed the financial pinch, which he said will help bring sanity to a city where a cup of coffee can put you back $10, a glass of lousy wine at a good restaurant costs $15 and a three-bedroom apartment in a modest central neighborhood can cost $10,000 a month.

All this in a country where the average official monthly income is around $700.

"If someone isn't able to buy a Bentley, or if some government bureaucrat has to sell his Gulfstream jet for $50 million of his hard-earned money … that's a good thing," Lebedev said.

For the fabulously rich, the turmoil isn't cause for consternation just yet, said Nikolai Uskov, editor-in-chief of GQ magazine's Russian-language edition.

"The richest Russians will continue to consume huge amounts and they simply can't stop," he said. "If you want to buy new watches and you have the money, you'll keep buying them. I think they won't care about another 10,000 or 20,000 euros even during a crisis time."