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. Last Updated: 07/27/2016

Global Developers Tout Wares at Luxury Fair

For MTThe exclusive St. George's Wharf Development in London has sold strongly among the wealthy Russian diaspora.
Top-end developers and real estate agents from around the globe were out in force at Moscow's prestigious Extravaganza-2007 fair last week, proving that Russia is an increasingly crucial market for companies looking to hawk their luxury properties.

Stretching over three days, the annual Extravaganza event, billed as a supermarket for the super-rich, lined the Manezh exhibition center with everything the wealthy could want, from sports cars to private jets and even luxury porta-potties.

Most eye-catching, however, was the preponderance of stands offering elite real estate around the world, from villas in the south of France to holiday homes in Dubai.

"Real estate is really something that has the wind in its sails at the moment," said Peter Illovsky, a partner at Burger Sotheby's International Realty.

Fueled by the influx of petrodollars, the economy has boomed over the past few years, pushing up the flow of wealthy Russians to many of the world's most desirable destinations.

"You are mainly looking at places like Dubai, London and the French Riviera," Illovsky said, as a pair of bikinied female models cavorted in a Jacuzzi opposite his stand.

Illovsky sells homes in the south of France, where top-end properties range from $7 million to $150 million for a 1,000-square-meter beachfront home.

"The Russians are more interested in the luxury properties because the Russians are the ones with the money now," he said.

At a neighboring stand, George Englezos, sales executive for Cypriot developer The Residence, stood proudly over a model of his exclusive beachfront development near the seaside resort of Limassol in Cyprus.

Since launching the project at last year's Extravaganza event, over half of the development's 57 units have been snapped up. Eighty percent of the buyers were Russian.

"We target the Moscow market," Englezos said, explaining that although some customers come from the regional towns, such as Perm and Yekaterinburg, most are from the capital. Prices for the villas range up to $12 million, Englezos said.

Despite their heavy presence at the fair, representatives from a range of companies said very few deals were actually struck at the shows in Moscow. Firms are still trying to test the water in Russia and build up awareness among potential buyers.

"Developers have been going to Hong Kong and the Far East for a long time but haven't yet come to understand this market," said Andrew Williams, managing director of the residential and hotels department at Cushman & Wakefield in London.

Cushman & Wakefield is acting as the exclusive leasing agent for London's St. George's Wharf Development. A stone's throw from the distinctive ziggurat-shaped MI6 headquarters on the city's South Bank, the flagship project has sold quickly.

Work is also penciled to start next spring on the final part of the development of London's tallest residential building, Williams said. The penthouse will cost somewhere in the range of $40 million to $50 million, Williams estimated.

"We think that Russians will be one of the key markets because of the wealthy Russian interest in London," Williams said.

An increasingly wide group of Russians is flocking to the British capital, from businessmen to families and university students, Williams said.

Whereas many purchases are bought as family or holiday residences, some locations are seen more as investment opportunities, representatives from a number of firms said.

With prices rising by 20 to 25 percent each year, Dubai is increasingly becoming a magnet for wily Russian investors, said Mashook Seyed, executive director of Dubai-based ETA Developers.

ETA's $655 million Dubai Lifestyle City, where properties range from $1.8 million to $12 million, has been well received by potential clients in Russia and other CIS countries, such as Kazakhstan, Seyed said.

"There are some people who just want to live in luxury in a tax-free environment, and some people who see it as a good investment," he said.