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. Last Updated: 07/27/2016

Wealthy Russians Dive Into Caribbean

For MTThe planned Isla Moin in Costa Rica, with a circular marina carved into the center of a barrier island, top, and cottages on 81 beachfront hectares, below.
After the singer in the glittery black cape finished his aria and swept off stage, a member of Gianni Versace's family stepped into the haze of a smoke machine and cut a red ribbon.

The stage was in Moscow, but the ribbon cutting was for the opening of an elite condominium with Versace-designed interiors in Panama.

As more Russians move into the top tier of the world's rich, they are beginning to dive from one sea to another. Leaving their traditional stomping grounds of the Mediterranean, rich Russians are slowly making their way to the islands of the Caribbean.

"Russians are looking for the Caribbean dream that they've seen in the movies and on music videos," said Steven Ankrom, vice president of sales for Group Metro real estate, speaking by telephone from his office in the Dominican Republic. "Even the Russians dream about a white beach and a pina colada."

Although superrich Russians have owned houses in exotic locales for more than a decade, the growing number of millionaires -- 136,000 at last count, according to Merrill Lynch and CapGemini -- means that more Russians than ever are investing in second, third and fourth homes abroad.

"Our target market is what we call the three-quarters market," Ankrom said. "These are multimillionaires who are buying places -- people who are looking for a second or third investment place bringing in between $400,000 and $1 million per year."

To cash in on the trend, projects such as Isla Moin in Costa Rica, Costa Blanca in the Dominican Republic and Vita Tower in Panama have begun springing up -- all appealing to the wealthy by piling on superlatives and tax breaks.

Group Metro's Costa Blanca, to be completed by 2010 on 121 hectares of land on the south coast of the Dominican Republic, will include 10 condominium towers, 52 villas, a marina village with retail and commercial space, slips for 150 boats ranging up to 40 meters, a tennis village, clubhouses for both tennis and golf, a private beach, a signature Greg Norman PGA golf course and a Founder's Club "made up of 52 elite individuals."

On the opening day, Group Metro closed almost $100 million in sales. Two bedroom-two bath apartments of 120 to 175 square meters sell for $350,000 to $550,000. Penthouses cost $1.5 million.

Isla Moin, which has 81 beachfront hectares on Costa Rica's undeveloped Atlantic coast, is shooting for an even higher-end crowd by offering slips for megayachts -- yachts of more than 100 meters in length with five levels above and two below the waterline.

for MT

A huge, circular marina will be carved into the center of a barrier island and accessed by deepwater channels -- although the slips that will be able to accommodate 250 yachts will still be too small for the likes of billionaire Roman Abramovich's 200-meter Eclipse.

But Abramovich is a clear exception. Houses in the Caribbean are seen as more of an investment than an absolute luxury, particularly because of sweet tax breaks.

Dmitry Shevchenko, a broker for Trump Ocean Clubs, which is opening a complex on the Pacific side of Panama, described Panama as a tax haven, "Buyers get a 20-year property tax exemption," Shevchenko said. Besides this, he said rental incomes are also attracting buyers.

In the Dominican Republic, Ankrom said, "We're building under tax incentive codes so a first-time buyer doesn't pay property taxes for 10 years. Transferring the title is 3 percent of the value, while annual taxes are 1 percent of the value."

The situation is much the same in Costa Rica.

At Isla Moin, Russians are buying in part because "foreign investors are protected under the constitution with the same rights as a Costa Rican citizen when purchasing property," said Antonio Facio, a regional sales manager for the development.

"The Russians are also taking advantage of the current weakness of the U.S. dollar," he said. Facio said the highest amount a Russian had paid at the development was "well over" $1 million.

Right now he has three Russian buyers and five more "are thinking about it." "They're super excited about it, and they want to bring in their friends," Facio said. He said the three have their own yachts and of the other five, two are buying yachts in Florida, one of which is 36.5 meters.

Alois Schwendinann, a Swiss national who represents a Moscow-based buyer, said there are a handful of Russian clients interested in Isla Moin. "They've just discovered Costa Rica," he said. Although he could not name his employer, he described him as "a usually rich Russian who has oil and gas in Kazakhstan." The client is interested in also buying a slip at the marina for his 35-meter yacht.