Russian billionaires nest in Turkey

Turkey has become the most popular haven for the yachts of Russian oligarchs. Billionaires are actively investing in local resort real estate.
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At least eight Russian oligarch yachts, including Roman Abramovich's Eclipse, 162 meters long and valued at $438 million and Solaris, 139 meters long and valued at $474 million, are now moored in Turkish ports or have recently left them. The ships now in Turkey are worth a total of $1.1 billion, according to yacht valuation experts VesselsValue.

The country is popular among the richest Russians not only because of the sunny climate and the long Mediterranean coast: despite the fact that Turkey is a NATO member, it has refused to join Western sanctions and maintains close ties with Russia, and even organized peace talks between Russia in late March and Ukraine in Istanbul.

“Sanctions imposed by European countries and the US have pushed billionaires to look for alternative markets for investment,” said Zeynep Firatoglu, communications manager for Space, an Istanbul-based premium real estate firm. “Turkey stood out as a realistic option due to its geographic location, developed markets and banking system, and neutrality in relations between Russia and Ukraine.”

In February 2022, house sales to non-residents increased by 55% compared to last year, according to the Turkish Institute of Statistics. Sales to Russian customers grew by 96%, and sales to Ukrainians by 85%. The boom continued in March, when foreigners bought 21% more properties than in February. “After the start of the “special operation” * in Ukraine, we noticed a significant increase in demand from Russian buyers,” says Firatoglu.

The main advantage of Turkey for Russians is the opportunity to obtain citizenship through investment. Anyone who invests at least $250,000 in real estate or $500,000 in government bonds, companies, investment funds, or deposits in a local bank account will be able to obtain a Turkish passport in three to four months. This is a trifle for people like Russian oligarchs, which means that Turkey becomes an attractive alternative for those who are looking for a second passport. And while some other European countries also offer so-called golden passports with similar benefits, those routes may soon be closed. Cyprus, which has long been a popular tax haven for Russians, is tightening the requirements. Forbes found that 15 Russian billionaires have Cypriot citizenship, but the island nation has already revoked the passports of eight oligarchs, including Oleg Deripaska.

Russian billionaires are less interested in luxury homes and more in big investments that can bring them profit (and a Turkish passport), according to Sherif Nadia Varli, a leading real estate broker at Istanbul-based Vartur Real Estate. “Their yachts are here, they spend time here,” he says.

Nadia Varli was recently approached by a client who represented a Russian buyer looking to spend $100 million on a hotel on Turkey's Mediterranean coast. “We offered them hotels by the sea, from Antalya to Bodrum,” he says. “Now all Russian clients are trying to get Turkish citizenship through investments.”

Coastal cities such as Bodrum, Fethiye and Marmaris are the most likely destinations for Russian millionaires looking to invest in Turkish property. The region hosts four of the eight businessmen's yachts that Forbes has found in Turkey: Abramovich's Eclipse and Alexander Nesis' $110 million Romea are located in Gocek, near Fethiye; Andrey Molchanov's $110 million Aurora is in Marmaris, and Abramovich's Solaris is in Yalikavak, near Bodrum. Oleg Deripaska's $58 million Clio departed Göcek on April 16, and a month earlier Iskander Makhmudov's $55 million Predator departed from the port of Kusadasi further north. Elsewhere in Turkey, $8 million Vagit Alekperova's $8 million Space is in Tuzla Marina in Istanbul, while Arkady Rotenberg's $38 million Rahil was last seen in Tuzla before heading to the Russian resort town of Sochi on April 27.

On March 29, Abramovich was spotted at peace talks in Istanbul. He has long-standing ties to the country: Nadi Varli told Forbes that his firm sold four apartments in Bodrum to members of the Abramovich family in 2007, but it is not known if they still own them. On March 14, one of his aircraft, a Gulfstream G650 registered in Luxembourg under the number G650, flew from Israel to Istanbul, and the next day left for Moscow.

In addition to investing in real estate, Russians are opening companies in Turkey. In March, Russians founded a record 64 companies in Turkey, nearly four times the number in February, and the number is expected to grow when April data is released, said Erey Sayin, an associate with the Istanbul law firm Sayin Law & Consulting. A company can be set up in five days and the entire process costs only about $3,400, he notes.

“After the sanctions were imposed on Russia, the number of companies that [Russian] citizens establish in Turkey has skyrocketed,” says Sayin. Over the past 25 days, his firm has received 25 inquiries from Russian clients who want to set up a company in Turkey.

Most of these firms are created to invest in real estate, but some are going into energy projects, especially in renewable energy, oil and gas. According to Sayin, it is likely that at least some of the Russian billionaires are setting up companies in Turkey, but the exact number is not known. If Western sanctions related to the "special operation" in Ukraine hold for more than a few months, he expects Russian firms in other industries, including fertilizer - one of Russia's key exports - to build factories and invest hundreds of millions of dollars in Turkey.

“There are a lot of investors from the energy industry, but at this stage, due to a lot of uncertainty, they are only investing small amounts,” Sayin says. “But the amounts will rise.”

However, Turkish banks are afraid of violating the sanctions and require written confirmation that the Russian individual or company opening an account is not under restrictions. High demand for citizenship by investment could also increase the cost of the transaction: the Turkish government plans to raise the minimum threshold for real estate investment from $250,000 to $400,000.

Turkey has close economic ties with Russia. Turkey is the fifth largest Russian export market and Russia is the tenth largest Turkish export market. Vladimir Putin and Recep Tayyip Erdogan have grown closer in recent years after the difficult period of the war in Syria. Tensions reached a breaking point after Turkey shot down a Russian fighter jet in its airspace in November 2015, leading to trade restrictions and a visa-free freeze. However, in 2016, the countries normalized relations.

As long as Western sanctions are in place and Turkey refuses to impose its own, Russian businessmen are expected to continue investing in the country. It is easier to do this if you have a Turkish passport and a company registered here.

“In the short term, we expect Russians to acquire Turkish citizenship by buying property in Turkey to have an alternative to their Russian passport,” Firatoglu says. “In the medium to long term, we can expect Russian billionaires to move their businesses and fortunes to Istanbul and settle families in Turkey or other European countries.”