Russian ruble’s skip hits Miami realty market
Written by Susan Danseyar on December 23, 2014
Residential brokers who help Russians find homes in Miami say the plunging value of the ruble will probably affect their clients in a variety of ways, including apprehension over buying and renting here alongside higher motivation to place their money in a more secure country.
Russians are already buying in Miami and they know the market, said Anita Funtek, broker at The Boscolo Realty and CEO of the Miami New Construction Show.
“Their buying power is definitely shrinking as the ruble is falling, but as they have doubts in the future of the Russian economy, their motivation is higher to place their savings to a more secure country,” she said. “Many just want to stop their loss right now and, if they were planning to buy in the last couple of months, the current situation is helping them to make the decision faster.”
Ms. Funtek has a large number of Russian clients in Sunny Isles where there’s a community of Russian stores, restaurants and newspapers. She said there’s also a growing Russian population in Hollywood and Golden Beach.
It’s difficult to be a fortuneteller, she said, but the falling ruble could increase as easily as decrease the number of Russians buying and renting property in the Miami area.
“I just returned from a month-long trip to Ukraine and Russia where I talked to many friends who are worried about the ruble,” Ms. Funtek said. “Just like in the stock market crash, some want to stop the loss and put their money in a safe haven because they don’t feel they have a future in Russia; others are hesitant to buy and want to wait until the market improves.”
At the beginning of the year, $1 bought 33 rubles. The escalating currency crisis began in the second half of 2014 due to the fall in the price of oil, a major export of Russia, along with the international economic sanctions imposed on Russia by the US and European Union following President Vladimir Putin’s military intervention in Ukraine.
Last week, the Russian ruble steadied around 62.5 against the US dollar after Russian authorities announced Dec. 18 measures to ease banking regulations and encourage exporters to sell foreign currency. On Dec. 19, Mr. Putin endorsed the Russian central bank’s raising its key interest rate 6.5 percentage points to 17%, its highest since 2003.
The exchange rate from rubles to dollars results in properties that are twice as expensive for Russian buyers and current condo owners, said Irina Kim Sang, broker/associate for Coldwell Banker Miami Beach.
“The devaluation of the ruble and oil price decrease is distressing a lot of Russians,” she said. “I’ve seen the effect of this confusion and worry in my daily practice for the past three months.”
There will be a number of consequences, Ms. Sang said. “Those who have invested $1 million plus [for a condo] have at least $1,000 in monthly fees,” she said. “With the ruble devalued, they’re paying double the amount for maintenance and, should they only be using the property for three to six months of the year, they may want to sell.”
For her affluent Russian clients who have an investment portfolio of homes, sometimes three or more in Miami and elsewhere around the world, Ms. Sang doesn’t believe they are concerned with finances.
However, Ms. Sang said, political instability and the uncertainty of getting a visa might affect people of all income levels if they can’t travel to their vacation home.
“There are people in Russia who don’t want to immigrate and are more interested in investing their money in property here,” she said. “They prefer a tourist visa so they don’t have to pay worldwide income taxes.”
With the shrinking ruble and the possibility that the problem will continue to loom, Ms. Sang said there’s a potential for clients who might be interested in committing to immigration through an EB-5 visa, bringing investment to Miami for an approved regional center project. Those people, she said, are potential homebuyers.