Russians spurn crisis to splurge on luxury flats

Wed Oct 22, 2008 11:53am EDT
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By Christian Lowe

MOSCOW (Reuters) - Banks may not be lending and global recession threatens but the Russian developer building Europe's tallest skyscraper sees a reason for confidence: Russians have not lost their appetite for flaunting their wealth.

The developer behind Moscow's Federation Complex believes that, crisis or no crisis, rich Russians will pay for the cachet of owning one of the project's apartments designed by Giorgio Armani and costing in excess of $5 million.

"It's a lifestyle thing," said Dmitry Lutsenko, a board member of Mirax Group, the company that is building the complex of twin towers on the banks of the Moskva river.

"It is quite obvious that people still have money in the world, and they want to buy nice things. They want to buy unique things. And I think this section of the market will be least affected by the crisis."

Russia has not been immune from the turbulence on global markets. Stocks listed in Moscow lost 70 percent of their value since May -- worse than comparable economies -- and several billionaire businessmen have watched their assets shrivel.

But Russia's super-rich, the type the Federation Complex wants to attract, appear unusually resilient to the global crisis.

There are a lot of them: the Russian edition of Forbes magazine says there are 110 entrepreneurs worth at least $1 billion, and a study commissioned by Mirax showed Russia has 200,000 families with an annual income over $1 million.

And they still appear ready to spend money on items that enhance their status. "We studied the situation with the sale of luxury items, for example expensive cars, to analyze buyers' behavior at a time of crisis," said Lutsenko.   Continued...

<p>A set table is seen in a private members' club on the 59th floor of the Federation Tower complex in Moscow October 21, 2008. REUTERS/Denis Sinyakov</p>