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    Russians & Villa Seizures on the French Riviera

    Updated: May 4, 2022

    From the early 1990’s until early 2022, the Russian community on the French Riviera has been varied — from uber-wealthy Russian oligarchs and their associates, to new-money Russians who’ve earned money legitimately, to middle-class Russians, to a large criminal / mafia contingent. How the 2022 sanctions will change this is yet to be seen.

    The French Riviera is home to 20,000 Russians — a quarter of France’s 80,000-strong Russian resident population. Monaco has 750 Russian residents (not including those who grew up in Russia but have since traded their Russian passport for those of other countries, like Cyprus). And yet, in 2017, a banker from Nice was asked how many ultra-rich Russians there are on the French Riviera — he estimated 20,000. Clearly, this is an over-estimation, but it demonstrates the larger-than-life reputation that the wealthiest Russians have created on the French Riviera. He said: “They bring their money from Russia through Cyprus into the Riviera. They’ve kept the market moving for 10 years.”

    Wealthy Russians currently own more than 2000 villas on the French Riviera, many of them belonging to Vladimir Putin’s closest friends, girlfriends, and his offspring. Because Russians often purchase villas anonymously, using a network of overseas holding companies and straw-men, the real number is likely far, far higher.

    According to the regional tourism committee, the share of Russians and nationals of the former USSR amounted to 9% of French Riviera tourists in 2012 but has since fallen to 6% in 2019 due to the sharp decline in the ruble, which decreased the purchasing power of Russians in the euro zone.

    The Local Russian Communities

    The top tier of Russian society has long held a fascination with French culture. The Russian aristocracy used to mainly speak in French, and the Riviera became an established resort for its high society after the state’s imperial family (Empress Alexandra Feodorovna) built a holiday home on the Mediterranean coast in 1856. 

    The onion-shaped turrets of a Russian Orthodox Church built in 1922 rise above coconut palms in Nice. Built in 1900, the Nice cathedral was paid for by the imperial family and other Russian nobles. A veritable Russian quarter sprang up there, complete with streets such as Avenue Nicolas II and Boulevard Tzarewitch .

    Russians & Villa Seizures on the French Riviera - russian seizures french riviera villas real estate 1
    the Russian Orthodox Church in Nice

    The Russians who came here before the Bolshevik Revolution, whether to settle or just enjoy the fabled winter season, were cultivated aristocrats or royalty. After the abolition of the monarchy and the establishment of the Soviet Union in 1923, many of them returned penniless, forced to forgo their luxe villas for boarding houses and drive taxis for a living.

    “For a long time after that, the serious money down here was all English and American,” the late historian Francis O’Hara said, “But now the Russians have all the money again, along with the Arabs.”

    But only since the fall of communism have extremely wealthy Russians descended on the French Riviera in large numbers and with plenty of money to enjoy the best the region has to offer. When the Soviet Union crumbled in 1991, and Putin helped Russian oligarchs drain money from the country’s public assets, it didn’t take long for big-spending Russians to show up on the French Riviera and start buying up luxury properties. In 1994 alone, capital flight from Russia was estimated at $43 billion, with $24 billion of it legal, the rest from illegal sources, according to the Economic Survey of Europe.

    A wealthy set of Russian oligarchs, expats, and tourists continued to visit every summer to enjoy the area’s Michelin-star restaurants, expensive nightclubs, luxury concierges, yacht dealers, designer boutiques, and private art galleries, while maintaining their Moscow connections despite the distance. While it had become risky to buy ostentatiously overpriced villas, extravagant spending continued via vacation rentals and 5-star hotels, until the invasion of the Ukraine in early 2022.

    How the Russian Oligarchs Changed Real Estate Prices

    From the mid-90’s until sanctions started (more on that below), the French Riviera real estate market was used as a way for Russian oligarchs to move their ill-gotten gains out of Russia and launder their money. This was so prevalent that the prices of luxury villas was all-but dictated by Russian buyers, pushing the prices up so much that locals were soon priced-out of the market.

    Rich Russians gravitated here, where they can look out on what is called “Billionaire’s Bay” or the “The Cove of False Money”, buying up the finest villas through an opaque system of shell companies and lawyers that inevitably attract the French tax authorities.

    One local real estate agent told us that she estimates that Russians own about 70% of the mansions on Cap Ferrat alone. Because of Russians, Cap Ferrat has become a seasonal area, as 60% of villas are now vacation homes.

    The Russian takeover of the French Riviera has been “dramatic for everyone” said one construction specialist on condition of anonymity. “My village has lost its soul, there used to be a butcher and a hairdresser around here and now there’s only estate agents.” Nevertheless, “we shouldn’t criticize, it’s thanks to them that we can eat”, he added.

    Because of newly-wealthy Russian buyers, the prices of luxury coastal real estate on the French Riviera shot straight upwards from the mid-90s until 2008. Oligarchs and their buddies came with suitcases of cash and bought properties at crazy prices. This happened in many desirable areas around the world.

    Paying up to €50 million for a home, “they artificially inflated the market, they were prepared to over-pay for properties,” said Benjamin Mondou of Century 21 Lafage Transactions.

    They used real estate as a way of laundering money and transferring wealth to other corrupt people. For example, in Florida, oligarch Dmitry Rybolovlev (who is a resident of Monaco) paid $95 million in 2008 for an 81,000 square foot Palm Beach mansion owned by Donald Trump — considered at the time the most expensive single-family residential sale in the country, and upwards of $50 million more than the sum Trump paid when he purchased the property in 2004.

    In Cap d’Antibes (like everywhere else where they bought real estate) Russian buyers caused property prices to skyrocket. A square meter of luxury property in that exclusive Riviera area went up from a maximum of about €20,000 in 2000-2001 to as much as €53,000 in 2005-2006, according to an estimation from the French tax administration.

    Worldwide, people heard the stories of Russian oligarchs buying up French Riviera villas, at any asking price, as a way to get their dirty money out of Russia.

    Then came the 2008 economic and housing market crash, followed by the subsequent sanctions on Russians, which caused the number of Russian buyers to drop and French Riviera villa prices to flat-line. If you were lucky enough to sell property during that sliver of upwards pricing between the mid-90s and 2008, you might have made profit, but if you bought post-2008, you will likely have lost money, as real estate prices haven’t kept up with inflation.

    In response to Moscow’s 2014 annexation of Crimea, the European Union banned more than 100 Russian officials and businessmen from entering its territory and froze their European assets. Alexander Kraft, chairman and CEO of Sotheby’s International Realty France, said that since then, the number of Russian clients has halved. “Since Vladimir Putin introduced an obligation to declare money transfers to buy a property to the tax authorities, Russian customers are much rarer.”

    And yet, in 2017, there was as much financial wealth held by rich Russians abroad than held by the entire Russian population in Russia itself.

    Putin used the threat of additional sanctions to encourage wealthy Russians to repatriate overseas assets, which exceed $1 trillion by one estimate. Putin has made repeated calls to oligarchs, demanding that they bring their [read: Putin’s] money back to Russia “where it’s earned” to the benefit of the motherland [read: so Putin can more easily control it]. “It’s toxic to be Russian,” said Oleg Vyugin, a former senior central bank official who is now chairman of the Moscow Exchange, in 2018. “And the richer you are, the more toxic you are.”

    Many would argue that since the Russians artificially inflated prices, now that they will be leaving (in 2022), that prices should deflate.

    A frustrating phenomenon affecting the French Riviera real estate market’s pricing, is the hope that silly-spending Russian buyers will eventually come back. It’s true that in the past, you did see overpriced villas selling for ridiculous prices. The plan was to buy, hold, and then resell to another Russian when they needed clean cash. But that hasn’t been happening for 15 years now.

    Until the Ukraine war started, many French Riviera sellers were defiantly holding out hope, waiting for the Russians to come back — someday. Once these sellers wrap their head around the fact that the Russian money-tree has died, and nobody else is willing to overpay –and adjust their expectations accordingly– prices could fall dramatically.

    The War and Russian Villa Seizures

    Due to Russia initiating war with the Ukraine, France and Monaco have already started seizing the assets and villas of Russians connected to Putin, plus their families, close friends, and anyone who may have benefitted from a friend’s connection to Putin. They are casting a wide net.

    French finance minister Bruno Le Maire has created a ‘task force’ of customs officers, tax officers, and ministry officials to draw up a list of oligarch-controlled assets in France and begin seizing them. He said: “At the request of the president, we are continuing a full survey of the financial assets, real estate, yachts and luxury vehicles (in France) which belong to Russian personalities targeted by European sanctions.” He added that France was also working on identifying the property of other Russians who might be hit by further rounds of sanctions “because of their proximity with the Russian government.”

    “Tonight I say to the Russian oligarchs and corrupt leaders who have bilked billions of dollars off this violent regime: no more,” President Joe Biden said in his March 2022 State of the Union Speech. “We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-begotten gains.” Germany, the U.K., France, Italy and other counties are involved in trying to collect and share information against Russians targeted for sanctions, the White House said when it announced the formation of the task force.

    This could have a profound effect on the real estate market, as potentially hundreds of luxury villas, previously owned by Russians connected to Putin, will soon be seized and put on the market for sale.

    Governments first started seizing yachts (before they all end up being moved to somewhere out of reach) and have now begun to seize villas. The net of sanctioned Russians is ever-increasing, making most wealthy Russians very nervous.

    Apparently, Russian oligarchs and their associates have already started approaching real estate agents to try to quickly sell their properties before the government can seize and sell them. Much like how Russians drove the luxury villa market up pre-2008, this time the price changes could be equally as dramatic, in the other direction.

    Even non-oligarch Russians will have liquidity problems and need to sell because the money they had in Russia is now not only dramatically devalued, but near-impossible to export. Nearly all banks and wealth managers are refusing to work with Russians, even in places like Switzerland and Monaco.

    “If I had $20 billion and a Russian passport, I would be getting all of my assets out of every one of these jurisdictions as fast as I can,” said Dj Wolff, a partner at the firm Crowell & Moring specializing in economic sanctions.

    We are watching this unfold and it’s unclear when these villas will start flooding the market, but this could further drive prices down and inventory up. It’s also most likely that the government will tell notaires / agents to sell the seized villas at below market value, so they can quickly liquidate rather than wait many years with these villas sitting empty.

    “No oligarch will slip through our net”, promises Le Maire, adding that oligarchs’ “partners, their children, their property holding companies” would be affected, “such that they won’t be able to hide behind financial constructs”. Like owning villas. “If I were an oligarch, in Russia or France, I’d be worried,” French Foreign Minister Minister Jean-Yves Le Drian said.

    As the walls close in around those with ties to Putin, these villas and yachts risk becoming relics of a luxurious life lived by wealthy Russians in the South of France.

    March 21, 2022 update

    Le Maire has announced that France has already seized around €850 million of Russian oligarchs’ assets. Le Maire added that authorities have taken €539 million in real estate on French territory, corresponding to some 390 properties and sequestered two yachts with a value of €150 million. The finance minister confirmed that the state is now ‘working to ensure that it will not just be a matter of freezing assets, but also of seizing them’.

    April 14, 2022 update

    France has seized more than €23 billion worth of Russian assets since the invasion of Ukraine began – including luxury villas on the Riviera belonging to Russian oligarchs. 41 properties have been seized around France so far. More than half of them are here on the Côte d’Azur – in Saint-Tropez and Le Lavandou in the Var, and in Villefranche-sur-Mer, Saint-Jean-Cap-Ferrat, Nice and the Cap d’Antibes in the Alpes-Maritimes.

    April 27, 2022 update

    French authorities impounded two other French Riviera villas belonging to Russian billionaires — one near the city of Saint-Tropez belonging to Oleg Deripaska since 2005, and another close to Saint-Jean-Cap-Ferrat and owned by Musa Bazhayev, chairman of the board of directors of the Russian Platinum company.

    May 4, 2022 update

    Many more villas seized in France, including two more villas on the Côte d’Azur, including a villa in Saint-Tropez belonging to businessman Mikhail Fridman, whose fortune was estimated in 2019 at more than 14 billion euros.

    The Effect of Previous Sanctions on Dirty Russian Money

    From 2014 to 2021, those previously high-spending Russian buyers almost completely stopped buying, and this area has felt the fallout. Instead of buying, Russians are now trying to sell. But, nowadays, Monaco residents are savvy and price-conscious, so their ‘funny-money’ villas are just sitting on the market.

    In 2018, Peter Illovsky, president of Côte d’Azur Sotheby’s International Realty, said: “the biggest impact on prices has been the absence of the Russians”. Until 2014, buyers from ex-Soviet states were “driving the real estate market on all levels”, says Illovsky. “People would buy an apartment and renovate it in the hope they could sell it to a Russian for a high price.” But the number of Russian buyers, he says, has “fallen by 90%”.

    In 2014 after Russia’s first invasion of the Ukraine, France created a detective tax task-force whose goal is to figure out which Russians own which villas, and not only tax them, but seize the properties, and press criminal tax-avoidance charges.

    Massive leaks like the Offshore Secrets (2013), Panama Papers (2016), Paradise Papers (2017), FinCEN Files (2020), and the Pandora Papers (2021) leaks helped the French government find and seize Russian oligarch’s luxury villas. On top of that, more and more U.S. and European sanctions are being imposed against Russia, making it difficult for Russians to move money, and giving the U.S. and French government the right to seize property.

    • “The year 2014 is a watershed because sanctions have since made it harder for politically-connected Russians to acquire overseas assets… Putin has been calling on Russian business to ‘deoffshorize’ for a decade… Post-Crimea, Russia embarked on the path of self-isolation, at first somewhat reluctantly because wealthy Russians, including Putin’s friends, had indeed developed something of a lifestyle dependence on their French villas… But then Putin and his entourage seem to have discovered that… Russia is big and diverse enough to satisfy anyone’s taste for luxury. The post-2014 chic includes majestic palaces on the Black Sea, the likes of which could never be built or bought on the Cote d’Azur.” – Bloomberg ‘Pandora Papers’ (2021)
    • “According to Knight Frank research, transactions of apartments across the Provence-Alpes-Côte d’Azur region fell by 36 per cent in 2008 after the financial crash. But sales volumes started to recover quickly. Until 2014, buyers from ex-Soviet states were “driving the real estate market on all levels”, says Illovsky. “People would buy an apartment and renovate it in the hope they could sell it to a Russian for a high price.” Since the annexation of Crimea, the drop in oil prices and Russian fiscal reform, the number of Russian buyers, he says, has fallen by 90 per cent.” – Financial Times ‘Nice adapts to fall-off of Russian buyers’ (2018)

    “Russian buyers have dried up all along the Cote d’Azur,” says a local real estate agent. It may take time, but once these sellers realize that the Russian money-tree has died, and that nobody else wants to pay 5x the actual value for their villa, prices could fall dramatically.

    Extravagant Russian-Owned Villas that Top the List for Seizures

    These are just a few of the French Riviera villas that are likely to be seized in 2022:

    Russians & Villa Seizures on the French Riviera - russian seizures french riviera villas real estate
    Chateau de la Croë in Cap d’Antibes

    The French government has also released a partial list of the addresses of villas that are on the list to be seized.

    Buying a Villa? Read This First!

    When you’re ready to look for a property, make sure to read our complete guide to buying real estate in France. These guides explain how to estimate a property’s real value, how to get the best price and avoid over-pricing, what to look out for, how to avoid getting scammed, and more. Here’s a list of our must-read buying guides:

    Our guide to where the market is headed includes: French Riviera real estate market predictions, current & historic pricing trends in the market, and the reasons why prices will continue to fall.

    Our guide to real estate listings includes: how to find villas for sale, what to look out for, misinformation and warnings, auctions & foreclosures, buying direct from sellers, why timing is everything, and the reason why only about half of villa sales are publicly listed.

    Our guide to scams and secrets includes: warnings about the unethical tricks that agents, notaires, sellers, developers and builders use to get more money out of you. This is a must-read, and the whistleblower guide that those in the business don’t want you to see.

    Our guide to real estate agents includes: the dishonest things agents will tell you, how real estate agencies operate, buyer’s agents and property finders, why you should avoid illegal and non-local agents, and who to trust (an important warning).

    Our guide to pricing & determining a villa’s market value includes: why there’s so much extreme overpricing, how to estimate a villa’s market value (what it’s worth), and a step-by-step guide to finding your offer price.

    Our guide to important things to find out includes: diagnostic reports and surveys, sun & micro-climates, potential issues with the view, housing taxes, the age, internet and mobile access, danger (red) zones, health risks, privacy & space issues, nearby problems, what you’ll actually own, illegal additions and structures, why they’re selling, how to verify, and more.

    Our guide to things to consider includes: your actual costs, issues with buying a ‘newly renovated’ villa, learning about local crime & squatters, and questions to ask yourself.

    Our guide to the buying process includes: negotiating the price & the initial offer, choosing an honest notaire, buying in the black, the official offer & deposit, using a SCI, contract pitfalls, the cooling-off period, what to do before handing over the money, and the final signing.

    Our guide for after you buy includes: insurance pitfalls, tips for second homes, renting your villa, renovating, and what to know about hiring people.

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