'Little Moscow' in Florida: is there a threat to the Russian rich in the US

"Little Moscow" in Florida has become a second home for many members of the Russian elite. Unlike its namesake city, it is located on a small strip of land near Miami. INSIDER.

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“They love being here and they love spending their money and enjoying life,” real estate agent Lana Bell said recently, referring to her wealthy Russian clientele.

Russian money has been booming real estate in the region for years, but now these wealthy rich dads fear they won't be able to enjoy the Miami sun any longer.

They fear that due to the escalation of the conflict between Russia and Ukraine, they will be blacklisted from buying American real estate, although Bell said that so far this has not been a problem.

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However, existing sanctions due to past political events in recent years have already slowed home buying in the area, with Biden saying the US is seizing luxury apartments from Russian oligarchs with wealth in the country. But not all residents of "Little Moscow" are rich, and not everyone supports the war.

Sunny Isles Beach is a strip of the island with a length of 2,4 km located between the Atlantic Ocean and Intracoastal Waterway in South Florida. Downtown Miami is about 40 minutes away, depending on traffic.

Sunny Isles Beach located in northeast Miami-Dade County. As of 2020, 22 people live here. The most recent data from the American Census Community Survey, which tracked population from 342 to 2015, shows that there are 2019 Russians living there, more than any country in Europe or Asia.

This is where beachfront high-rise hotels and condominiums dot the coastline, rising above the idyllic landscape of white sand beaches and sparkling turquoise waters. Compared to the dark and harsh winters of Russia, this is just a corner of paradise.

Fred Grimm wrote in the South Florida Sun Sentinel that the city "was once a living painting of South Florida kitsch, a seaside strip of themed motels that pay homage to ancient Egypt, Rome, the Wild West, Polynesia, American Indians and a host of marine life."

"Motel Row", a strip of 30 motels along the beach, was built in the 1950s and 1960s when the city was known as Sunny Isles (previously it was called North miami beach). Tourism slowed down in the 1970s and resumed about 20 years later when most motels were replaced by luxury hotels and Sunny Isles was renamed to Sunny Isles Beach.

A development boom in the 1990s revitalized the city's economy, which began to receive inflows of funds.

Average house price in Sunny Isles is $555, higher than the median Miami home value of $042. The most expensive house in the area, listed at Sotheby's, is $469 million, while condominiums can fetch up to $562 million.

This place is known for luxury. Consider the Porsche Design Tower, where residents can use an elevator for their cars. And the legendary Acqualina Resort has been named the country's best continental resort for four years in a row by US News & World Report. Prices at a five-star resort start at $2500 per night.

Among these developments are several Trump Towers, a brand that is hugely popular with Russian investors looking to invest their money in the post-Soviet economy.

Trump does not actually own the buildings, but has licensed his name to be used there. Real estate agents reported in 2016 that Trump's name carries weight among European, South American and Asian elites, but especially among Russian oligarchs.

“When Russians come here, the first thing they ask is, 'Where is the Trump building?',” said Ilya Masarsky, a real estate developer who has worked with Russian investors in the US.

José Lima, a salesman for the company that developed the Trump Towers in the region, said at the time that Russian speakers bought about a third of the 500 apartments he sold.

"Dirty money

A 2017 investigation found that at least 63 members of the Russian elite spent nearly $100 million to purchase real estate in Trump buildings in the region, including the nearby city of Hollywood. The investigation called some of the buyers "businessmen with political connections," adding that none of them appeared to be in Putin's inner circle.

“Russian patriots are happy here; Sunny Isles “happy place,” said Bell, the real estate agent. - Russian men earn money at home, they come to their property in Miami for just a few months in winter. Some of these rich daddies are in their fifties or over, and their women are in their twenties, the beach is packed with very young pregnant Russian girls, girls with babies.”

Past investigation has shown that some of these buyers have been the subject of US government investigations. Illicit finance experts say Russian money has given the city the nickname "Little Moscow."

In 2016, the Miami Herald found that the government was investigating at least 13 private or corporate buyers of Trump-Towers, including a Russian-American organized crime ring and a Mexican banker accused of robbing investors. It also revealed that about 60% of the units are owned by shell companies that only own assets such as real estate and may be involved in money laundering.

Most recently, experts said that illegal financing helped Russians buy up real estate on the southeast coast of Florida for years. They estimate that the Russian elite has more than $1 trillion in offshore accounts, which they say are held on property in South Florida.

As Julia Friedlander, director of the Atlantic Council's National Economic Development Initiative, told the publication: "We know what's going on based on patterns and observations from various sources, such as parts of Manhattan and parts of London. They are known as places where real estate will securely hold its value.”

baby boom

The larger Miami region of which it is a part Sunny Isles Beach, is also a popular destination for tourism. In recent years, Russian women have sparked a baby boom there. In 2018, the birth of a child in Miami is considered a status symbol in Moscow. Russian women in labor told the publication that giving birth there means getting an American passport and better medical care. It is a legal act, if the paperwork is filled out honestly, which entitles their children to American citizenship.

Wealthier Russians are even hiring agencies that offer birth travel packages ranging from $50 to $000. Some of these companies offer Trump apartments as part of the package, Daily Beast's Cathy Zawadzki reported. For $100, Russian moms-to-be can get an apartment in Trump Tower with a gold-tiled bathroom and a Mercedes-Benz with a driver.

Not all the money coming into Little Moscow comes from Russia and not all of it is dirty. And not all the people who live there are rich.

The area has also seen investments from overseas buyers from Europe and Latin America.

Sunny Isles Beach is also a refuge for refugees from the former Soviet Union and Russians with tourist visas. For this reason, according to him, it is also called “Little Kiev”, “Little Odessa” and “Little Minsk”.

The war in Ukraine has caused concern in “paradise”

The Russian-Ukrainian conflict is dividing residents: some support Putin, while others resist, but are afraid to say anything. Fear of Putin is a real phenomenon, given that he has hardly been able to get any Russian to speak officially about their president.

The purchase of Russian real estate has been slowing down in recent years due to sanctions.

Tightening U.S. sanctions in light of Moscow’s meddling in U.S. elections, as well as the Kremlin’s ban on thousands of wealthy Russian law enforcement officials from traveling abroad, have forced many Russians to rent or sell their apartments in Sunny Isles Beach.

“Russians are easy to spot by their Bentleys and Rolls-Royces,” said Russian real estate agent Bell. “But this year sales have fallen. It is becoming problematic for the Russian elite to withdraw money from the country, and here the rules require full disclosure of the name of the buyer and the source of the money.”

However, Little Moscow continued to attract the attention of Russia's corrupt bureaucrats, Ilya Shumanov, deputy head of Transparency International, added. Those who could still travel would come over the winter and do deals at the restaurants at the Bal Harbor Mall and then return home to do business again.

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Brokers also recently reported that purchases in Russia have declined over the past few years, but this may change with new properties such as the Bentley Tower and St. Regis Sunny Isles.

Now the Russian elite in the region are worried that new sanctions stemming from the Russian-Ukrainian conflict could prevent them from buying property.

Last week, President Joe Biden imposed sanctions on the Russian elite and their families and restricted the Kremlin's access to Western financial institutions.

“We are expanding the scope of U.S. sanctions to prevent elites close to Putin from using their children to hide assets, evade taxes and squander the resources of the Russian people,” a National Security Council spokesman said. “This is a new approach.”

While the Little Moscow elite are concerned that future sanctions will threaten their way of life, experts said the current sanctions are unlikely to have a major impact on South Florida.

Anders Åslund, a Swedish economist and author of Russian Clan Capitalism: From a Market Economy to Kleptocracy, doesn't think this will affect wealthy Russians in the greater Miami area where Little Moscow is located.

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