Alpine Real Estate Boom: Russians Buying Up Austrian Resort
Rich Russians have discovered the Austrian luxury resort of Kitzbühel and are circumventing local laws to buy real estate there. Property prices have surged to such dizzying heights that the local mayor wants to put a stop to it.
It's high season in the Austrian ski resort of Kitzbühel. The crowd of tourists strolling along the streets of this pretty Tyrolean town, population 8,500, at the foot of the Wilder Kaiser mountain, is a blur of Chanel hats and Louis Vuitton handbags. The Porsche Cayenne count is extremely high, as is the proportion of wealthy Russians.
That's a snip compared with the outlay of a married couple from Minsk, who booked the hotel's "Grande Suite Imperial" for 24,500 a week.
Many of the guests from Moscow, Minsk or Yekaterinburg would like to settle down here for good. "Russian demand for real estate is growing," says Manfred Hagsteiner, a local estate agent who helps them in their house hunt.
In his blue uniform jacket adorned with green velvet piping and carrying his little Yorkshire Terrier, Buffy, Hagsteiner looks like a younger version of the late flamboyant fashion designer Rudolph Moshammer, who could best be described as the Liberace of Munich. The Russians have a tremendous desire for luxury, he says.
A well-heeled client recently dismissed the offer of an exquisite 5 million villa with a contemptuous shrug -- too small, too confined, too unrepresentative. Money is clearly no object. The Russians are buying what they like.
Roman Abramovich, billionaire owner of London's Chelsea Football club, has expressed an interest in the "Waldschlössl", a palatial 15 million estate in the Salzburger Land region with 24,000 square metres of land.
A century ago Kitzbühel was a sleepy Alpine village that scratched a living from copper and silver mining. Its residents today include German football legend Franz Beckenbauer, the Meinl coffee roasting family, former DaimlerChrysler boss Jürgen Schrempp and men's fashion designer Werner Baldessarini.
The high celebrity density has driven prices for plots of land and old farm buildings to dizzying heights. Buyers have to pay up to 20 million for the best locations. Rustic homes facing the famous Hahnenkamm ski piste or in the nearby district of Aurach are among the most expensive real estate Austria has to offer.
The 12,000 per square meter price you pay here is more than you'd pay for prime real estate on Vienna's elegant Kohlmarkt street.
"Prices in Kitzbühel and the surrounding area have risen by 50 percent in the last two years," said Wolfgang Böhm of luxury real estate agents Engel & Völkers.
Rules like Swiss cheese
And now the notoriously extravagant Russians are piling into the overheated market. Unlike in other parts of Austria, the Tyrol region attaches strict conditions to property buyers. Only citizens of the European Union are allowed to buy property, says a local directive aimed at preventing the wholesale selling off of homes and land in the narrow valleys. At least, that's the theory.
In fact the rules have as many "loopholes as Swiss cheese," says real estate agent Hagsteiner. All non-EU citizens need to do is set up a foundation or a company in an EU country, and the purchase can go ahead.
Prospective buyers go to great lengths to circumvent the rules. A few weeks ago the Kitzbühel golf club changed hands for 25 million. The new owner is Saphros, a private foundation based in Vienna. The foundation is linked to two faceless investment companies of the same name.
There is speculation that the billionaire wife of Moscow Mayor Yuri Luzhkov, Yelena Baturina, is behind the foundation, and that her construction empire Inteko is in the running to operate a planned 80-bed luxury hotel in the grounds of the golf club. Saphros has declined to comment.
The complex bid via the Saphros foundation is aimed at elegantly circumventing the law banning non-EU citizens from acquiring real estate, say critics. The regional government of Tyrol now plans to investigate who owns what.
Officially, a Russian stake in the foundation has been denied. But the Saphros foundation's board contains a senior member of the Austro-Russian Friendship Society, Christoph Ulmer, a former aide to ex-interior minister Ernst Strasser.
And a registered co-owner of the foundation, Vienna-based tax consultant Stefan Malaschofsky, has excellent contacts in Russia; he is on the supervisory board of CE Oil.
The Russian guests appear to have secured themselves a refuge at the Kitzbühel golf club. On New Year's Eve, mayor Luzhkov and his entourage staged a huge party there with a firework display that put the town's official one to shame.
Officially, he has only rented the building. Real estate experts have their doubts. The opulent estate with breathtaking views of an Alpine panorama has undergone extensive refurbishment which included constructing living quarters in a neighboring building for servants and guards.
Kitzbühel's mayor, Klaus Winkler, is increasingly worried about the latest surge in the local property market. A map of the area hangs on the wall of his office, next to a wooden cross. Local buyers have been priced out of the market, says Winkler, adding, "It's time we did something about it."
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