Editor’s note: From Russia without love

There were heady days a decade ago when Russian buyers set records in New York City’s real estate market, including the $88 million purchase of a condo at 15 Central Park West by  billionaire Dmitry Rybolovlev as a gift for his 22-year-old daughter.

Foreign money looking for a safe haven — and flashy Russian money in particular — helped fuel the city’s real estate run-up after the Great Recession.   

How different the situation has become in recent days, with politicians calling for pricey homes to be seized after Russia’s invasion of neighboring Ukraine. 

“Manhattan has been one of the most popular safe harbors for Russian oligarchs to park their cash, especially via ultra-high-end apartments,” wrote Manhattan Borough President Mark Levine after the unprovoked military assault ordered by President Vladimir Putin. “It’s time to start seizing their properties.”

While it’s unlikely that financial sanctions will go that far, Europe’s largest military conflict in decades has set the stage for economic turmoil whose impacts will clearly stretch to U.S. real estate. See our coverage here. 

War breeds uncertainty, and uncertainty is bad for real estate. Dealmaking took a major hit upon the invasion of Iraq in 2003. Leading up to presidential elections, too, transactions often slow as homebuyers and investors grapple with different political outcomes. (The Real Deal’s new book, “The New Kings of New York,” is a great history on all of this and is available for pre-order on Amazon now.)

Higher inflation and energy prices as Russian oil exports are held back could also affect investors and landlords. And in an increasingly connected world, the failure of Russian banks could bring unanticipated boomerang effects to U.S. financial markets.

Will Miami, arguably the hottest real estate market in the nation, hit the pause button? See our stories about South Florida.

Maybe all of this is wrong, and there is a flight of foreign money to safety, with European investors increasingly heading to the U.S. to park wealth a continent away from the war. Or maybe all of this ends quickly. As Ukrainians bravely hold off their attackers and the regrettable conflict continues, we will see.

Just before the war in Iraq began in 2003, TRD began its annual ranking of New York City’s residential brokerages. Our latest tally is here. Without any spoilers, it’s remarkable that the list of top finishers is relatively similar to what it was back then. Upstarts and tech disruptors have climbed the list, but several of Manhattan’s biggest brokerages have maintained their market share over the years. Given predictions about the death of the brokerage, that seems pretty notable — unexpected stability in an unstable world.

Another blast from the past is Wall Street bonuses. It used to be front page news in New York whenever annual bonuses were doled out, because of the outsize effect on the real estate market. That’s changed as the city’s economy has diversified, but it’s still a major force in driving luxury home sales. This year, bonuses were at their highest level since the Great Recession.

Last but not least, our cover story this month looks at a scrappy player in the lending space that is now competing with the big boys — and has courted some controversy along the way. As an alternative lender, Madison Realty Capital pounced on opportunities when traditional banks pulled back after the recession, and it has grown steadily since. Its latest fund pulled in $2.1 billion — second only to Brookfield’s private debt fund. As Madison writes bigger checks and looks to go national, it is working to shed its reputation for bare-knuckle negotiating tactics and noisy foreclosure battles. Check out the story here.

With the latest global conflagrations, hopefully there will still be plenty of deals to keep things going.

Enjoy the issue.