All that glitters, for Russia's big spenders

October 02, 2005|By ERIKA NIEDOWSKI | ERIKA NIEDOWSKI,SUN FOREIGN REPORTER

MOSCOW -- The man who introduced himself as Roman Manashirov said he had already spent $720,000 for a Mercedes sedan, for ferrying his 8-year-old son to school, and $108,000 for a white grand piano destined for a white-and-gold banquet room at his house in Rublyovka, the Moscow suburb that is also home to President Vladimir V. Putin.

Now, visiting displays at the city's inaugural Millionaire Fair, he expressed interest in furs. Manashirov pointed to a floor-length coat made from lynx and mink and asked the price.

"Forty thousand dollars," the saleswoman said.

He asked her to slip it on. Almost disappearing into its folds, she dropped her chin and swiveled her head from side to side as glamorously as she could.

He liked the coat.

"We are hoping for discounts, of course," Manashirov smiled. Perfect for his brother's wife, he said.

Not since the czars' formal balls has Russians' conspicuous consumption been as conspicuous, as demonstrated at the city's first Millionaire Fair.

For five days, helicopters, thoroughbred horses and other luxury goods were offered at an exhibition center that also holds trade union conferences.

Salespeople talked up $26,000 cell phones, single-malt scotch, real estate in Dubai, seven-seat whirlpools and a matching tuxedo and evening gown fashioned entirely out of currency - one in dollars, the other in rubles.

"Russian buyers are very good spenders," said Marina Najda, whose jewelry kiosk priced a 1-carat diamond ring at $2 million. "They earn a lot very quick, and they also are able to spend a lot quick."

It's doubtful that the architects of Russia's democracy foresaw such extreme wealth.

The combined net worth of Russia's billionaires, according to a survey last year by Forbes magazine, was equivalent to nearly a quarter of the country's gross domestic product.

Moscow had the distinction of being home to more billionaires than any other city in the world, along with a substantial number of Russia's 88,000 millionaires.

Parts of the city, especially near the Kremlin, are showrooms of wealth, including bodyguards standing alongside long black sedans parked outside the city's upscale restaurants.

Boutiques where price tags are beside the point fill GUM, the former State Department Store on the east side of Red Square, opposite the Kremlin.

Most Russians, of course, live and shop modestly.

The average monthly income here only recently reached $300 a person, and about 25 million people, or 17 percent of the population, live on less than $87 a month.

The prevailing attitude toward wealth is that it can't possibly have been acquired honestly. In the 1990s, self-made businessmen snapped up at rock-bottom prices the state's riches - including oil, gas and metals - in questionable privatization deals.

Luxury purchases were made abroad because that's where Russians, to be safe, kept their capital.

Jack A. Barbanel, president of the Strategic Investment Group, an investment banking firm, estimates that Russians spend $9.2 billion in Russia a year on luxury goods, but an additional $12.5 billion abroad.

They buy the most expensive Swiss watches and Italian villas. They shell out more, on average, on luxury jewelry, car and vacation purchases than their wealthy counterparts in the United States and Europe; the average expenditure on a luxury watch in Russia is $16,500.

"Here, it's who has the biggest, darkest car and how many bodyguards drive behind me," Barbanel said after the Millionaire Fair.

"It's very much psychology-driven. They really feel that they have to have the best and the most expensive. For Russians, it's more than a lifestyle. It's a monument to themselves," he said.

DaimlerChrysler sold 15 of its Maybach sedans here last year, for as much as $800,000 each, a company spokeswoman said, and Russians also purchased 600 of a new, top-of-the-line Mercedes before its local debut at the Millionaire Fair.

At the exhibition, Dimitri A. Sharapaniuk invited potential clients to relax on a couch draped in black silk and leopard fur as he talked up his travel company.

He recalled a businessman renting an Australian island, including a 18-person staff, for $200,000 a day.

"Every desire of the client should be satisfied - if it's paid," he said.

Nearby, a lawyer-turned-sales manager for an aviation company, Irina Blagodyr, showed off the leather interior of a seven-seat helicopter.

"Russia is a big country," she said, being helpful. "To go from one place to another by car, it's not always efficient. So we take helicopters."

A vendor selling a shower-solarium that allows simultaneous tanning and bathing seemed almost apologetic that the one-person model cost $12,000.

"Our prices are way too low," he said.

Manashirov, the shopper who so admired the furs, politely declined to identify his line of business - but a few days after the fair he pointed out that his son enjoyed riding in the Maybach to school.

"Whatever he likes," Manashirov said, "I get him everything."

baltimoresun@co.ru

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