November 21, 2007 / 12:38 AM / 11 years ago

Russia's dacha building boom shows rich-poor gulf

MOSCOW (Reuters) - The spires of a Germanic-looking palace rise over a muddy building site outside Moscow like a suburban Disney castle, while a Roman villa and a New England-style mansion jostle for room nearby.

Aras Agalarov, one of Russia's most ambitious developers, answers Reuters correspondent questions at a construction site outside Moscow, Oct. 26, 2007. REUTERS/Alexander Natruskin

These opulent dachas — second homes for the elite — are the latest status symbols for Moscow’s super-wealthy.

Looming over a run-down village where people grow their own food and lack running water, they present a stark illustration of the widening gap between Russia’s rich and poor.

“Russia is now like the rest of the world,” says Aras Agalarov, one of Russia’s most ambitious developers and the man behind the estate, who made his money selling luxury goods to the first wave of rich Russians in the early 1990s.

Agalarov controls the Crocus City Mall, an upmarket out-of-town shopping centre and runs an annual Millionaire Fair, a shop window for high-value products.

He says he’ll move in with his own extended politically- connected family. His son is married to the Azeri president’s daughter.

“In other countries, you have poor people and rich people and now in Russia we have poor and rich people too,” he says.

The mega-mansions are a far cry from the modest wooden cottages nestled deep in birch forests that served as rural retreats for the aristocrats of Russia’s past or the sparsely furnished weekend homes of many modern urban Russians.

Agalarov’s development boasts 14 man-made lakes, thousands of newly planted trees, a golf course, hotels and sports grounds. Each of its 150 houses costs up to $30 million.


The huge walled complex dwarfs the ambition and cost of similar new neighborhoods mushrooming around the Russian capital.

In a country where many pensioners live on less than $200 per month, a lavish bouquet of flowers of the kind often seen being delivered in central Moscow, will cost as much.

Although the official average income is just $500 per month, a lucky few will splurge more on a good bottle of wine or pay $777,000 for a Maybach luxury limousine, the latest ‘must have’ for those who want to flaunt their wealth.

“The fact is that there’s been an enormous windfall and, typically, those who were poor and win the lottery the temptation is to spend, spend, spend,” said Chris Weafer, the chief strategist with Uralsib bank in Moscow.

“We have to remember that it is only nine years since this country was technically bankrupt and was facing an abyss, so in nine years we’ve had this transformation based on $800 billion dollars of gas and oil export revenue,” he said.

Although still behind the United States and Germany, Russia has 53 billionaires, up from 19 on 2006, who mostly made their money in oil, mining and metals, according to Forbes magazine.

It names Roman Abramovich as the wealthiest, with a $18.7bn fortune spanning oil, steel and Chelsea Football Club, the former English Premier League soccer champions.

Agalarov believes Russia’s new rich will pay to rub shoulders on the golf course or chat over the garden fence.

“There will be so many buyers that it will be a problem for me to decide to whom I should sell and who I shouldn’t sell to.

“We want to ensure that normal people live here, so security guards won’t be allowed to live with the families. That would spoil the atmosphere,” he says.

Switching from a chauffeur-driven Mercedes to a Land Rover, trailing a second four-by-four full of bodyguards, Agalarov maneuvers through the construction site with confidence and energy.


Builders put finishing touches on the Germanic-inspired castle. The Roman villa has a vaulting hallway, a drooping dining room chandelier and ornate carpets and curtains.

The estate will eventually comprise about 150 homes, mixing modest townhouses starting at $2 million. Agalarov estimates construction cost at about $1 billion and the total selling price at $3 billion, making a healthy profit margin.

While the new houses have marble floors and underground kitchens for staff, down the road in the village Voronino, 60-year-old Natalia Andreyevna must draw her water from a well in her garden.

Most of the houses here are small, rundown and badly in need of a lick of paint on their wooden frames.

“It’s becoming like a prison around here,” said Natalia Andreyevna, who lives in the village most of the year but spends the cold winters with her daughter in Moscow.

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“I used to be able to walk through the forests, now you can’t. They have guards there and they won’t let anybody through.”

Her neighbor says how her new neighbors live is of no concern to her.

“I don’t care what goes on up there. I’m not allowed in,” said Galina Ivanovna, 70, who was herding her goats. “I don’t think very much about rich people. I have to survive myself.”

Editing by Michael Winfrey

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