Do billionaires just want homes away from home?

Rybolovlev, owner of the Monaco football club, made his fortune as fertilizer producer EQ Images

A court decision last month ordering Russian billionaire Dmitry Rybolovlev to cede half of his worth to his wife highlighted some high-priced properties the couple accumulated in Switzerland, and elsewhere. How are such homes acquired by ultra-wealthy foreigners, and are the buyers always in line with the law?

This content was published on June 5, 2014 - 11:00
Paula Dupraz-Dobias,

Donald Trump’s Maison de l’Amitié, a Florida mansion, estimated at $78 million (CHF70 million) and sold for $100 million was one property owned by a trust in the name of Rybolovlev and his daughter Ekaterina.

A $88 million apartment in New York, the highest price ever paid for a home in the city, another.

The family had other properties in Hawaii, Greece, France and Monaco, in addition to two homes worth $135 million in the Swiss alpine resort of Gstaad, and yet a couple more outside of Geneva, including a 20,000 m2 building site, now frozen, known as the “hole of Cologny”.

While wealthy foreigners have always been drawn to Swiss real estate, in recent years a steep hike in prices, particularly on the Lake Geneva shores, has continued to find buyers from abroad.

Rybolovlev property saga

Elena Rybolovleva may soon gain herself a respectable position, in her own right, on the Forbes rich list, but only after six years of a fierce struggle with her estranged husband, Dmitry Rybolovlev.

Rybolovlev, Russia’s sixteen wealthiest individual, made his fortune as CEO and the main shareholder at Uralkali, a potash fertilizer producer, valued at $34 billion in 2008.

In the past four years, Cypriot trusts associated to Rybolovlev and the couple’s eldest daughter, Ekaterina, spent hundreds of millions on real estate, including properties in New York, Florida and Greece.

The Aegean island of Skorpios, which had belonged to Christina Onassis, was purchased for €100 million in 2013, shortly before an earlier $1 billion divorce settlement was cancelled when Rybolovlev said he did not have the funds to pay.

Rybolovleva, who had no access to the trusts, lives in Geneva, not far from another property, a 20,000 m2 plot of land, where the couple had planned to build a copy of the Petit Trianon.

Work at the site was halted following the divorce filing, giving it the nick-name “the hole of Cologny”.

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In addition to the benefit of lump-sum taxation, Joachim Wrang-Widen, regional director at Christies’ Real Estate identified Switzerland’s central geographic location, its lifestyle, respect for privacy and security, as some of the country’s other draws for affluent individuals looking for a home in this country.

“You can wear your expensive watch and expensive jewellery and not be concerned about it being stolen at knife- or gunpoint… and you don’t have paparazzi or anyone else harassing people who have a face with a known name,” he said.


The law regulating real estate, puts limits on the purchase of property by foreigners and formally prevents acquisitions in the name of others, and of properties larger than a specific surface area.

But exemptions to the law can be conferred by cantonal authorities by granting residency permits to foreigners, often on the grounds that the wealthy individual would be good for business in the canton.

Residency permits can be awarded if the cantonal authorities are able to demonstrate that an “important cultural, economic or fiscal interest exists in the granting of such an authorisation”.

The sale of expensive property to foreign residents can, on occasion, be a grey area.

Charles Monteith, of the Basel Institute of Governance, describes how property obtained by politically exposed persons (PEPs) who gain funds illegally in their home countries, is placed offshore, including in Switzerland.

PEPs, he explained, “would not register property in their own name”. Instead they would hide these assets “through company ownership, setting up a trust, or increasingly by setting it up in another person’s name”.

Grandparents are a favoured choice of intermediary for hiding one’s assets, as they are not included on PEP’s lists, unlike other, closer family members. “Grandparents will not live too long, and then you would get the property through normal inheritance channels,” Monteith who works on asset recovery cases worldwide, told

For lawyer Enrico Monfrini, who has worked with foreign governments to recover the hidden assets obtained by corrupt leaders, there are other ways around the law for PEPs to acquire real estate.


“Protected by some sort of immunity, [a person] who is, by definition, a bureaucrat of a country, could get permission from Swiss authorities to buy property. We have seen many examples of that.”

Monfrini told how, “the daughter of the head of state X… bought properties for prices that were totally overdone, crazy prices, because they don’t give a damn about how much they pay”.

In 2009, Gulnara Karimova, the eldest daughter of the Uzbek president, and former ambassador to the United Nations in Geneva, purchased a $20 million house in the up-scale commune of Cologny. In March, the Swiss federal prosecutor’s office announced that she was being included in a money laundering investigation.

“The administration in Geneva may think it will bring in a good taxpayer, who will spend lots of money, paying a high stamp duty and offering work to people.” That’s why, Monfrini says, the authorities will grant authorisation to certain individuals.

Laurent Forestier, spokesman at the Geneva’s security and economy department, defended that his department “respects scrupulously the legal basis in effect” saying that  applications “are transferred to the Federal Migration Office for approval, once all the necessary requirements are gathered and an advance notice is favourable”.

Swiss property market

The areas surrounding lakes Geneva, Zurich and Zug are considered Switzerland’s “upmarket regions” where prices have risen most sharply in recent years.

The median transaction price for a single family home in Geneva in the first quarter of 2014 was $1.95 million, more than double the median for Switzerland as a whole. One reason for the appeal of property in canton Geneva is low supply, since the number of new jobs created has far outstripped new housing units coming onto the market.

Correspondingly, rental prices have soared; throughout the entire region around Lake Geneva, prices are more than 120% higher than they were in 2000. To draw a comparison, in the same period, rent prices for Switzerland as a whole have not even increased by 50%.

(Sources: Credit Suisse Real Estate Market 2014, Wuest & Partner, Property Market Switzerland)

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Who’s responsible?

When asked about due diligence, real estate representative Sébastien Rohner of Gérofinance Dunand said agents simply assure that buyers have funds to purchase properties, and that “it was up to the banks to check if the client has money in Russia, or elsewhere… and to check the provenance of the funds”.

Another independent estate agent, who asked not to be named, agreed, saying they are not concerned “at all” with the sourcing of funds.

“It’s the notaries and the banks who put together the acts and check the funds. That is out of our responsibility,” she said. “We just connect people and find the right house and eventually a bank and a lawyer, if needed.”

The agent, talking about the sale of a house to the family of the youngest daughter of the Uzbek head of state, said that the sale was “so straightforward”, as “they had a permit and the money was here”. The property had been valued at $46 million.

Jean-Luc Ducret, a Geneva notary specialising in property, said that in application of federal law, notaries should investigate whether the buyer or his family have other properties in Switzerland, intends to live in the property, and has funds. However occasionally, “people are rather cunning to misinterpret the law without the notaries realising”.

Monfrini lamented that while financial intermediaries involved in real estate transactions are bound by know-your-client (KYC) rules, assuring checks on the source of money, penalties for not abiding by them are relatively minor.

Even if they have to pay between CHF100,000 and CHF1 million, this pales in comparison with the millions they pay for the property and fees related to the purchase. “Who cares about one million?” he said.

But the Geneva lawyer tempered his statements about the capacity for potentially shady property sales, saying that compared to other countries, including France, “known to be rather lenient to African heads of state”,

Switzerland may not be the easiest place for those interested in laundering money, given legal restrictions.

“Unlike in the past, Monfrini believes PEPs have taken to laundering more of their funds in their own countries, as in Tunisia, where the family of deposed president Zine el-Abidine Ben Ali forced locals to sell properties and businesses to them at low prices.

When it comes to non-residents hiding assets - including property - for tax evasion, Monfrini said that with “the growing capacities of foreign countries to request the help of Switzerland to [reveal] bank accounts to those foreign authorities”, payments can then easily be tracked to property purchases.

“Safe bet”

The notary, Ducret, said that according to current negotiations between Switzerland and France on the exchange of financial information, French authorities should, in the future, be able to ask cantonal authorities if a French citizen is the owner of property.

However, Geneva’s cantonal government doesn’t see the situation changing yet.

Roland Godel, spokesman at the canton’s finance department, wrote in an email to, “Foreign residents owning property in Geneva, are only taxed (locally) on their property…. Recent developments which have been introduced to fight tax fraud have not impacted these obligations”.

Meanwhile, Christies’ Wrang-Widen said the often high sales prices of Swiss property could be justified, even if the way they are calculated is at times opaque and nebulous.

While some short-term adjustment, or “plateauing” is expected in prices, he believed, “in the long term, Switzerland is a safe bet – one of the safest bets people can make”.

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