Property boom fuelled by exiles could force locals out

Letter from Armenia: Property developers need not despair

Letter from Armenia:Property developers need not despair. Here in Yerevan, capital of this small, landlocked former Soviet republic in the southern Caucasus, the bulldozers and cranes are working away, the builders seemingly oblivious to credit crunches and bursting property bubbles, writes  Kieran Cooke.

Streets of houses are being torn down, replaced with long esplanades of apartment blocks. Whole sections of the old city have disappeared.

Armine, dressed in high heels, figure-hugging red jeans and a denim top with the message "Look at Me, Twice" etched across it, does not look like a property mogul.

Four years ago when I was last in Armenia, Armine - who speaks five languages, has a master's degree in engineering and is an expert on the cello - was a teacher and part-time translator.

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She was fiercely proud of being Armenian, describing the great achievements of her people - the financiers, the artists, the composers and the traders - who have spread around the world, some of them accumulating vast wealth in the process.

Back then Armine talked of a glowing future for Armenia and had dreams of starting a children's music school.

Those dreams are now gone. Armine has bought and sold homes four times in the last two years. Each time, she says, she has doubled her money.

"How do you say," she asks, "if you cannot beat them, join them?" Oligarchs and gangsters run Armenia now, she says.

Meanwhile, anything of any value - the power industry, the telephone system, the railways - has been privatised and sold off to the Russians.

Armine says she tried to start a school but bribery and corruption led to expenses she could not afford.

We sit in a small booth, drinking strong, grainy coffee. A babushka dressed in a white smock serves us lahmadjo - the local flat pancakes filled with spicy meat paste.

The population of Armenia is just over three million but there are an estimated eight million Armenians in a diaspora spread round the globe.

In most of the world's major cities there is a thriving Armenian community. It is this diaspora that is now fuelling the property boom in Yerevan, says Armine.

It started some years ago when the influential Armenian community in Beirut began leaving the war-torn city. Then flats in Yerevan were purchased by Armenians coming from Aleppo and elsewhere in Syria.

Now members of the Armenian community in Iran, just over Armenia's southern border, are buying up property.

"It is like an insurance policy," says Armine. "If for example there is trouble in Iran, then the Armenians know they will have a place here. Yet the diaspora buys but doesn't stay, she says.

"They might visit occasionally but then they become frustrated with life here and return to their exile. Meanwhile, locals find they can no longer afford to live here.

"They will also leave - it's strange but some day soon Yerevan could become a ghost city."

Armenia has a long and complex history. Under its patron saint, Gregory the Illuminator, the country became the world's first officially Christian state in 301 AD.

At one time the territory and influence of Armenia's kings and emperors stretched from the Mediterranean in the west, to the Black Sea in the north to the Caspian in the east.

In the early years of the 20th century, under rule by the Ottoman Turks, Armenians say at least 1½ million of their people were driven from their lands and killed.

Turkey, which denies it indulged in any systematic slaughter of the Armenians, is still an enemy, the border between the two countries closed.

To the east is Azerbaijan. In the early 1990s, following the break-up of the Soviet Union, thousands were killed in fighting between Armenian and Azerbaijani troops over the disputed territory of Nagorno Karabagh.

A ceasefire is in force but fighting still breaks out and the border has remained firmly closed. Annual per capita income in Armenia is only $700 and few jobs are available. More and more have been leaving the country.

We go south of Yerevan to see, close up, the snow-covered summit of Mount Ararat. The 5,160-metre mountain, where Noah and his ark are said to have come to rest after the flood, is an important symbol to all Armenians, an image that hangs in restaurants in Los Angeles, in the offices of millionaire bankers in London and in the warehouses of traders in Singapore.

Ararat is etched against a cloudless, blue, winter sky. Locals say it is like a bride with a white veil.

Yet though the mountain seems so close, people cannot visit. Mount Ararat is across the border in Turkey. The only consolation, say the locals, is that the view is far superior from the Armenian side.

And, even in this special place, there is more evidence of the property boom. One of Armenia's leading oligarchs - it is said he made his initial fortune through winning the unofficial title of world arm-wrestling champion in a Las Vegas casino - runs one of the country's biggest cement plants in the valley below Mount Ararat.

A long plume of yellow smoke shrouds the countryside, fumes fill the air. The cement goes off to Yerevan, to build yet more apartments.

Armine says, a little sadly, that all she thinks of these days is becoming rich. "Then I also will leave" she says. "There is no future in this country."