LONDON (REUTERS) – The war in Ukraine is making it hard for even unsanctioned Russians to sell exclusive residential property in Britain, adding to a shortage of supply that has helped drive up house prices in prime locations, real estate sources say.
Russian oligarchs, Middle Eastern oil barons and billionaire Chinese entrepreneurs have been on a spending spree on London real estate over the past three decades, snapping up trophy homes and high-end commercial property.
But the four-month-old invasion of Ukraine, which Russia calls a special military operation, has prompted Britain to slap sanctions on more than 1,100 Russians it says have ties to the Kremlin, spreading unease and freezing house sales in so-called Londongrad, agents say.
“There have definitely been a number of transactions that have not gone through, two in excess of 40 million pounds (S$68 million),” said Mr Charlie Willis, CEO of property broker The London Broker, adding that in both cases, the buyers were advised not to proceed “just because the seller was originally Russian”.
He declined to give further details.
The big squeeze
A widespread shortage of available properties has pushed up prime London prices by 4.7 per cent since the invasion, according to agents Benham & Reeves, although prices in Belgravia and Knightsbridge – popular locations for Russians – have climbed slightly less, at 3.3 per cent.
“The market’s being fuelled by a lack of supply,” said Mr Geoff Garrett, director at mortgage broker Henry Dannell.
The number of prime central London residential sales was down 30 per cent between March and May compared with last year, though still up on pre-pandemic levels, according to property data firm LonRes.
Estate agent Aston Chase estimates there are over 150,000 Russians living in London who between them own eight billion pounds of real estate assets, businesses, and other investments in Britain.
But Mr Mark Pollack, Aston Chase’s co-founder, says wealthy Russians are increasingly cautious about being caught up in the web of sanctions.
“Russians aren’t buying (in the same way) and they are not selling, not necessarily because they don’t want to in some instances, but because they probably can’t or it might be sensible to hope the… dust settles,” he said.
Britain in February scrapped its so-called “golden visas” for wealthy investors and last month announced plans for a new economic crime Bill, intended in part to identify the owners of property in Britain and combat illicit finance, although critics say loopholes remain.
Mr Henry Sherwood, managing director of The Buying Agents, which focuses on properties starting at around five million pounds, said the crack down had helped dash hopes the war and sanctions might lead to a flurry of cut-price Russian sales.
At the beginning of the war, “we had people ringing up saying: ‘Have you got any Russians selling?’,” he said.
But he added: “The more discreet don’t want to have anything to do with them. Our buyers don’t want to be associated with firesales – they don’t want to get into a transaction that will never happen.”
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