Press Article

Russians in £2bn UK homebuying spree

AFTER the oligarchs, a new wave of Russian professionals and financiers has moved into the British property market, snapping up a portfolio worth more than £2.2 billion.

A study has revealed that wealthy Russians are spreading to the home counties and beyond, as a “second wave” of less ostentatious professionals, businessmen and nannies set up in Britain.

The clique of oligarchs are now a tiny — if exceptionally high spending — minority among the estimated 250,000 Russians who have made their home in Britain. They have been buying London homes priced at more than £6m at a faster rate than American investment bankers and Middle Eastern sheikhs.

Russians are also becoming a powerful force among foreign buyers on the next rung of the property ladder, buying more than 240 homes in London worth more than £1m in areas such as Kensington, Chelsea and Hampstead this year.

Uncertainty over Russia’s direction after President Putin steps down in 2008 is said to be providing a new spur for Russians thinking of heading for Britain.

One Russian has paid nearly £16m this year for a five-bedroom penthouse apartment in Knightsbridge, west London — thought to be the most expensive flat to change hands in the capital this year — while helicopter charter companies report shortages of aircraft and pilots caused by demand from Russian customers.

Russian buyers are attracted by Britain’s benevolent tax regime, personal security, luxurious shopping and nightlife and political stability, according to the estate agents dealing with them.

The quality of British public schools is a further attraction. Aliona Muchinskaya, a consultant who has lived in London since 1991 and has married an Englishman, said many other Russians see a long-term future for their families in the UK: “Russians admire British education — a lot of Russians want their children to integrate and find homes here.”

Rupert Sweeting, a partner in Knight Frank, the estate agency, which opened an office in Moscow two years ago, said: “With the May 2008 elections drawing closer in Russia and growing uncertainty as to who will take over from Vladimir Putin, more and more Russians are deciding to buy in the UK.”

Russians spent more than £93m on houses and flats in 2000, according to the Knight Frank study, rising to £396m in 2004. This year they have already spent £799m, making a total of £2.2 billion since 2000. This sum — roughly equivalent to the value of all the housing stock in Barrow-in-Furness, Cumbria, or Merthyr Tydfil, south Wales — significantly understates the scale of the Russian portfolio, as properties sold for less £1m are not counted.

According to Knight Frank, a fifth of all London properties that sold for more than £6m in the 12 months to July were bought by Russians — more than the combined total for American and Middle Eastern buyers.

By comparison, about 38% of properties over £6m were bought by British citizens and fewer than 15% by non-Russians from continental Europe. Estate agents attribute the 25% surge in prices for the best properties in the most desirable areas of central London this year partly to the Russian influx.

Roman Abramovich, the owner of Chelsea football club, is thought to have the largest property portfolio among the Russians — having spent nearly £50m in the past two years on four houses in Belgravia and four luxury flats in Knightsbridge.

He also owns Fyning Hill, an £18m estate in West Sussex.

His friend Oleg Deripaska, the aluminium tycoon — and the sixth richest man in Britain with a fortune of £4.4 billion — owns a £25m Regency house in Belgravia.

There are signs, too, that the wealthiest Russians are keen to explore beyond London and are buying houses in the home counties.

In 2000, only 22 houses priced at more than £1m were bought outside London by Russians, dropping to just 11 last year, whereas this year the figure is 73.

Last year Vladimir Lisin — a steel tycoon worth an estimated £6 billion who is a keen marksman and president of the Russian National Olympic Shooting Association — paid £6.8m for Aberuchill Castle, set in 3,300 acres in Perthshire.

Russians viewing property outside London often prefer to travel by helicopter. Richard Naylor of PremiAir, a helicopter charter firm based in Cambeley, Surrey, said: “We have more work than we know what to do with. We can’t recruit enough pilots and we don’t have enough helicopters.”

Muchinskaya maintains that many Russians dismiss Paris as being too “dowdy” and “villagey”. By contrast, she said: “London is bustling and busy, with its restaurants and nightclubs — they can hire Rolls-Royces and private jets here.”

She added that the Russians had now become an established part of London’s culture: “In the past, you had to go to Karl Marx’s grave in Highgate cemetery to be sure of seeing a Russian but now you meet them everywhere. There are also increasing numbers of Russian tourists.”

Muchinskaya said that it is now easier for Russians to obtain visas, making for growing numbers of Russian holidaymakers in London and more fans travelling to support Russian football teams such as CSKA Moscow, which held Arsenal to a draw at the Emirates stadium earlier this month.