House prices

London luxury property prices rise as Russians lock down

LONDON, June 28 (Reuters) – The war in Ukraine is making it difficult for even unauthorized Russians to sell exclusive residential properties in Britain, adding to a supply shortage that has helped drive up property prices. housing in prime locations, according to real estate sources.

Over the past three decades, Russian oligarchs, Middle Eastern oil barons and billionaire Chinese entrepreneurs have been spending on real estate in London, snapping up trophy homes and high-end commercial properties. .

But the four-month-old invasion of Ukraine, which Russia calls a special military operation, has prompted Britain to impose sanctions on more than 1,100 Russians it says have links to the Kremlin. , causing unease and freezing home sales in what is known as Londongrad, agents say.

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“There have certainly been a number of deals that have not gone through, including two over £40m ($49m),” said Charlie Willis, CEO of property brokerage The London Broker, adding that in both cases, the buyers had been informed. not to continue “just because the seller was originally Russian”. He declined to give further details.

THE GREAT PRESSURE

A widespread shortage of available properties has pushed prime prices in London up 4.7% since the invasion, agents Benham & Reeves say, although prices in Belgravia and Knightsbridge – popular places for Russians – have increased slightly less, to 3.3%.

“The market is fueled by a lack of supply,” said Geoff Garrett, director of mortgage broker Henry Dannell.

The number of prime residential sales in central London fell by 30% between March and May compared to last year, although it is still up from pre-pandemic levels, according to the real estate data company LonRes.

Estate agent Aston Chase estimates that there are more than 150,000 Russians living in London who alone own eight billion pounds of property assets, businesses and other investments in Britain.

But Mark Pollack, co-founder of Aston Chase, says wealthy Russians are increasingly wary of getting caught up in the sanctions web.

“Russians don’t buy (in the same way) and they don’t sell, not necessarily because they don’t want to in some cases, but because they probably can’t or it might make sense to hope the…dust settles,” he said.

In February, Britain 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 owners of property in Britain and to tackle illicit funding, although critics say loopholes remain.

Henry Sherwood, chief executive of The Buying Agents, which focuses on properties from around five million pounds, said the crackdown had helped dash hopes that war and sanctions could lead to a wave of sales Russians at reduced prices.

At the start of the war, “we had people calling and saying, ‘Do you have any Russians selling?'” he said.

But he added: “The quiet ones don’t want anything to do with them. Our buyers don’t want to be associated with clearance sales – they don’t want to get into a deal that will never happen.”

An unauthorized Russian failed to secure three lawyers before securing one loan to help him sell an expensive property in London, a senior executive at a property development firm on the other told Reuters side of the deal.

Russian tenants, including students, are also struggling to transfer funds due to sanctions, forcing them out of the market in London, said Marc von Grundherr, director of Benham & Reeves.

Unprecedented Western sanctions against Moscow, the withdrawal of dozens of Western companies from Russia and the pressure on London consultancies to cut ties with Russian clients have pushed some Russian buyers to more property hotspots. friendly places such as Dubai or Istanbul. Read more

A Russian client, Pollack said, had backed out of buying an £18million flat in London when Russian tanks rolled into Ukraine in February because they were nervous about political rhetoric in Britain. They still want a house in London, but have cut their budget in half, he said.

But buyers from other areas are helping to keep the London market buoyant.

International buyers accounted for at least a third of property purchases in prime central London locations in every quarter between 2011 and 2019, according to data from Statista.

Vic Chhabria, managing director of agent London Real Estate Office, which specializes in new builds as well as condominiums and luxury homes, said his agenda was full, with the greatest interest from buyers from Singapore, Hong Kong and Mumbai willing to spend between £2m and £20m.

A protracted war, tighter regulation, rising interest rates, runaway inflation and sharp stock market declines could further dampen some of that growth, officials added.

“The real estate market has been flying over the past two to three years,” Garrett said. “All of these cycles need to slow down.”

($1 = 0.8164 pounds)

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Editing by Mark Potter

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