Sanctions on Russian oligarchs push up premium property prices

“LONDONGRAD” sanctions are pushing up high-end property prices in the capital, as the war in Ukraine makes it hard for even unsanctioned Russians to sell exclusive residential property.

Russian oligarchs, Middle East oil barons and billionaire Chinese entrepreneurs have mounted a spending spree on London real estate over the past three decades, snapping up trophy homes and commercial property.

However, the invasion of Ukraine last February prompted UK sanctions on more than 1,100 Russians, whom it says have ties to the Kremlin, and has spread unease and frozen sales in so-called “Londongrad”, estate agents claim.

Charlie Willis, chief executive of The London Broker, said: “There have definitely been a number of transactions that have not gone through, two in excess of £40million.” He said in both cases, buyers were advised to pull out as “the seller was originally Russian”.

A widespread shortage of available properties has pushed up prime London prices by 4.7 per cent since the invasion, according to agents Benham and Reeves, but prices in Belgravia and Knightsbridge – popular with Russians – have climbed less, by 3.3 per cent.

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

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 prepandemic levels, according to property data firm Lonres.

The estate agent Aston Chase estimated that there are more than 150,000 Russians living in London who collectively own £8billion in property assets, businesses and investments in Britain.

Mark Pollack, Aston Chase’s cofounder, said Russians are cautious about being caught in the web of sanctions. He said: “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.”

In February, Britain scrapped its “golden visas” for wealthy investors and last month it announced plans for the Economic Crime Act, intended in part to identify the owners of property in the UK and combat illicit finance – although critics say loopholes remain.

Henry Sherwood, managing director of The Buying Agents, which focuses on properties starting at around £5million, said the crackdown had helped dash hopes that the 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.

However, he added: “The more discreet don’t want to have anything to do with them.”