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Rising London luxury property prices as Russians lockdown

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A general view of the London skyline is seen from Canary Wharf in London, Britain, October 19, 2016. REUTERS/Hannah McKay

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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 prices for houses in prime locations. say real estate sources.

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

But the four-month 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, sparking unrest and freezing the sale of houses in the so-called Londongrad. agents say.

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“There have definitely been a number of transactions that haven’t gone through, two for over 40 million pounds ($49 million),” said Charlie Willis, managing director of real-estate brokerage The London Broker, adding that in both cases buyers were told not to proceed “just because the seller was originally Russian”. He declined to give more details.

THE BIG SQUEEZE

A widespread shortage of available property has pushed luxury prices in London up 4.7% since the invasion, according to agents Benham & Reeves, although prices in Belgravia and Knightsbridge – popular locations for Russians – have risen slightly less. , 3.3%.

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

The number of prime residential sales in central London was down 30% between March and May compared to last year, though still above pre-pandemic levels, according to property data firm LonRes.

Estate agent Aston Chase estimates that there are more than 150,000 Russians living in London who between them own £8bn in real estate, business and other investments in Britain.

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

“The Russians are not buying (in the same way) and they are not selling, not necessarily because they don’t want to in some cases, but because they probably can’t or it would be sensible to expect the…dust to settle,” he said.

Britain scrapped its so-called “golden visas” for wealthy investors in February and last month announced plans for a new economic crimes bill, aimed in part at identifying property owners in Britain and combating illicit finance, though critics say loopholes remain.

Henry Sherwood, managing director of The Buying Agents, which focuses on properties starting at around £5m, said the crackdown had helped dash hopes that the war and sanctions could lead to a flurry of Russian sales. at a reduced price.

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

But he added: “The more discreet ones don’t want anything to do with them. Our buyers don’t want to be associated with forced sales, they don’t want to get into a transaction that will never happen.”

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

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

Unprecedented Western sanctions on Moscow, Russia’s withdrawal of dozens of Western companies and pressure on London advisory firms to cut ties with Russian clients have driven some Russian buyers to friendlier property hotspots, Like Dubai or Istanbul. read more

A Russian client, Pollack said, had backed out of an £18m London apartment purchase 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 regions are helping to keep the London market rising.

International buyers have 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 London Real Estate Office, which specializes in new builds as well as high-rise condominiums and luxury homes, said his appointment schedule was full, with the biggest interest from buyers in Singapore. , Hong Kong and Mumbai willing to spend between two and 20 million pounds.

A protracted war, tighter regulation, rising interest rates, runaway inflation and brutal stock market crashes could still eat into some of that growth, the brokers added.

“The real estate market has been soaring over the course of the last two or three years,” Garrett said. “All these cycles have to slow down.”

($1 = 0.8164 pounds)

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Edited by Mark Potter

Our standards: the Thomson Reuters Trust Principles.

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