IN THE FANTASY world of multimillion-pound property deals the Russians are the new Fifth Cavalry. This year, as the pool of takeover millionaires was drying up and big-hitting bankers started to disappear through their balance sheets, in rode the Russians with a fistful of newly converted dollars.

It is not the first time they have appeared on the London property scene, but it is the first time they have paid such huge prices. The early post-glasnost pioneers bought unassuming flats and houses, typically for less than £500,000. In 2002 they have joined the big league.

The most spectacular Russian buy of the year was Stanley House, an elegant period property, just off the King’s Road in Chelsea. Its drawing room is decorated with a frieze of the Elgin Marbles, but the rest of the house is still in need of some finishing. That did not stop Hamptons from selling it for £10 million.

If that was the biggest buy, Boris Berezovsky was the biggest buyer. The Russian tycoon, who bankrolled Boris Yeltsin’s election campaign, bought one of the most impressive flats in Belgravia, kitted out to a James Bond specification, and also picked up a mansion in the Surrey stockbroker belt. Several multimillion-pound flats have gone to Russian buyers, who prefer modern, lateral space to tall, thin London townhouses. It is a Russian who tops the list of potential buyers for one of the country’s most expensive houses in Eaton Square.

There have been 15 sales at more than £8 million in London this year. One reason for the buoyancy is the return of the Middle East market. Arabs have been sellers, rather than buyers, of expensive properties in recent years, but 2002 marked a resurgence in spending.

It is mainly the third generation of oil-wealthy Middle Eastern families who have been in the market for UK homes. The most expensive private sale in the country this year, of a 13-bedroom house in Chesham Place, Belgravia, is believed to have gone to an Arab buyer.

Despite its size and its £19 million sales price, the property is a discreet, white stucco Belgravia house. That is entirely in keeping with the mood the current political climate demands. Another major Arab purchase this year was of a second-floor flat in Eaton Square, bought for £10 million from the Candy Brothers. This pair of young brothers has had phenomenal success in placing high-tech, high-gloss properties with buyers from the Middle East and Russia.

Some of the properties more traditionally associated with Arab purchasers have not been so successful. The two most expensive properties ever to come up for sale in the UK are a spectacular Eastern-style mansion, complete with prayer room, hairdressing salon and full Turkish bath in Kensington Palace Gardens, priced at £80 million, and an unfinished modern version of the same, near Windlesham in Surrey, priced at £70 million. No 18/19 KPG, as it is called in the trade, still awaits a buyer. Updown Court in Surrey, famous for its five swimming pools and not so famous for its road noise, was eventually sold by agents acting for the receivers at the rather undignified knock-down price of £13 million.

It has been a tough year in the regal neighbourhood of Kensington Palace Gardens, which is owned by the Crown Estate. Several embassies — most notably the Dutch — have moved elsewhere, and the properties they are leaving behind are struggling to find takers. The combination of high prices and short leases is proving increasingly unattractive in a world where freehold houses are becoming the norm.

One set of people who would be more than happy to stay in the ambassadorial road are Prince and Princess Michael of Kent. This year we learnt that they were paying £69-a-week rent for their five-bedroomed, grace and favour home in neighbouring Kensington Palace — the same as the rent paid by the average Bristol University student for digs in Clifton.

Celebrities from across the world have been helping the British property market boom, from Madonna in Wiltshire to Claudia Schiffer in Suffolk. (As a German, Schiffer is doing her bit for the market in Germany’s favourite second-home destination, Majorca, building a second property on a hill above her existing one.)

It was the celebrity belt of South Kensington that hit the headlines this year, when the singer George Michael put his house in Gilston Road up for sale for £8.25 million. For its size the house was the most expensive in the country, working out at just under £2,000 per square foot, a calculation which a judge ruled this week was the true measure of a property’s value.

Michael had owned the white stucco house for less than a year, having bought it in 2001 from the one-time media mogul Chris Evans for £7.25 million. Evans had bought it only a few months earlier for £6.7 million. In just over a year its value had supposedly risen by £1.55 million, or 22 per cent, keeping it roughly on a par with the Nationwide house price index. It has yet to find a buyer.

That is also the case with some of the most expensive houses up for sale in the country. Harewood House, a mansion on the edge of Windsor Great Park, near Ascot, with 12 bedroom suites, six reception rooms and a helicopter pad, came on the market this year at £27 million. It has been joined by an even larger neighbour, Fernhill Park, an Arab-owned mansion with 26 bedrooms and 11 cottages in 214 acres, priced at an eye-watering £48 million. Houses of this scale rarely sell quickly, unless they have that special rarity factor. The one property which definitely had that was Encombe in Dorset, set in a green bowl of 1,000 acres, with its own stretch of coastline. Charlie McVeigh III, European chairman of Schroder Salomon Smith Barney, snapped that up for £15 million.

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