There is a joke in Moscow. Two men are walking down the street. On being paid
a compliment on his tie, one of them smiles, boasting it cost him £1,000.
“What a rip-off,” his companion scoffs. “Mine cost £3,000.”
The joke has reached London. Earlier this year, one Russian multi-millionaire
was so keen to secure a £20m villa in Kensington that he ended up bidding
against himself. He eventually secured the property, but the mix-up —
because although he was using a property finder, he also acted alone — meant
that he ended up paying £1m more than the asking price.
Such monetary one-upmanship among Russia’s super-rich has become relatively
common in the smarter parts of London. Increasingly, though, the wealthy are
taking to their helicopters and venturing to the home counties and beyond in
search of trophy properties.
A study by Knight Frank, one of the handful of top-end agencies that has
tailored its services to cater for Russian clients, estimates they now own
as much as £2.2 billion worth of property in London and the home counties —
up from a mere £93m in 2000.
Liam Bailey, the agency’s head of residential research, estimates Russians
have bought more than 240 £1m-plus properties in the capital since January.
Indeed, the massive spending power of the novi Russki has been a driving
force behind the 25% rise in prices in the few squares miles of what estate
agents call “prime central London” since January.
Gary Hersham, managing director of Beauchamp Estates in Mayfair, sold his
first property to a Russian buyer nearly 15 years ago. This year, he has
sold more than a dozen flats and trophy houses priced from £1m to £20m to
Russians — among them, a five-bed penthouse in The Knightsbridge. The buyer
paid almost £1m over the asking price of £15m to secure the property,
exchanging within five days in May, making it the most expensive flat to
change hands in the capital.
“It is about the perception of reality,” says Hersham. “To them, to buy a
helicopter, a Picasso, or a million-pound house is no longer a question of
price, but a question of want. I have just sold an £8.5m property to a young
Russian woman. She chooses her handbags, she chooses her clothes, and she
chooses her flat. It is just an accessory.”
Many of the top-end agencies began taking on Russian-speaking negotiators five
years ago. Their role is to tap the estimated 1,000 or so Russian
millionaires who already own property in the capital but are keen to add
another flat or a seven-bed house with triple garage to their portfolio.
Russia was one of four countries, along with South Korea, India and South
Africa, to see the sharpest rise in high net-worth individuals, according to
the annual World Wealth Report published in June by Merrill Lynch and Cap
Gemini. And last month, Savills, another upmarket agency, announced a
partnership agreement with Intermark, a British-owned estate agency in
Moscow.
“They operate in a different way from other buyers,” says Lulu Egerton, head
of the Chelsea office of Lane Fox. “They always seem to turn up for viewings
in groups of four, so you are never really sure which is the one doing the
buying. They are all well-dressed and never haggle. They move in groups.”
The role model is, of course, Roman Abramovich. Over the past 20 months, the
Chelsea boss has spent almost £50m on four houses in Belgravia and four
luxury flats in Lowndes Square, Knightsbridge. He has just put down a
deposit for a flat at Bridges Wharf, a new development next to Battersea
heliport, and also owns an £18m, 420-acre estate, Fyning Hill, in West
Sussex.
Like Abramovich, many of the oligarchs are looking beyond London. Earlier this
year, for example, another unnamed Russian reportedly made a bid for Updown
Court, a £70m marble mansion in Surrey, the most expensive property for sale
in Britain. The deal fell through — although not, apparently, due to a lack
of finance.
Agents have also been noticing growing numbers of buyers of more modest means
— modest by Russian standards, that is. “It is no longer about public trophy
buyers,” says Daisy Horwell of Strutt & Parker, one of the latest
Russian speakers to be employed by a central London estate agency. “They
love St George’s Hill in Surrey,” she says. “But two months ago, I also had
business with a couple of Russians who live in Tunbridge Wells.”
Knight Frank estimates that Russians bought a mere 11 properties outside
London in 2005; this year they have snapped up 73 properties, mainly in the
gilded enclaves of Esher, Surrey, and Ascot, Berkshire.
“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,” says Rupert Sweeting, a partner in Knight
Frank’s country department.
Sweeting, too, has seen a significant increase in the number of Russians
looking outside London. When a £12m house in Ascot came on the market in
June, half the 22 viewings were by Russians, he says. When another house in
Berkshire was marketed at £8m, 34% of viewers were Russian.
“Twenty years ago, we might have seen one a year,” he says. “Now it is almost
one or two a week. You meet them at Battersea, or a helipad in the country,
and visit four or five houses a day. They want something immaculate but not
olde-worlde.”
Even Scotland is coming within their sights. Last autumn, for example,
Vladimir Lisin, one of Russia’s wealthiest men, paid £6.8m for 16th-century
Aberuchill castle and 3,300 acres in Perthshire.
“It is the first year we have dealt with Russians,” says Jamie McNab, a
director in Savills’ Edinburgh office. “They are looking at castles, mansion
houses and shooting estates. We are looking on behalf of one Russian who
wants to move his family and business up here. He is seriously cool and has
pots of money.” Given the weather back home, he may even find the Scottish
climate positively balmy.
Once they have bought their trophy houses, of course, the Russians need to
furnish them — which means lucrative business for London’s auction houses.
Mark Poltimore, UK chairman of Sotheby’s auctioneers, says they tend to buy
good English country furniture, silver, porcelain and books.
“They turned up at the recent sale of contents of Shrubland Park, in Suffolk,
a 40-bedroom stately home that used to belong to the de Saumarez family,” he
says. “The guide price for the total sale was £2m-£3m — it made £4.5m, much
of which was down to Russian buying power.”
Poltimore, for one, is not complaining. “If the Russians turn up, you can add
a nought to the price of things,” he says.
