Sanctions on Russia unlikely to impact central London property prices argues specialist property investor

29th April 2014

The ramping up of sanctions on Russians by the West should have a very limited impact on Central London property prices as they make up just 2% of purchases and very few are of a size to involve oligarchs says Naomi Heaton chief executive of the London Central Portfolio Ltd.

Heaton says that as Russia feels the impact of further economic sanctions, London’s army of estate agent cannot seem to agree on the knock-on effect for Prime London residential property.

She says: “One camp can barely hold their caviar trays steady, dreading an asset freeze that will see the market tumble. Whilst the other camp is toasting their vodka, proclaiming that sanction fears will accelerate the stream of Russian property investors. The truth is, however, that either outcome will barely be noticed.

“Given the increasing trend to globalisation and Central London’s status as a cultural, educational and financial epicentre, it will come as no surprise that demand for real estate is dominated by foreign buyers”. LCP says they represent 83% of the market. “However, London’s metamorphosis into ‘Moscow-upon-Thames’ is greatly exaggerated. It is reported that Russians represent just 2% of all buyers. HM Land Registry recorded just 242 property sales over £5m in 2013, of which only 51 were over £10m – the sector most usually associated with the Oligarchs.”

“Half of the private purchases in PCL are in the booming private rented sector, prized by investors worldwide. As crises such as the Eurozone meltdown, Parisian Taxes and Arab Spring have driven the global high net worth community towards London, Russian domination of London is no more than a Putin pipedream.”

She says it is the Far Eastern buyer who has always been the major player in the London property market. “They are sophisticated buy-to-let investors who fulfil a socioeconomic role, unlike lock-up-and-leave Russian buyers. Far Eastern investors make up 43% of LCP’s clients.  In the past few years, more and more have taken advantage of beneficial exchange rates and sought the safety and security of Prime London real estate. As rampant speculation has resulted in massive tax hikes in local markets (such as Singapore and Hong Kong) Asian buyers are coming over to London in even greater droves”.

“With the mainland Chinese locked out of these closer-to-home markets, all eyes are turning to London. 15% of Chinese students now come over to the UK and with 3 of the top 10 world universities situated in London, its reputation for a top drawer education has resulted in a matching appetite for a top drawer property. Last year, well before the annex of Crimea, China overtook Russia as the country granted the most tier one investor visas in the UK, with the highest number issued to a single nationality in one year.”

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