The new money rescuing London's property market from Russian retreat
Matt Oliver
6 min read
Mayfair Gucci mansion Grafton Street chinese real estate london luxury property - Beauchamp Estates/Tom St. Aubyn Photography
As Britain’s authorities cracked down on Russian oligarchs’ assets and influence, the picture for estate agents who long furnished them with luxurious London pads may at first have seemed bleak.
But those clutching their pearls for the capital’s realtors can rest easy, for they have been saved by a new favourite clientele: the Chinese investor.
Property hunters from Hong Kong and China’s mainland have been filling the void as far more circumspection is applied to Russian money, swooping on prime central London.
“Russian money is pretty much yesterday,” says Beauchamp Estates’ Paul Finch. The number of new Russian buyers has tumbled over the past four or five years, with scrutiny having increased gradually after the Skripal poisonings and then massively after the invasion of Ukraine.
“The Chinese have definitely taken up the slack. They have been quite prolific, especially the Hong Kong Chinese, in buying up properties in London,” he adds.
“They want trophies. And with that you get all the bells and whistles – the amenities and the facilities.”
In 2021, all of the city’s top five super-prime property deals – or those worth £20million or more – involved Chinese billionaires, according to research by Beauchamp.
That was ahead of Russians, Americans, Britons and Africans, who made up the rest of the list.
As ever, one of London’s big draws is its private schools and cultural offering.
Deals in recent years have concerned some of the capital’s most prestigious properties.
In 2020, Cheung Chung-kiu, a Hong Kong property magnate who also owns the “Cheesegrater” skyscraper, snapped up 2-8a Rutland Gate, the Knightsbridge mansion overlooking Hyde Park. It cost more than £200m – making it the most expensive property ever sold in the UK.
With 45 bedrooms, the 1830s building was previously owned by Sultan bin Abdul-Aziz, the former Crown Prince of Saudi Arabia, and has also been home to Rafic Hariri, the businessman and former Lebanese prime minister.
Cheung has since been granted planning permission for extensive demolition and renovation works that will rework the eight-floor palace into a vast new home potentially worth £500m.
Elsewhere, Wang Jianlin, the founder of real estate, finance and movie theatre giant Dalian Wanda Group – whose fortune is estimated at £10bn – forked out £80m for a Grade II-listed home in Kensington Palace Gardens. It has been dubbed London’s most desirable street, just down the road from Russian oligarch Roman Abramovich.
The ten-bedroom Victorian home was previously occupied by Ukraine-born businessman Sir Leonard Blavatnik and was leased by the Crown Estate.
Meanwhile, an unnamed Hong Kong tycoon splashed out £65m on a penthouse apartment in Belgravia just days after Boris Johnson’s 2019 election victory. The six-bedroom property spanned two floors and delivered a reported £10m in stamp duty receipts to the Exchequer.
Trevor Abrahmsohn, an agent who specialises in properties on The Bishops Avenue in Hampstead – London’s “billionaire’s row” – says most high-end Chinese buyers like “off the shelf” properties that do not need much work.
They also tend to be less security-conscious than their Russian counterparts and come with huge entourages who do much of the work for them, making the process far longer.
“There are often a myriad of intermediaries,” he says, “so you're talking to them, not to the principal, and decision making is quite drawn-out.
“With many Eastern European buyers, they see it, they like it, they buy it. But the Chinese cogitate, they discuss – it is a process.”
Grafton Street Gucci mansion real estate Russia China property London luxury - Beauchamp Estates/Tom St. Aubyn Photography
One property that currently has several Chinese buyers aflutter is a Mayfair pile in Grafton Street dubbed the “Gucci mansion”, which previously served as the headquarters of the luxury Italian fashion brand.
On the market for £55m, the eight-bedroom, seven-floor home – which has a sauna, steam room, indoor swimming pool, gym, cinema and four security vaults – is where Gucci designer Tom Ford entertained the likes of Vogue editor Anna Wintour and French billionaire Francois Pinault.
Before that, while owned by Lord Brougham, the property’s high-ceiling state rooms played host to Queen Victoria and the Duke of Wellington.
So far, it has attracted interest from several ultra-high net worth Chinese house hunters, according to Beauchamp, which is acting for the seller.
Finch says his company deals with buyers of every nationality but that the Chinese now generate up to one quarter of super prime deals.
“The Chinese are very important to us and have been a good proportion of the super prime business that we’ve done,” he adds.
Frostier relations between London and Beijing seem to have had little impact, he says, but in the past year deals have been artificially suppressed by China’s “zero Covid” lockdown policies, meaning many would-be buyers “can’t get here”.
Finch is bullish about the market’s prospects going forwards, pointing to the sheer number of billionaires being churned out each year by the Middle Kingdom as evidence there will be no shortage of buyers.
While America retains the largest number of billionaires, at 735, up by 11 in 2021, China was second with 607, according to Forbes. The country’s list included 60 newcomers, including a host of technology tycoons such as Miranda Qu, the boss of Shanghai-based e-commerce company Xiaohongshu (“Little Red Book”).
Chinese citizens have become the biggest users of the UK’s “golden visa” scheme, which allows investors to pay £2m in exchange for at least three years of residency and later a path to citizenship. Applicants from China have received 33pc of the so-called tier 1 visas issued since the scheme was launched in 2008, ahead of the 19pc issued to Russians.
According to Transparency International, a total of 1,624 visas have been issued to Chinese applicants and a further 2,623 to their dependents such as family members.
Yet as Russian buyers recede with sanctions and anti-corruption investigators on their tail, there are inevitable questions over whether Chinese money may also come back to bite.
With so much dirty cash thought to have washed through London, the capital has already earned the unenviable nickname “Londongrad” for its seeming ability to look the other way.
In China, several well-known figures have been jailed in recent years for corruption. In 2020, real estate magnate Ren Zhiqiang was put behind bars for 18 years on charges of bribery and embezzlement of public funds – although some claim an anti-corruption drive under Chinese President Xi Jinping is simply a smokescreen for silencing opponents.
Campaigners say the political realities in China should give estate agents some pause for thought. The heads of MI5 and the FBI recently warned that due to the Communist Party’s pervasive influence, it is sometimes impossible to distinguish between the state and the private sector.
Rachel Davies Teka, advocacy director at Transparency International, says: "While investment from Russia has received significant attention, this should not distract from the money laundering risk posed by funds from countries where corruption is commonplace, like China.
"Businesses should be on high alert when dealing with wealthy clients from places where bribery and abuse of power are rife, and report any suspicious activity to the National Crime Agency."
