Crises spoil Chinese, Russian appetite for luxury London property

Thu Feb 4, 2016 8:15am EST
 
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By Costas Pitas and Ana Nicolaci da Costa

LONDON (Reuters) - Crises at home and turmoil on world markets may have taken the shine off London's luxury property market for Chinese, Russian and Middle Eastern investors: some are even looking to sell up.

From Russian oligarchs and Middle Eastern oil barons to newly-minted Chinese entrepreneurs, foreign buyers have driven a spending spree on London property over the past two decades, snapping up everything from opulent homes to iconic commercial property.

London is not alone. Wealthy overseas buyers have been investing in other cosmopolitan cities such as Sydney and New York, where property purchases are also viewed as a prestigious insurance policy against changes of fortune.

But oil has lost nearly two thirds of its value since mid 2014, the Russian rouble has more than halved and Chinese growth is slowing. The scale of this wealth destruction combined with property tax rises in London has prompted investors to pause, estate agents said.

"There's definitely been less (interest) ... over the last six months or so with the oil price and currency issues for the Russians," said Ed Mead, executive director of Douglas & Gordon estate agents which sells some of London's most expensive homes.

"If people have bought a property here, which a lot of Chinese people have done over the last few years, we are definitely seeing more of them coming to us, saying look can you sell it for me."

Data from estate agents and property consultancies shows there has been a fall in transactions in some of the most expensive areas of central London, a decline in asking prices and fewer Russian, Chinese and Middle Eastern buyers.

Around 4 percent of prime London property buyers were Chinese in the first half of 2015 but that fell to 3 percent during the second half, according to data from property firm Savills.   Continued...

 
The development of One Hyde Park is seen London, May 2, 2014. Crises at home and turmoil on world markets may have taken the shine off London's luxuru property market for Chinese, Russian and Middle Eastern investors, some are even looking to sell up.   REUTERS/Paul Hackett