Rich Russians turn London into Moscow on the Thames

Kim Hjelmgaard | USA TODAY

LONDON — Roman Grigorev and Dmitriy Zakirov have spent a lot of time driving around this city's posh neighborhoods in their vintage red Volga.

The Russian car was popular in the Soviet Union in the 1950s. Now, as it circles Kensington, Mayfair, Belgravia and other wealthy enclaves, it helps Grigorev, 33, and Zakirov, 39, publicize a service they describe as "reassuringly expensive."

LonGrad, the duo's real-estate consulting firm, advises some of Russia's wealthiest families, including some on Forbes' list of top billionaires, on how to buy homes in London's most enviable areas.

Like several elite cities around the world, London is a favored destination for foreign money to escape political or economic hazards at home.

"Russians have been purchasing some of the biggest and most expensive homes here since at least the early 1990s," said Grigorev, a tall, dapper Russian-speaking Estonian.

After the Soviet Union collapsed 24 years ago, many of Russia's state-owned industries were privatized, creating vast wealth for the lucky few.

"The biggest wave began in 2012, when more political instability in Russia started, and that also coincided with a worsening economy there," Grigorev said.

He estimates hundreds of Russian real-estate brokers are now in London, catering to Russia's super-rich and clients from former Soviet republics, such as Azerbaijan and Kazakhstan.

Russia's economy has wobbled as a result of U.S. and European Union sanctions over Moscow's support for rebels in eastern Ukraine. Dozens of Russian officials are now subject to travel bans and asset freezes in the West.

Yet the nation's extravagantly wealthy are still moving into inflated London real estate — a market accustomed in recent years to seeing annual double-digit percentage rises.

More than 20% of London homes with asking prices in excess of $15 million in the first half of 2014 were purchased by Russians, according to Knight Frank, a property agent. And in the first nine months of 2014, the number of Russians granted investor visas in Britain — which stipulate a minimum investment of about $3 million in British assets in return for residency — soared by nearly 70% to 162, according to data cited by the Financial Times.

"The glamour of London is a big attraction for Russians, but equally if not more important is the rule of law," said LonGrad's Zakirov, originally from Moscow. "Russians feel their assets will always be safe here."

Giles Hannah of Christie's International Real Estate said that over the past four or five years, there's been about $1 billion in residential sales in London to Russian families. "They bring staff, they create jobs, they use the best interior designers and architects — they create a kind of local economy when they buy in London," he said.



While Britain has always encouraged as much foreign investment as possible, there's a little more skepticism now about how valuable that is, said Daniel Bentley of the Institute for the Study of Civil Society.

"Yes, we want an open economy and investors — Russian, Chinese, Malaysians, Middle Easterners — to buy up property. That pushes up values," he said. "But for the vast majority of people in the United Kingdom, the benefits may be a bit nebulous because we have a huge problem with affordability."