With the crisis in the Ukraine boiling, the international community has committed itself to imposing sanctions on international investors with business ties in Russia and the Ukraine. However, this is having an unexpected effect in boosting the London housing market.
Top oligarchs in the Ukraine and Russia have moved their investments to buying property across London to hid their assets from international sanctions. Real estate agents and housing analysts have confirmed that an immense flow of capital from the Ukraine and Russian region has accelerated since the Ukraine crisis occurred. Savills, a real estate advisor group, has found that over £ 180 million has been spent on London real estate by Russian buyers
in just 2013. Most of the purchases are being done as corporate purchases. That way, under international laws and codes, the purchases are harder to process under major sanction regimes, such as states like the U.S. or international regimes.Sanctions have increased and are even specifically targeted against major Russian and Ukrainian oligarchs as the political crisis in the Ukraine has gotten worse over the last few months. The Ukraine crisis
is the result of complex geo-political events within the Ukraine and the reactions of Russia to the crisis. Countries like the U.K. and the U.S. have been quick to condemn Russia during the Ukrainian crisis and are now enforcing tough sanctions against wealthy individuals associated with President Putin and top Ukrainian and Russian oligarchs. However, as the trends show, those sanctions are forcing those investors and oligarchs to rush their money into the London real estate market. The London real estate market is seen as a great investment for global investors, so it makes sense that many Ukrainian and Russian investors are putting their money into the real estate of the city. Some purchases are being made on Bishops Avenue in Highgate, North London, which is often called “Billionaire’s Row”, others in the very fashionable Kensington & Chelsea Borough.
The U.K. government is doing what it can to stop these investments so that international regime sanctions can affect the Ukrainian and Russian oligarchs’ assets. Prime Minister David Cameron wants to reform the Land Registry, which is a public register that informs the public of property owners in the country. These reforms can help show who exactly is purchasing this real estate so international regimes can focus their sanctions on those particular assets. Many anti-corruption NGOs and non-profits are praising the Prime Minister’s proposal, but they argue that these reforms will not help to reveal real estate purchases done by offshore companies. Offshore companies are created by many wealthy investors and oligarchs to hide their money and their specific investment strategies. This allows the offshore companies to make investments that benefit the wealthy investors or oligarchs without having the money trail lead back to those investors or oligarchs.
As the crisis in the Ukraine continues, more oligarchs will manipulate and take advantage of international and U.K. taxing codes to invest in real estate around London. Although sanctions can have immense political power to affect dire situations, it seems the sanctions on the Ukraine and Russia are ending up benefiting the London real estate market.