Russia blazed a trail for Chinese oligarchs to nab London property

You can’t move in London for Russian oligarchs these days. The city is a haven for the rich and famous – or those trying to escape scrutiny. Its schools are good, it provides a stable investing environment, and according to those who monitor the flows of illicit money into the UK, the country’s anti-money laundering regime is so toothless that criminals can get away with buying their McMafia mansions here. London’s real estate market is broken, and illicit cash is the reason.
“The UK welcomed Russian money, and few questions – if any – were asked about the provenance of this considerable wealth,” claims the Intelligence and Security Committee of the UK parliament, whose long-awaited report on Russian influence in the UK was released yesterday. That was a mistake, the MPs on the committee say. It normalised Russian influence in the UK, and allowed those who had gained their money nefariously to launder it while gaining power and influence. It echoes former British spy Christopher Steele’s evidence to the committee, which claims Russia has been behind a “gradual and more subtle erosion of our norms and politics”.

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“The fact it’s been stated so clearly in a parliamentary report of such significance will, I think, have a very important impact going forward,” says Bill Browder, an anti-corruption campaigner who is the driving force behind the Magnitsky Act, a US law providing for financial sanctions against foreign government officials proven to have done wrong (he’s also a key driver of the UK’s 2018 amendment to money laundering legislation).
“The importance of this report is not to relitigate the past but to create proper defences for the future,” Browder adds. And for many, that means paying attention to where the high-value property market is going, not where it’s been.
Now that Russia has created a well-trodden path, China is marching in – and the UK can’t afford to be as complacent this time.“The spread of dirty money in the United Kingdom and the hiding of gains we’ve seen from Russia is not the only example of the UK being used to be a safe haven,” says Conservative MP Tom Tugendhat, chair of the Foreign Affairs Committee and China Research Group in parliament.
Until recently, Russians and Indians were the most avid buyers of prime London real estate. But recently they’ve been overtaken by buyers from elsewhere, according to London-based brokerage Beauchamp Estates.

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“Since the December 2019 general election, Hong Kong buyers have overtaken purchasers from Russia and India to become the largest group of overseas buyers investing in residential and commercial property in London,” says Jeremy Gee, managing director of Beauchamp Estates. Russian interests have declined since the mid-2010s, thanks to a doubling in cost in the golden investment visa into the UK, and the rise of unexplained wealth orders.
“The Russians we deal with go through stringent anti-money laundering measures and pass, but the concern was some of the money from others that made it to London was proceeds of crime,” he says.
Fifteen per cent of homes bought for more than £1 million by international buyers in prime central London are now bought by those from China or Hong Kong, which China recently subsumed into its control even more strongly than before. Go up to the really high end of London’s property market – those with an asking price of £10m or more – and one in every five are bought by Chinese buyers. In 2019, before they became the biggest buyers, mainland Chinese and Hong Kong buyers invested £7.7 billion in London’s property market. Almost 220,000 London properties are in the hands of Chinese and Hong Kong buyers.
Many of these people are so-called “big crocs”– China’s version of the Russian oligarchs. They generally made their money as the country transitioned from a totally planned economy to one that incorporates elements of market competition.

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Their investment was, in fact, the second wave of Chinese cash washing into the UK, says Sarah Hall, professor of economic geography at the University of Nottingham, who studies the growing presence of China in London’s financial sector, and banking for the super-rich. In the aftermath of the 2007-8 financial crash, Hong Kong investors bought into London’s property market as a safe haven. “There was a mass affluent market in Hong Kong, and people wanted to invest it outside greater China so they had more control over it,” she says. Since 2014 and 2015, that’s been supplanted by mainland Chinese cash, “reflecting the growth of private wealth in China itself”.
“The mainland Chinese investment is similar to Russian oligarchs,” she says. Wealth creation and the development of the property markets in Europe has taken 200 years,” explains Marcus O’Brien of Beauchamp Estates. “In China, the same process has taken just 20 years.”
Chinese buyers are most likely to buy expensive properties worth £15m or more in monied areas of London like Westminster and Kensington and Chelsea that are already popular with Russian buyers. According to Beauchamp Estates, Chinese buyers spent more than £750m on homes in those two areas in 2019.
“Because China’s wealth is so new, Chinese and Hong Kong buyers in London like purchasing either new homes or historic properties which have newly refurbished super-luxury interiors,” says O’Brien. A culture of conspicuous consumption means money is flowing abundantly. Buyers “need to be seen to be successful when benchmarked against their peers, so if one buys a London property a business rival needs to acquire an even better one,” he adds.
“There are parallels in London as a significant destination, and in terms of issues around information wars,” says Rowland Atkinson, research chair in inclusive societies at the University of Sheffield, and author of “Alpha City”, a book on how London was captured by the super-rich. “There are also cultural parallels in terms of the attractions of London for wealthy Chinese and Russians.”
Like Russians in the 1990s and early 2000s, Chinese drawn to the capital in might be anti-government figures fleeing Hong Kong, as well as members of the establishment from the mainland secreting away their wealth. ““We’ve got to be realistic about it: not all of it is criminal, not all of it is illegal. We’ve got to make sure we protect those who are merely trying to keep their earnings safe from state kleptocracy as happens in one party, authoritarian states,” Tugendhat says.
The report lays bare the need for the government to act now to ensure that the same mistakes with Russia aren’t repeated with China. The UK’s National Crime Agency (NCA), which tracks and tackles illicit money, needs beefing up, according to MPs in the newly-released parliamentary report. The NCA did not respond to a request for comment for this story.
“Until law enforcement becomes more robust, this problem will continue,” says Browder, who believes “London is the world capital of dirty money” because it’s known to be lax on financial crimes. “My fear is: no matter how loudly parliament is banging the table about this, there’s always going to be a disconnect between the will of the parliament and the implementation by the government,” he adds.
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