Last month, China’s richest man forked out a staggering £80m on a home on London’s most exclusive street. The property and Sunseeker yacht tycoon Wang Jianlin, who is worth an estimated £20bn, now has the run of a grade II listed mansion with 10 bedrooms, nine bathrooms and an indoor pool, and is expected to spend £50m doing it up. The businessman’s new neighbours on Kensington Palace Gardens form a roll call of the international super-rich — they include the Indian steel magnate Lakshmi Mittal, the Ukrainian businessman Leonard Blavatnik and the Russian owner of Chelsea football club, Roman Abramovich. Such is the clout that wealthy overseas buyers now have in Britain, estate agents in Canary Wharf supposedly advertise the new-build properties in their windows in Chinese, while any high-end agent worthy of their Patek Philippe has at least one fluent Russian-speaker on the staff.
Yet, just as we have got used to headlines telling us how foreign buyers are grabbing our most expensive homes and pushing up property prices for everyone else, the overseas invasion appears to be on the wane, especially in the capital. During the first half of 2013, Russian buyers accounted for the largest share of foreign purchasers in prime central London — the area stretching from Islington to Chelsea, and Notting Hill to the fringes of the City — with a 6.5% share of the market, according to Knight Frank estate agency. Now, thanks to the Ukraine crisis and sanctions, they are nowhere to be seen. Henry Sherwood, managing director of The Buying Agents, hasn’t had a single Russian inquiry in 18 months, while another property insider reveals that one glamorous Muscovite tenant could no longer afford to pay the rent on her luxurious London flat because her money was frozen in a Swiss bank account. “Most Russians looking to spend over £2m are now being scrutinised by the authorities back home,” says Jessica Simpson, of Private Property Search, the buying consultancy of Strutt & Parker estate agency. Middle Eastern buyers and investors, who have poured billions into residential and commercial property over here, are feeling the pinch from plummeting oil prices. Brent crude has tumbled by 18% since the start of this year, and by more than 70% since June 2014; last week, Standard Chartered bank warned that it could drop as low as $10 a barrel. “We didn’t see nearly as many inquiries from countries such as Qatar and Saudi Arabia in 2015 as in previous years,” says Simon Barnes, a property consultant at the London agency H Barnes & Co. “The Qatari sovereign wealth fund also lost billions because of the fall in the share prices of VW and Glencore.” London may be suffering, but the Qatari royal family has just snapped up a Highland estate near Inverness for £7m. Many Chinese buyers have seen their spending power reduced by the stock-market crash, while other overseas purchasers have been put off by George Osborne’s increases to stamp-duty rates. “We are seeing ennui among the foreign super-rich — they are feeling let down by the Conservative government,” says Mark Parkinson, co-founder of the buying agency Middleton Advisors. International investors are still looking at the UK, but are now buying multiple properties for less than £1m each. These attract less stamp duty than a single larger, more expensive one, according to Henry Sherwood. “Yet it is hard to find good value in prime central London now at that level,” he says. “Even the wealthiest of billionaires will not want to lose bragging rights by admitting that they bought at the wrong time.” Although there has been an increase in expats looking to buy back here — the mortgage broker Trinity Financial has seen a spike in inquiries from Britons based in Saudi Arabia since the start of the year — there are worries that the London slowdown is partly a result of an ebbing in the tide of foreign money. Prime London house prices fell by an average of 0.8% in the final quarter of 2015, according to Savills estate agency. And Cluttons recently warned that as many as 30,000 unbuilt flats could come back onto the capital’s property market over the next two years, “as buyers, particularly those of an international flavour, try to exit the market as currency advantages fade”, says Faisal Durrani, the agency’s head of research. To give an example, since this time last year, Malaysian investors have seen the ringgit fall by almost 20% against sterling. Many foreigners are choosing to rent, rather than buy, perhaps following the example of the governor of the Bank of England, Mark Carney, who lives in a rented house in west London. “Last year, given the uncertainty in the prime market and the increasing costs of buying in London, we saw some would-be purchasers coming across to rentals,” says Louise Good, head of super-prime lettings at Savills. “In 2015, new applications from high-net-worth tenants increased by about 15%, while inquiries for properties costing £10,000 a week or more doubled.” Indeed, so expensive is buying in the capital, six- or seven-figure annual rental bills are starting to look almost reasonable. “You could rent an ultra-prime property for an average of three years before covering the stamp duty that would have been payable on purchase,” says Mark Tunstall, managing director of the luxury lettings agency Tunstall Property, who let out a property in One Hyde Park, advertised at a record £45,000 a week, to an overseas tenant last year. Still, it’s not all bad — for the estate agents, at least. Sotheby’s International Realty saw a £2bn increase in Indian money being invested in UK property last year; the Mayfair townhouse that houses the celebrity haunt the Arts Club was recently bought by a European family with Far Eastern links as an investment; and Becky Fatemi, the managing director of Rokstone estate agency, has seen an increase in inquiries from wealthy Iranians looking to buy here in readiness for sanctions being lifted. “The London market is rarely soft for long,” says Adam Challis, head of residential research at the property consultancy JLL. “Geopolitical issues such as those in the Middle East are likely to get more challenging before they get better. When your concern is more about protecting against losses than making gains, London property tends to be a good way to preserve value.” That said, a braggart to better Mr Wang isn’t expected any time soon, according to Peter Mackie, co-founder of the buying agency Property Vision. “Big transactions at £70m or £80m have disappeared — for now.” This article originally appeared on The Sunday Times.