New money saves London property market from Russian retreat

One property that currently has several Chinese buyers buzzing is a Mayfair heap in Grafton Street dubbed the ‘Gucci Mansion’, which previously served as the luxury Italian fashion brand’s headquarters.

On the market for £55million, the eight-bedroom, seven-storey home – which includes a sauna, steam room, indoor pool, gym, cinema and four security vaults – is where Gucci designer Tom Ford entertained the likes of Vogue editor Anna. Wintour and French billionaire François Pinault.

Prior to this, when owned by Lord Brougham, the property’s high-ceilinged state rooms hosted Queen Victoria and the Duke of Wellington.

So far it has attracted interest from several very wealthy Chinese house hunters, according to Beauchamp, who is acting for the seller.

Finch says his company deals with buyers of all nationalities, but the Chinese now generate up to a quarter of super prime deals.

“The Chinese are very important to us and accounted for a good portion of the super prime business we did,” he adds.

The more frosty relations between London and Beijing appear to have had little impact, he says, but over the past year agreements have been artificially suppressed by China’s ‘zero Covid’ lockdown policies, which means that many potential buyers “can’t get here”.

Finch is optimistic about the market’s prospects going forward, pointing to the huge number of billionaires produced each year by the Middle Kingdom as proof that there will be no shortage of buyers.

While America retains the highest number of billionaires, at 735, up 11 in 2021, China was second with 607, according to Forbes. The country’s list included 60 newcomers, including a host of tech moguls such as Miranda Qu, boss of Shanghai-based e-commerce company Xiaohongshu (“Little Red Book”).

Chinese citizens have become the biggest users of Britain’s “golden visa” scheme, which allows investors to pay £2million in return for at least three years of residency and later a path to citizenship. Chinese applicants have received 33% of so-called level 1 visas issued since the program was launched in 2008, ahead of the 19% issued to Russians.

According to Transparency International, a total of 1,624 visas have been issued to Chinese applicants and another 2,623 to their dependents such as family members.

Still, as Russian buyers back down with sanctions and anti-corruption investigators hot on their heels, there are inevitable questions about whether Chinese money can also come back to bite.

With so much dirty money reportedly flowing through London, the capital has already earned the unenviable nickname of ‘Londongrad’ for its apparent ability to look away.

In China, several well-known personalities have been imprisoned in recent years for corruption. In 2020, real estate tycoon Ren Zhiqiang was jailed for 18 years for corruption and embezzlement of public funds – although some claim an anti-corruption campaign under Chinese President Xi Jinping is only a smokescreen to silence opponents.

Activists say the political realities in China should give real estate agents pause to think. The heads of MI5 and the FBI recently warned that due to the pervasive influence of the Communist Party, it is sometimes impossible to distinguish between the state and the private sector.

Rachel Davies Teka, Director of Advocacy at Transparency International, said: “Although investments from Russia have received considerable attention, this should not distract from the risk of money laundering posed by funds from countries where corruption is common, such as China.

“Companies should be on high alert when dealing with high net worth clients from places where corruption and abuse of power are rife, and report suspicious activity to the National Crime Agency.”