Ukraine and the UK Property Market

Ukraine and the UK Property Market 

Much has been made of Russia’s role in London’s property market following the tragic events in Ukraine. Almost all major news outlets have published pieces on the matter with titles ranging from ‘The rise and fall of Londongrad’ to ‘From Russia with cash’.

While Russian wealth has historically poured into London, since the depreciation of the Russian Ruble in 2014, Russians have become far less important to demand. According to Savills, only 1.4% of Central London is Russian owned and under 0.1% of Savills sales came from Russians in 2021. The story is similar on the commercial side, with Legal & General estimating Russian investors to account for just 0.3% of UK commercial real estate purchases since 2015. Any direct impact the Ukraine conflict will have will likely be confined to London’s super-prime market (£10m or above) where, prior to 2014, Russian wealth made up closer to 8% of demand. Even here, there is a general consensus that the gap will quickly be filled by buyers from Europe, the Middle East and Asia as London’s safe heaven credentials are further underlined.

Although the direct effects are currently limited, increased inflationary pressures at a time when basic household costs are already squeezed could lead to a general cooling off of the property market. There is also sentiment to consider with many buyers and sellers pausing for reflection as the situation unfolds. While this uncertainty will likely be short lived, the sudden and drastic increase in transparency of ownership requirements being introduced by the UK Government could have a slight dampening effect on prime transactions in the long term.

The full effect on UK property will ultimately depend on whether there is further escalation or not and at the time of writing this hangs very much in the balance.


Post a comment

We use cookies to give you the best experience.