New money saves the property market in London from the Russian downturn
One property that currently has many Chinese buyers is the Mayfair mound on Grafton Street nicknamed “Gucci Palace”, which was once the home of the Italian luxury fashion brand.
On the market for £55m, the eight-bedroom, seven-storey home – which has 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, while owned by Lord Brougham, the high-ceilinged state rooms of the monarchy had hosted Queen Victoria and the Duke of Wellington.
So far, it has attracted the interest of many ultra-high net worth Chinese house hunters, according to Beauchamp, which works on behalf of the seller.
Finch says his company deals with buyers of every nationality, but the Chinese are now generating up to a quarter of the excellent deals.
“The Chinese are very important to us and have been a good part of the high-quality business that we’ve done,” he adds.
Cooler ties between London and Beijing seem to have had little effect, he says, but in the past year deals have been artificially suppressed by China’s “zero-Covid” lockdown policies, meaning many potential buyers “can’t get here” .
Finch is optimistic about the market’s outlook going forward, pointing to the huge number of billionaires exiting every year by the Middle Kingdom as evidence that there will be no shortage of buyers.
While America holds the most billionaires, at 735, up 11 in 2021, China ranked second with 607, according to Forbes. The country’s list featured 60 newcomers, including a group of tech tycoons like Miranda Chu, president of Shanghai-based e-commerce company Xiaohongshu (“Little Red Book”).
Chinese nationals have become the biggest users of the UK’s “golden visa” system, which allows investors to pay £2m in exchange for a minimum of three years of residency and thereafter a pathway to citizenship. Applicants from China have received 33 percent of so-called Tier 1 visas issued since the scheme was launched in 2008, before 19 percent issued to Russians.
According to Transparency International, a total of 1,624 visas were issued to Chinese applicants and another 2,623 visas to their dependents such as family members.
However, as Russian buyers back off with sanctions and anti-corruption investigators on their tail, there are inevitable questions about whether Chinese money might also come back to hurt them.
With so much dirty money thought to have been washed across London, the capital has already earned the unenviable nickname “Londongrad” due to its apparent ability to look the other way.
In China, many well-known figures have been imprisoned in recent years for corruption. In 2020, real estate mogul Ren Zhiqiang was put behind bars for 18 years on charges of bribery and embezzlement of public funds – although some claim the anti-corruption drive under Chinese President Xi Jinping is just a smokescreen to silence dissidents.
Activists say political realities in China should give real estate agents some pause for thought. 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.
“While investment from Russia has received a lot of attention, this should not distract from the money laundering risks posed by money from countries where corruption is widespread, such as China,” says Rachel Davis-Teka, advocacy director at Transparency International.
“Businesses should be on high alert when dealing with wealthy clients from places where bribery and abuse of power are common, and report any suspicious activity to the National Crime Agency.”