‘Fears that the asset freeze on oligarchs might dent the prime property market also appear to be unfounded’
As the people of Ukraine woke to another onslaught by Vladimir Putin’s merciless armed forces, the Russian oligarch Mikhail Fridman laid bare his own struggles in London after he was hit by UK sanctions. “I can’t even pay in a restaurant. I have to eat at home,” he said.
The Lviv-born citizen of Russia and Israel, reportedly worth £11.9bn, told the Spanish newspaper El Pais on Monday that his credit cards have been blocked and he was “practically under house arrest” at his £65m Athlone House home on the edge of Hampstead Heath.
Fridman is one of more than 1,000 Russian individuals and businesses sanctioned by the UK since Putin invaded Ukraine, triggering a knock-on effect for the legions of £1,000-an-hour lawyers, bankers and accountants who have served Russia’s wealthy and Kremlin-linked elite over the past two decades.
The tycoon’s limited dining options, and apparent flight of his wealthy compatriots perhaps fearing similar treatment, signals a downturn for a range of firms serving the luxury sector in London which had enjoyed the wide-open wallets of super-rich Russians.
At Mari Vanna, a high-end Russian restaurant in glitzy Knightsbridge specialising in traditional “babushka cooking” such as beef stroganoff, the crisis has had a marked effect. A recent online reviewer aptly described its dilemma: “The food was great, but unfortunately the war has ruined our appetites.”
Evgeniya Gavina, Mari Vanna’s manager, said: “The Ukraine situation has been affecting our restaurant quite heavily. We’re definitely seeing fewer customers. You can’t name just one reason – it’s not just because of oligarchs or people who are under sanctions – but in general the situation has made it difficult for all Russian businesses in London.”
The restaurant said it was donating 50 per cent of its takings to the Disasters Emergency Committee to help fund aid in Ukraine.
A short limousine ride east in tourist magnet Soho, the restaurant Zima, acclaimed for its infused vodkas and authentic zakuski, or traditional appetisers, has experienced a wave of anti-Russian hostility, reporting that angry voicemails have been left on its inbox. “Russians are killers,” one declared. “You’re Putin’s Russians,” another claimed.
But at Novikov, the three-floor plutocrat’s playground in Mayfair’s Berkeley Square, where a 37-page wine list offers a magnum of Petrus red wine for £16,500, business is reportedly still brisk even without the usual wealthy Russian diners. A recent call by food critic Jay Rayner to boycott the restaurant because of “blini baron” owner Arkady Novikov’s close links to Putin appears to have gone unheeded – and the restaurant itself has added the words “Peace for Ukraine” and the nation’s flag to its online presence.
Fears that the asset freeze on oligarchs might dent the prime property market also appear to be unfounded, according to Marc von Grundherr, director of estate agents Benham and Reeves. He estimates that 286 London properties were sold to Russian buyers last year.
“While the expectation is that this segment of international buyers will now dwindle as assets are frozen and the iron curtain falls once again, the likelihood is that we may actually see an increase in Russian ownership,” said Grundherr.
“The London market has always been a safe haven in times of crisis and with many looking to flee a free-falling Russian economy, there is a very good chance London will be their destination of choice.”
Lee Koffman, of Sotheby’s Realty, confirmed that the Ukraine crisis had yet to cause a wobble in high-end property transactions. “At the top end of the market, only a very small percentage of buyers are Russians. It’s not like the flood we had years ago,” he said.
“But saying that, the past two years have been some of the best I’ve had. And I’ve been doing this for 20 years. Most of the Russians living here are totally legitimate and are keeping their heads down, but they’re still buying.”
The key pull factor often cited for relocating Russians was security. A mansion in London or the Home Counties was a safe place to stash their Moscow millions, while our rule of law and lack of corruption made Britain a place to do business in relative anonymity. And for families, an expensive education at a traditional boarding school is as desirable as a Mayfair penthouse.
Companies such as high-end tutoring firm Bonas MacFarlane charge around £10,000 to place a child in a British public school. It can cost from £300 a day to tutor young Boris or Svetlana for the entrance tests that many top British schools now use.
Some parents, however, may soon need to make alternative arrangements for paying the fees that keep their offspring in boaters and blazers. Private schools, where more than 2,000 Russian children are studying, have been warned by the Independent Schools Council not to take fees from Russian banks or from sanctioned individuals.
Julie Robinson, the council’s chief executive, said: “Schools are encouraged to remain on high alert… and to raise suspicious activity reports if they have any concerns over the provenance of the money they are receiving.”
Concierge firms catering to the needs of wealthy Russians sprang up as soon as the first oligarchs began arriving in London to help families identify suitable properties, transportation and schools. Now they, too, are feeling the effects of the crisis.
One Russian-born concierge operator, who asked not to be named, told i: “I’ve been here for 22 years working with Russian clients and pretty much everyone I know here supports the Ukrainian side. But the propaganda works really well in Russia and when I speak to my parents about what’s going on, I feel like there’s a battlefield within my own family.”
Edwin Smith, editor of Spear’s, a magazine for ultra-high-net-worth individuals, said the ongoing effects of the recent crackdown, combined with the new Economic Crime Bill and mooted reform of Companies House, made it difficult to predict the future for the Russian super-rich. But, he said, they may have cause for optimism as sanctions for a minority could remove suspicion from the rest.
“It’s in almost everybody’s best interests that this sector remains a powerful asset and functions in a proper way,” he said.
Protocols: Bad neighbours
A gated luxury housing estate in Surrey dubbed “Britain’s Beverly Hills” has had to step up security after locals staged protests demanding that Russian residents with links to Putin leave the suburb. Russians and those from former Soviet states own more than a quarter of the 430 swanky homes in St George’s Hill, a heavilyguarded 964-acre estate near Weybridge, where mansions have changed hands for more than £20m each.
Scores of oligarchs are reported to own homes on the estate, including billionaires Oleg Deripaska, the metals tycoon, and Petr Aven, a banker and politician, who have been placed on the Government’s sanctions list. Residents of a council estate that backs on to the exclusive enclave joined other locals and councillors last month in two demonstrations calling for Russian mansion-owners to be given their marching orders.
“I think the rich Russians in the huge houses should be turfed out of the country,” one pensioner said. “The only way to stop Putin is to put pressure on Russians. The Government should seize their homes.”