‘Before Abramovich bought Chelsea, Russians were not particularly conspicuous when it came to the wider public. Nor had the media cottoned on to their potential significance. Abramovich’s move on Chelsea changed all that. It was a big public statement - it was in effect an announcement that the Russians have landed’
- ALEXANDER NEKRASSOV, London-based journalist
AT THE HEART OF Roman Abramovich lies a remarkable paradox. On the one hand he had outpaced and outmanoeuvred all bar one of his business colleagues and rivals to accumulate, by the middle of 2008, a multi-billion-pound fortune. Much of his wealth was spent in London building a glittering portfolio of property, jets, yachts, and, later, works of art. On the other hand his taste for the good life masked a surprising character: a slight, casually dressed, diffident, self-taught deal-maker with an instinct for survival. On the surface this nonde-script-looking billionaire with a prodigious spending appetite could be mistaken for any Russian construction worker then making a living in London.
When he first made big money in the early 1990s, Abramovich quickly set out to acquire a jet-set image. ‘We used to make jokes about him because, as he began to move up the ladder, he started to change, living up to his new role, wearing expensive cufflinks, only the best suits, moving from the driver’s seat into the back of the car because you had to hire a chauffeur,’ a friend related. ‘At first his friends used to take the mickey out of him: “Why are you becoming so formal, wearing all those smart clothes?” “Why are you sitting in the back of the car?” And he would say, “Well, I have to have a chauffeur”, and we would say, “Don’t be ridiculous”.’
While Abramovich soon shed the tailored suits, ties, and crisp white shirts, he steadily began to acquire demonstrable symbols of wealth. His main criteria seemed to be size and expense. The chauffeur-driven limousines were just the start. He developed a taste for lobster, sushi, and designer clothes. One house, one yacht, one jet, and one sports car was not enough; he needed quantities of them and the more expensive, the better. He shares this mentality with most, though not all, of the new Russian financial elite. ‘If they see a piece of antique furniture and it is priced at £100,000 and I negotiate a discount that cuts the price to £75,000, they will still insist on paying £100,000,’ said one property consultant.
The obsession with ostentatious displays of wealth among newly enriched Russians started in the early 1990s. ‘The first thing that came out of perestroika was the wealth,’ said Valerie Manokhina, a photographer who knew the Abramovichs at the time. ‘Some people were suddenly awash with money and the first thing they did was build a beautiful dream-like lifestyle.’
That dream could not be realized in Russia itself. Instead, Russian money steadily made its way out of the homeland, much of it in London’s direction. The first wave of mostly middle-class, professional Russians came to Britain to study, start businesses, or work for Russian companies such as Aeroflot and the Bank of Moscow. They were by no means wealthy and mostly kept out of the limelight.
But the most conspicuous arrivals were the second wave, beginning to arrive in 1993 to 1994 - a group dubbed the ‘New Russians’ by their countrymen: those making money out of Yeltsin’s reforms, though not nearly on the scale of the oligarchs. London was the place they could ‘burn’ the money they had filtered out of Russia, sometimes in cash, sometimes via offshore companies.
It was a group that sowed the first seeds of the spending frenzy that was later to typify Londongrad’s super-rich community, although to a greater extreme in the years to come. One Russian who knew some of them well was Alexander Nekrassov. He had come to London in 1989 as a reporter for Tass, the Russian news agency, and remembers being able to cash in himself by virtue of his good English and knowledge of Britain. Some of his compatriots, making their first journey to London, turned to him for help. He soon built a sizeable personal bank account by offering advice and helping to open doors. On one occasion a Russian émigré paid him £22,000 just for writing a letter on his behalf to help him get a business visa.
Steadily, London began to turn into a playground for these newly enriched Russians and they soon developed a reputation for being loud and flashy with their money. Moscow had not yet succumbed to the Westernization and commercialization that later brought the world’s luxury retailers and brands to its doors, but in London they singled out the most expensive hotels, such as the Lanesborough, gathered at the most lavish restaurants, tipped extravagantly (a cultural import from Moscow where the wealthy tip wherever they go), and paid exorbitant prices for rare wines. Car showrooms started doing a roaring trade. Top-of-the-range Jaguars were soon being shipped back home.
The new migrants’ favourite haunts were often casinos like the Colony Club in Mayfair’s Hertford Street. Renowned for their love of partying, one popular hangout in the mid-1990s was Tramp in Jermyn Street. Another was the Number One Yacht Club on a pleasure boat on the Thames opposite Temple station. Friday evening became Russian night. As one participant remembered, ‘At the Yacht, they would swill back bottles of vodka at a time and listen to bleached blondes singing Russian pop songs. Unlike the English, there was nothing self-conscious about the Russians. Despite the views over Westminster Bridge, you could have been in Moscow.’
One waiter who used to work in a Thames-side restaurant near Pimlico also remembered the Russians from the time. ‘They took a particular liking to this restaurant and money was certainly not an issue. They would get very drunk and boisterous, dance on the tables, and often do a lot of damage. They would simply leave great bundles of notes behind in compensation.’
Maxie’s basement nightclub in Knightsbridge was popular from as early as 1991 and became something of a gathering point. It initially attracted a mixed crowd - intellectuals, students, and professionals - although there was also no shortage of heavy gold jewellery on display. Saturday soon turned into Russian night, with specially invited bands and singers often playing blatnaya - traditional songs of the Russian underworld. Groups of dark, sharp-suited businessmen would sit at their reserved tables while the younger crowd could be distinguished by their Levis, leather trousers, or leather jackets. The women rarely wore anything other than heavy make-up and expensive couture. In this pre-oligarch age hundreds rather than thousands of pounds were typically spent on one night - usually on 70 per cent proof vodka and several bottles of Dom Perignon. Eventually Maxie’s was forced to close after a serious fight broke out involving Armenians and Russians.
Aliona Muchinskaya arrived in London in 1991 at the age of nineteen as a correspondent for Moscow Komsomolets, the organ of the Moscow Communist Party’s Youth League. She married a Briton, went on to help found the London-based PR company Red Square, and remembers well the members of the second wave with their hard currency. ‘They were not always the perfect ambassadors; nyekultumy [uncultured], as we say,’ she recalls. ‘They loved flaunting their wealth: gold Rolexes, gold cufflinks, shiny suits that were always too tight.’
As Russian accents became more commonplace from the mid-1990s, restaurants, hotels, and some retailers started making comparisons with the arrival of the Arabs in the 1970s. While the press began running occasional articles about Russian excesses, the new rich of this early wave had not yet arrived in sufficient numbers and with sufficiently deep pockets to make the kind of public splash that was to follow later. Indeed, it was not until after the millennium that London’s top property agents and exclusive retailers began to feel the full impact of the Russian invasion.
The birth of super-rich Londongrad can really be dated to April 2000, the month Vladimir Putin was elected President, when the febrile state of Russian politics and the oligarchs’ uneasy relationship with Putin launched a third wave of migration. It was the turn of Russian billionaires and multi-million-aires to shower London with money. What also distinguished most of this group was an obsession with secrecy and security. They were largely desperate for anonymity. The richest Russians, their wives, and entourages - with the rare exception of Berezovsky - preferred to be inconspicuous, and were much less likely to attract attention by splashing out in hotel bars or ostentatiously buying an entire restaurant a round of drinks. The vulgarity and flashiness of the earlier years gave way to a new era, one defined by discretion and a preference for secrecy.
The oligarch who epitomizes this curious combination of a desire for privacy and jet-fuelled lifestyle is the enigmatic Roman Abramovich. Cold and unemotional, he shuns publicity. ‘He is not known for his wit and can easily give the impression of a somewhat grey nonentity, lacking a sense of humour or wider intelligence,’ one friend has said. A former acquaintance who first met him when they were students remembers him as ‘very shy in a good way. He was always lacking in self-confidence. But he is also very uptight. He always felt that he needs to do things the way they should be done, according to the rules.’
In contrast to many rich Russians, Abramovich now seldom drinks and is not known for wild partying. This is not just due to diffidence. ‘He is very astute,’ said a friend. ‘He is both shy and calculating. He knows that if he goes partying, there is a risk that he might be watched and photographed and end up on the wrong end of some unwanted publicity. He’s very careful.’ A workaholic, he stood out as the very antithesis of the nouveaux riches Russians of the second wave. Obsessed with enhancing his fortune, Abramovich was more likely to be networking quietly among the international yachting fraternity at the International Yacht Club of Antibes in the South of France than frolicking until the early hours in a nightclub. The few photographs he authorized for publication show him with his ex-wife and his children. Before his divorce from second wife Irina in March 2007, he liked to be seen as a family man, a claim that now seems a little hollow.
But behind the apparent aloofness and sullenness lies a sharply contrasting character - and one with a love affair with excess. Abramovich has enjoyed a sumptuous lifestyle that caps those of all his fellow oligarchs, all the British-based super-rich in the spending stakes, and is on a par with the world’s megarich. In a study of Britain’s Biggest Spenders commissioned by Virgin Money in 2007, he topped the list of extravagant tycoons surveyed, from the Aga Khan to Lakshmi Mittal. Such indulgence is regarded with disdain by some Russians. ‘Abramovich is a tragic figure,’ says former KGB agent turned oligarch Alexander Lebedev. ‘There is something Shakespearean about him. He has all this money. What does he do? He buys houses. He has homes everywhere but he is unhappy. I think he has more than fifteen houses, here, France, the Caribbean - everywhere.’1
Abramovich’s first serious foray into London was in 1997 when he rented a large apartment at 81 Cadogan Place, just off Sloane Square, with his then wife Irina and their two children. Irina was pregnant and wanted their third child to be born in Britain. ‘It was massive, five bedrooms, very expensive but totally tasteless, full of expensive furniture but hardly comfortable,’ said Valerie Manokhina, a former family friend who first came to London in the mid-1990s. ‘There was no garden. It was totally unsuitable for children. They just wanted to be near Harrods.’ It was the location that clinched it. Even then Belgravia and Knightsbridge, with its reputation for classy shopping, held a fascination for the newly emerging Russian super-rich. Valerie asked Irina why she chose the flat. ‘“Well, it was Roman’s secretary who found it,” she replied. ‘It told us a lot about Russians at the time. They didn’t know their way around. They simply asked their secretary to get a flat near Harrods.’
The family stayed at the flat for a few months. Their second daughter was born on 2 April 1997 at the Portland Hospital, a private maternity hospital in central London. To celebrate, the family threw a large party at their apartment, but shortly afterwards they moved to the South of France.
Apart from a small circle of Russian insiders, Abramovich was virtually unknown in the late 1990s. Despite his wealth and political connections to the Yeltsin family, he was soon dubbed the ‘stealth oligarch’ by this circle. In late 1998 Valerie and her husband, Viktor, were on holiday with Roman and Irina and came back with several photographs. Although he was becoming known as one of the oligarchs, he was still a shadowy figure, to the extent that no photograph of him had yet found its way into the press. Apart from his inner circle, nobody would have been able to recognize him. Valerie remembers a Moscow journalist getting excited about seeing the holiday pictures. ‘We showed him the pictures and he was the first journalist to know what Abramovich actually looked like,’ she recalls.
In 1999 the Abramovichs slipped quietly and more permanently into the UK. They acquired Fyning Hill, a 420-acre estate in the village of Rogate in West Sussex for £12 million from the late Australian media magnate Kerry Packer. It was a property Abramovich purchased perfectly legally through an offshore company registered in the British Virgin Islands. Such an offshore arrangement is a tax avoidance device, albeit an entirely legal one. Built in the 1920s, the mock-Tudor mansion offered the oligarch two things he most valued: a distinguished former owner (King Hussein of Jordan had lived there before selling the property after a £1 million jewellery robbery attracted press attention) and - more importantly - seclusion. The house, set in grounds the size of eighty football pitches, is invisible from the road. It boasted perimeter-wide surveillance cameras and a helipad that enabled its owners to enter and leave undetected.
The estate also came with two of the best polo grounds in the country, stables for 100 horses, a tennis court, a rifle range, a trout lake, a go-kart track, a clay pigeon shoot, an indoor pool, Jacuzzi, and a plunge pool. Abramovich once reportedly ordered in 20,000 grouse and pheasant to indulge his passion for shooting. In 2002 he applied for permission to build a ten-lane bowling alley, an indoor swimming pool, a gym, a family room, a steam room, a sauna, and a plant room.
Irina Abramovich’s initial experience of Knightsbridge had struck a chord. In early 2000 the couple bought two luxury flats at Lowndes Square for £1.2 million. Sparsely furnished, they were rarely used, since by then Abramovich was spending most of his time in Moscow and Siberia. But as if aping Britain’s landed aristocracy, the couple now had a country pile and two London pads - and not just any old pads, either. One of London’s smartest and most colourful addresses, Lowndes Square offers not just grand listed buildings but, crucially, location: it lies close to Sloane Street and is, conveniently, a few minutes’ walk from Harrods. More infamously, in the early 1960s John Profumo, Secretary of State for War in Harold Macmillan’s Cabinet, used an apartment in Lowndes Square to entertain Christine Keeler. (Intriguingly, Keeler had also had a relationship with Yevgeny Ivanov, senior military attaché at the Soviet Embassy, a liaison in those Cold War days that has been partially blamed for the fall of Macmillan’s government.) In the 1970s Lowndes Square was the backdrop to Nicholas Roeg’s film Performance, starring Mick Jagger and James Fox.
At the time Abramovich’s acquisitions sparked not a flicker of national press interest. What catapulted the oligarch from a cipher into an international name overnight was his purchase of Chelsea Football Club in July 2003. Although the deal - worth £140 million - took the football world by surprise, the man brought up as an orphan close to the Arctic Circle and captivated by the excitement of English football had been plotting the move for a while.
Abramovich’s purchase of Chelsea - promptly nicknamed ‘Chelski’ by excited tabloids - meant that he would never again be able to escape the limelight. It was also a defining moment in the history of Londongrad. ‘Before that the Russians were not particularly conspicuous when it came to the wider public,’ said Alexander Nekrassov. ‘Nor had the media cottoned on to their potential significance. Abramovich’s move on Chelsea changed all that. It was a big public statement - it was in effect an announcement that the Russians have landed.’
The Abramovichs’ decision to put down such firm roots in London stemmed from both personal and business motives. Although Abramovich had taken Putin’s warnings to the oligarchs seriously, the purchase of Chelsea is likely to have been inspired by another motive: insurance. Despite playing the political game, he could never be sure of what Putin was thinking. The high-profile acquisition of Chelsea provided a form of protection while London offered him a base, and an escape route should he need to take it.
By this point Abramovich was a very rich man, rich enough to buy the club, pay off its debts, and go on a spending spree for the world’s best football players. Much of his increasing wealth had come from mass dividends as a result of soaring oil prices. In 2000 Sibneft paid £28 million in dividends. Those rose to nearly £600 million in 2001 and even higher figures in 2002 and 2003. The lion’s share of this dividend flow went to Abramovich, with a minority going to his fellow core shareholders, among them Evgeny Shvidler.
In 2004, at the age of thirty-seven, Abramovich entered the Sunday Times Rich List - which includes foreign domiciles living and working in Britain as well as British citizens. He shot from nowhere to first place as Britain’s wealthiest man. The newspaper estimated his fortune at £7.5 billion. Most of this - £5.3 billion - came from his 60 per cent personal stake in Sibneft.
Abramovich may have taken Chelsea fans by storm, but he was not universally popular. The purchase caused disquiet among some key advisers in the Kremlin. It hardly went down well with his former partner Boris Berezovsky, either. More seriously, in early 2004 Abramovich’s past returned to haunt him when the London-based European Bank for Reconstruction and Development (EBRD) started legal action against him. Set up in 1991, the EBRD - funded by taxpayers in Britain, Europe, the United States, and Japan - invested in emerging markets in the former Soviet Union. In 1997 the bank made a substantial loan to a Moscow-based bank called SBS-Agro, and, as part of its collateral, it insisted on first call on a loan that SBS-Agro had made to Runicom SA, Abramovich’s old Swiss-based trading company.
During the 1998 economic crisis SBS-Agro collapsed - large numbers of records also went missing - and the debt was duly reassigned to Runicom SA. But when challenged by EBRD, Runicom SA claimed that the debt - which, through interest and penalties, had now risen sharply - had already been repaid to SBS-Agro. This was vehemently denied by EBRD.
Although EBRD privately acknowledged that it was unlikely to recover the full amount, it sued for the money in a Russian court but lost the case. Runicom SA produced documents claiming to prove it had repaid the debt in 1998. EBRD alleged they were forged and took the case to a Russian appeal court. This time, in January 2002, it won a judgement in its favour for £9 million.
Four months later Runicom SA declared itself bankrupt, failing to honour the ruling. EBRD then hired London-based private investigators to identify the assets of Abramovich. Because Runicom SA had been run by nominees - designated representatives - it proved difficult to demonstrate that Abramovich was directly liable for any of the debt. But later the EBRD alleged that Runicom SA had funded hundreds of thousands of pounds of personal expenses. The most notable allegation was that a payment of 27,800 Swiss francs had been made for a stay at a beauty farm for Irina Abramovich. In 1999 Runicom SA allegedly paid £4,700 towards a hotel bill for Roman Abramovich and a business associate, while the company also purchased two yachts - Stream and Sophie’s Choice.
Legal writs were eventually served on Abramovich personally at Stamford Bridge, Chelsea’s Football Club’s home, in February 2005, following a Champions’ League match. Asked why it had taken so long to serve the papers, Richard Wallis, spokesman for the EBRD, said, ‘If you are asking me whether it would be extremely difficult to serve on Mr Abramovich because he is surrounded by millions of bodyguards, then my answer is I don’t want to comment. I’ll leave it to your own imagination.’ It was not the last time the Chelsea owner was to be served with a legal writ in London. By the autumn of 2008 the case still remained unresolved, though EBRD claimed they remained determined to pursue it.
None of this interrupted Abramovich’s inexorable rise in the wealth stakes. Although in 2003 his two daughters were still being educated at the prestigious Moscow Economic School, the couple started a search for a large London property suitable for their five children and live-in staff. They looked at Old Swan House on Chelsea Embankment, one of London’s most iconic Arts and Crafts movement properties, then on the market for £32 million. Irina was also intrigued by The Old Rectory, a magnificent nineteenth-century house on Chelsea’s Old Church Street, owned by the Norwegian shipping magnate John Fredriksen, complete with an extensive art collection. The couple initially offered £40 million for the house and the art collection, even though the latter was not actually for sale. Her office then made an even higher offer before politely being told that no price would be high enough. In Belgravia Irina was also entranced by Hugh House on Eaton Square, owned by philanthropist and socialite Lily Safra. Again, nothing came of it.
It was not until June 2005 that Abramovich found the right home for his family: a £9.3 million Grade II-listed property in Chester Square, Belgravia. Once owned by the Duke of Westminster, it included a swimming pool and gymnasium and a mews house at the back. A year later he bought the next-door house in Chester Square and in the mews, thus creating an enclave of four houses. They were handed over to Irina as part of the settlement when the couple divorced in 2008.
While the family moved into Chester Square (and thus became neighbours of Lady Thatcher), Abramovich spent a further £10 million on four adjacent apartments in Lowndes Square to add to the two he already owned. In May 2008 he submitted plans to convert these flats (part of two adjacent town houses) into one grand London house, one with five storeys above ground level and three below. When finished, the 30,000-square-foot mansion (five times the size of an average five-bedroom house), complete with a football pitch-sized reception room, cinema, indoor pool, and steam room, was widely expected to be worth upwards of £100 million.
Abramovich’s property empire extended beyond British shores. In 2008 he also owned an £8 million, 104-acre estate in Moscow - his principal home in Russia - the Tenisheva Palace on the banks of the River Neva near St Petersburg, a castle in Bavaria, the £10 million Ornellaia estate and vineyard in Tuscany, and a villa in St Barts. And then there was the £18 million Wildcat Ridge, a 14,300-square-foot mansion near Aspen, Colorado, sitting in 200 acres, and the Hôtel du Cap-Eden-Ros, an exclusive seaside hotel in Antibes between Cannes and Nice, a hotel complex in Cyprus, and a holiday home in Montenegro. There were also three homes in the South of France. And they are no ordinary homes. Take one of them - the Château de la Croix at Cap d’Antibes, which Abramovich bought in 1998 for £15 million. The chateau was not just the former home of the exiled Duke and Duchess of Windsor until 1949, but also of a succession of other former monarchs, from Leopold III of Belgium to Farouk of Egypt. In the 1980s it was owned by the shipping magnate Aristotle Onassis until it was devastated by fire in 1989. Abramovich and his ex-wife Irina spent millions restoring it to its former glory, grand enough for the requirements of a ‘super-oligarch’. As well as twelve bedrooms, a swimming pool, and a tennis court, there is a dining room big enough to seat twenty-four and a drawing room whose walls are lined with expensive tapestries.
Once Abramovich had emerged from the shadows, security became paramount. Fearing that his family were targets for kidnapping, in autumn 2003 his UK management company, Millhouse Capital, hired Kroll Security International to provide bodyguards and close protection. Kroll commissioned Mark Skipp, formerly of the SAS, to manage the contract. He hired thirteen bodyguards on eight-hour shifts at £5,000 a month each. Three were based at his apartment at Lowndes Square, and ten looked after his family at his house in Chester Square and the country estate at Fyning Hill, West Sussex. Later an additional seven bodyguards were employed as fears of kidnapping increased.
In 2004 Skipp joined Abramovich’s management company as head of security on an annual salary of £200,000. After Kroll’s security wing was taken over by the multi-national Garda Worldwide, Skipp summarily sacked Garda and hired his former SAS colleague Bob Taylor. Skipp and Taylor were old friends and had served together in 22 SAS during the first Gulf War in 1991. Abramovich liked the idea of being protected by Special Forces. ‘He loved having them around and did not mind that the ex-SAS officers charged a premium as long as he was being protected by Special Forces,’ said one security source. But, in fact, many of his security staff were former RAF and army officers, because most former SAS officers ended up working for private contractors in Iraq and Afghanistan.
Nevertheless, Abramovich still developed one of the biggest private security operations in the world. In the South of France a team of four operatives armed with 9mm Glocks guards his vast villa. Another six protect his fleet of yachts. One of the boats, the Pelorus, is fitted with bullet-proof glass and a missile-detection system. In Russia security precautions were even more extensive: the oligarch recruited dozens of Russian soldiers, some serving officers, as hired guns. As Russian infantrymen are among the worst paid in Europe, they are easily lured by the extra cash. In London his convoy of cars is armour-plated and his drivers are specially trained to deal with assassination attempts. Following the attack on Berezovsky in 1994, his security team continues to believe that Abramovich is a possible target for assassination or kidnap.
London is no stranger to wealthy foreigners heading to the UK with ambitions to buy up the nation’s most prestigious addresses. Before the First World War, America’s gilded elite bought houses in Kensington and Chelsea’s most sought-after squares. In the 1970s a steady wave of oil sheikhs colonized entire areas of London, snapping up expensive homes and hotels in Kensington and boosting business in Harley Street. The Arabs were soon followed by super-rich Greeks, Italians, Japanese, and Nigerians, though not on the same scale, either in numbers or wealth. In the 1980s the flow of oil money was slightly reduced, and new foreign buyers included Americans (again), Hong Kong Chinese, and Singaporeans. Then, during the first Gulf War, the Saudi royal family bought no fewer than ten of the sixty-six properties that line The Bishops Avenue in north London.
Next it was the turn of the Russians. In the early 1990s some of the Russian arrivals started buying up property. Some came to live in Britain; some saw property as a great investment, while others bought for their children who they were planning to educate at British universities. In 1994 the Financial Times reported that at least £50 million worth of property had been purchased in the previous two years by buyers from the former Soviet Union.2 Although apartments and small houses were popular, some were buying at the very top even then. By 1995, two houses in The Bishops Avenue were Russian-owned. Gary Hersham of Beauchamp Estates in Mayfair, and a specialist in the top end of the London market, remembers selling, in 1996, two consecutive properties in W14 to Russians within a month of each other. ‘One went for £6.5 million, a record for the area at the time,’ he remembers. ‘That was rare, well before the later Russian influx. It was totally different from what happened after the millennium.’ Even in the mid-1990s, it seems, Russians were outbidding British buyers in the central London sites. One of those buying property in London at the time was Vladimir Gusinsky. His wife and son spent much of their time in London from 1994 and he used to shuttle back and forth between Moscow and London for business so often that he once quipped ‘it was like catching the metro’.3
Most of these transactions were exceptionally discreet, with the buyers often demanding anonymity, sometimes using intermediaries or pseudonyms to disguise their identity. Media coverage was the last thing they wanted. Even then the Russians started to show a distinctive taste. According to a director of one upmarket estate agent at the time, ‘They like to keep themselves pretty anonymous, but they do like houses that make a bit of a statement. The amount of marble that might appeal to a Russian would perhaps be a little over the top for some Western European buyers.’4 Often the money changing hands came via offshore accounts. In 1994 one estate agent was so excited by the influx of wealthy clients that he even started talking to a bank based in the Isle of Man about establishing a special offshore payment system for Russians.
Despite Abramovich’s purchase of two flats in Lowndes Square in 2000, there was little wider awareness of Russians in the immediate post-millennium years. In March 2002 the London Evening Standard ran an article on the ‘Top 50 residents of Kensington & Chelsea’. The list contained a number of super-rich foreigners, from the Swedish Tetra Pak entrepreneur Hans Rausing to the Norwegian oil and shipping magnate John Fredriksen (he of The Old Rectory), as well as a long list of British tycoons and celebrities, from Sir Richard Branson to Stella McCartney. There was not a single Russian on the list.5
The real Russian assault on London’s property hotspots followed Vladimir Putin’s increasingly tough stand against the oligarchs and Abramovich’s purchase of Chelsea Football Club. In early 2004 London witnessed its first super-rich bidding war when a property became available in Kensington Palace Gardens, W8 - London’s most prestigious address. With some of the capital’s finest houses, imposing stucco mansions, many the size of office blocks, the street oozes wealth, power, and privilege, perhaps more than any other in Britain. Only the super-rich and nations in search of embassies (Kensington Palace Gardens boasts more foreign embassies - the Russian, the Japanese, the Israeli, to name but a few - than any other in the capital) can compete for property here, and in 2006 the makers of the popular board game Monopoly dumped Mayfair as the most expensive square on the board and substituted Kensington Palace Gardens instead.
Past residents have included Baron de Reuter, founder of the eponymous news agency, family members of the Rothschild merchant banking empire, and the Sultan of Brunei. During the Second World War, No. 8 Kensington Palace Gardens was used as a top secret British interrogation camp that was known as the ‘London Cage’.
In early 2004, No. 15 - next door to Kensington Palace, the former home of the late Diana, Princess of Wales - was put up for sale. Immediately, four of the richest men in the world, all foreign-born, London-based multi-billionaires, declared an interest. Three - Berezovsky, Abramovich, and the industrialist Leonid Blavatnik - had been born in the former Soviet Union and one - Lakshmi Mittal, since 2005 the richest resident in Britain - was Indian.6
In the event the sumptuous ten-bedroom Queen Anne mansion went to Blavatnik for £42 million, beating Berezovsky’s offer of £37.1 million. As the agent who was lucky enough to handle the sale, Andrew Langton of Chelsea-based Aylesfords, stated: ‘Blavatnik said, “I’ve got to have it”, and he bid more than the others.’
Blavatnik, fifty-one, known to his pals as Len, was born and raised in Russia and moved with his family to the United States in 1978 at the age of twenty. He gained an MBA at Harvard and moved into business. Although a Cold War émigré and a US citizen for thirty years, he made his substantial fortune from post-communist Russia, taking significant stakes in oil and in the aluminium group Sual. By 2008, he was a major player in oil, aluminium, and petrochemicals. With a personal fortune close to £4 billion, he had joined the Sunday Times Rich List as Britain’s eleventh richest resident.
From the millennium, foreign buyers came to dominate the top end of the London market. An extraordinary two-thirds of Savills’ London sales over £4 million in 2006 were by international buyers, compared to only one-third by Britons. In 2004 it was the reverse. By 2006, the Russian super-rich, awash with money, had overtaken the traditional foreign buyers - the Arabs, Americans, and Europeans - to become the biggest overseas players in the London property market.
Fuelled by increasing fears generated by the incarceration of Khodorkovsky in November 2003 and uncertainty about Putin’s second term, Russian money just kept pouring into London. Gary Hersham of Beauchamp Estates tells how he met a Russian friend around Christmas 2006.
‘Gary, how are you?’ asked his friend.
‘Fine. How are you?’ replied Hersham.
‘I’m fine. I’m alive.’
‘How’s business.’
‘Well, I made a couple of billion last year,’ he said almost casually.
For Hersham that conversation put the issue into perspective. ‘Do you think it makes a blind bit of difference to them whether they spend £20 or £50 million on a unit, £20 million or £22 million, £7 or £10 million?’ he has said. ‘It makes no difference to them. What’s most important to them is time, efficiency of time. “This is what I want, I’m not going to be stingy, I’ll pay the price, and if I have to pay a little more, I’ll do that too.” They’re taking that to a different level, but that’s what they are doing.’
In 2006 Hersham sold twenty properties ranging from £1 million to £25 million - mostly in Belgravia - mainly to Russians but also to Eastern Europeans from former Soviet states such as Uzbekistan and Kazakhstan, both enjoying booming economies. While working for Harrods Estates, Russian-born Tatiana Baker sold twenty-five to thirty properties between 2005 and 2007, ranging up to £7 million, all in Knightsbridge, Mayfair, or Chelsea. It was these central London ‘trophy addresses’ - along with certain parts of Hampstead and The Bishops Avenue - that make up the elite areas referred to as ‘prime’ and ‘super-prime’ by agents.
To meet the soaring demand, Knight Frank set up a ‘Super-Rich Team’ to handle clients worth over £100 million. They also published a glossy thirty-page brochure in Russian with guidance on all aspects of property buying in Britain. It covered not just the mundanities of conveyancing and rules on freehold and leasehold but issues such as ‘UK money-laundering regulations’ and ‘the effect on taxation of buying offshore’. Such was the competition to secure Russian buyers that top-end agencies all launched into Russia with active marketing campaigns while some established offices in Moscow and St Petersburg.
According to Knight Frank, one-fifth of the houses they sold costing over £8 million in London in 2006 were bought by Russians. In that year alone Russians bought 240 homes while the agents estimated that, at the end of 2006, Russians owned £2.2 billion worth of property in London and the Home Counties. This was up from £93 million in 2000, a staggering increase.
In the next two years that figure would have grown still further. As the oligarchs rarely register properties in their own name, the genuine figure is likely to be higher still. The Russians often use intermediaries such as banks, employ company names or relatives, or buy through companies registered overseas to disguise the real buyers. According to one agent talking in 2007, ‘When it comes to the top end of the market, properties over £10 million, you invariably deal with an intermediary, a bank, or a search agent, so you wouldn’t necessarily know you are selling to a Russian. One house I am selling at the moment on behalf of a Russian, for £12 million, I have only dealt with an offshore trust in Jersey and the solicitor, I’ve never spoken to the vendor and apart from his nationality, I don’t know who he is.’ When Russians hire top London designers like Nicholas Haslam for major refurbishments, they often insist on their names remaining a closely guarded secret.
At the height of the top-end London property boom in 2006 and 2007, super-rich Russians were, according to Natalie Hirst of search agency Prime Purchase, ‘not interested in paying at the lower end, from £1 to £3 million. They’re really only interested in properties from £5 to £10 million and over.’ They were also very specific about location. Even the prime locations have a pecking order. Properties in the most prized areas like Kensington Palace Gardens, The Boltons, or The Bishops Avenue were mostly, though not exclusively, snapped up by wealthy foreigners. The next most popular locations were the ‘garden squares’, especially Eaton, Chester, Belgrave, and Lowndes Square, the latter known to long-term residents as ‘Red Square’. The Russians can mostly be distinguished from other residents by their cars and chauffeurs: Russians have a particular preference for Rolls-Royce Phantoms, Mercedes Maybachs, and Bentleys. Even Cadogan Square is regarded as ‘Inner Mongolia’ and one existing owner of a luxury flat in Lowndes Square was not amused to be told by a Russian’s lawyer that these properties were really for ‘staff accommodation’.
While location is also important in terms of convenience - the favourite haunts of Kensington and Chelsea are just across the river from Battersea heliport, a key transport hub for the super-rich - they are also happy to be near their favourite hotels and restaurants, while their wives of course love shopping in Knightsbridge. According to Tatiana Baker, ‘People would get very excited about Harrods. It’s something of a legend in Moscow.’
But the concentration in central London is also, as one agent put it, ‘A snob thing. Certain addresses will be known to foreigners. Typical English squares like Eaton and Lowndes will be known about in top circles in Moscow.’ That may also be down to the herd instinct, what Natalie Hirst describes more politely as ‘their comfort zone’. Valerie Manokhina explained, ‘The Russian rich all know each other, even if many have fallen out. They are not especially confident in London. Many don’t speak other languages and they are not familiar with Britain, its history, and culture. So they stick together for security. The wives in particular like being near each other.’
For Abramovich’s business partner Evgeny Shvidler, former chief executive of Sibneft, his London residence was built almost from scratch. The man sometimes known as ‘Abramovich’s representative on earth’ has been very close to his boss since they first met at a synagogue. A trusted ally, he helped Abramovich negotiate the purchase of Chelsea FC. They are inseparable. Shvidler has degrees from the Gubkin Russian State University in Moscow and Fordham University in New York and in the 1980s worked for Deloitte Touche, gaining American citizenship and becoming known in America as Eugene. He returned to Russia in 1994, teamed up with Abramovich, and built a fortune of some £1.7 billion, with investments in Moscow real estate, steel, and a Russian meat processor. He keeps a private jet at Farnborough in Hampshire and flies regularly to his Moscow office.
Although he is an American citizen, Shvidler built his house in Caroline Terrace, Belgravia, for £20.5 million. The site had previously been occupied by a warehouse, which was sold in 2000 for £4.7 million and developed into a grand town house. Just two miles from Stamford Bridge, the property has an underground swimming pool, sauna, and a study with leather floors. It is five times the size of adjacent houses in the terrace where his neighbours include Viscount Rothermere, custodian of the Daily Mail, the actor Sean Connery, and the power couple Nigella Lawson and Charles Saatchi.
Like many Russians, Shvidler became obsessed with privacy, and the new house was set like a fortress behind high walls, reached only through a pair of tall, locked, and guarded iron gates with twenty-four-hour security. In order for him to build the gated archway, Shvidler bought out a neighbour for £1.3 million. When he leaves the house, he is driven in a black bullet-and bomb-proof Mercedes with VIP number plates. In Moscow he uses the Zil lane, once reserved for use by the ruling elite of the Politburo, and has a flashing blue light on the roof of his car while his bodyguards and retinue travel with him in four separate 4x4s.
High-level and expensive security is a trademark of the Londongrad set, many of whom enjoy better security than the British Prime Minster. Yuri Shlyaifstein, once dubbed the ‘King of Aluminium’ in Russia, bought a house in St John’s Wood in 2006 and had all the windows reglazed with bullet-proof glass. Following a series of assassinations of high-ranking bankers in Russia, Petr Aven, head of Russia’s largest private bank, Alfa, surrounded his house on the Wentworth Estate in Virginia Water, Surrey, with an ‘intelligent’ electronic fence, even though he lives mostly in Moscow. His security arrangements extend to a bomb-proof shelter and a two-storey guard house. It has been described as ‘KGB-proof’.
The postcodes favoured by the Russians also carry great social significance. As the ceramic blue plaques scattered across the neighbourhoods show, they have long been areas favoured by some of the richest, most powerful, and colourful members of British society. The seventeenth-century chronicler of London, John Bowack described Kensington and Chelsea as a place ‘resorted to by persons of quality, inhabited by gentry and persons of note’. What the Russians have been buying into is a large slice of British history.
The Russians have also showed, as one agent put it with characteristic understatement, ‘less than modest demands’. When it comes to extravagance, they are even outgunning their aristocratic predecessors. Not that long ago, 4,000 square feet would have been a big house. Now ‘big’ means 20,000 square feet.
Size became necessary to accommodate today’s new essentials - an indoor swimming pool, fitted gym, staff accommodation, computerized mood lighting, and extensive garaging. According to Knight Frank, ‘Some clients have been known to spend up to £400,000 just on advanced electronics. One had a system that enabled him to see who was knocking on his door in London from anywhere in the world, via a video clip sent to his mobile phone.’ Many wanted separate rooms for their growing art collections, a library, a billiard table, or a home cinema - or in some cases, all of them. If these didn’t already exist, then they would be added - often through excavation of the basement - at a cost that might well have equalled or exceeded the purchase price.
What was happening in London was a process of ‘megagentrification’ that was reversing a hundred years of history. Kensington and Chelsea’s prime locations were once more being colonized by the super-rich taking over the very properties built in the eighteenth and nineteenth centuries to house the landed gentry.
The effect of the foreign invasion on London’s super-prime property market was dramatic. Just after the millennium prices in prime locations rose broadly in line with all other property across London. Then, in the two years from 2005, foreign demand brought rocketing prices. According to Savills, prices for prime central London properties they sold costing over £5 million grew by a remarkable 50 per cent in the year leading up to March 2007, six times faster than for houses in general.
Part of the explanation for the boom was Britain’s own wealth explosion. Record City bonuses in the early 2000s fuelled demand for homes in the £1 million to £3 million range but, for homes above this level, the main driving force was international money from the global economic boom. ‘The more expensive the property, the higher the density of overseas buyers,’ Liam Bailey, head of research at Knight Frank said in late 2007. ‘The top end of the market has become an increasingly international market. While the principal European buyers have been French, Italians, and Germans - typically bankers in financial services, working in the City or Canary Wharf - at the top end it is the Russians who have outstripped all other nationalities apart from the British, well ahead of the Indians and Chinese, who have been late arrivals in comparison.’
Payment by cash also became the norm. As one agent described it, ‘I had this buyer approach me wanting to spend £64 million on three properties, two in prime central London and one in the country or in Scotland. I asked him for a banker’s reference, and he said, “No need, I will pay cash”.’ One agent told us that it was not atypical for a client to buy a ‘stop-gap property for about £15 million while waiting for the perfect purchase’. At the peak of the market in the late summer of 2007, top-end properties saw queues of frenetic cash buyers. There was an air of panic with properties being increasingly bought ‘off-plan’. ‘One foreign buyer bought a house off-plan in Eaton Square, a prime location next to the church, for £17 million’, according to Savills. ‘He didn’t view the property, he just liked what he saw in the brochure.’ By June 2007, one-third of the apartments at Candy and Candy’s One Hyde Park, the most expensive development in London, had been sold, this despite it being no more than a large hole in the ground and not due to be completed before 2010.
Natalie Hirst at Prime Purchase recalled representing a Russian client in a competitive bid. ‘The bidding got higher and I advised my client that he was overpaying by a significant amount and he looked me in the eyes and said, “Don’t lose the property, Natalie”. I carried on bidding and made sure I kept bidding until we won it. My client didn’t want to lose it even if we were paying way over the odds.’
When the right property came on the market, especially in the most exclusive addresses, it created a frenzy of interest. Jonathan Hewlett at Savills explained how ‘In 2007 we took on an unmodernized house in Mayfair and put it on the market for £15 million. Before we even had a floor plan, we had forty-six people viewing it in the first week.’ Andrew Buchanan of John D Wood said, ‘In mid-2006 I had seventeen registered buyers wanting to spend over £20 million; in mid-2007 I had sixty buyers willing to pay over £20 million.’ Even after a sealed bid had taken place, it was not uncommon for a rival buyer to come back with a better offer.
As colder economic conditions began to bite in 2008, feverish conditions at the top end of the market showed no sign of abating. In the spring Liam Bailey of Knight Frank reported that ‘The market for £5 million-plus homes had expanded to the point where the “super-prime” threshold had now risen to £10 million.’ Only by the autumn did the prices for homes above £5 million start to slip.
Fuelled by the foreign influx, in 2007 London overtook New York as the most expensive residential market in the world. Prime London property cost £2,300 per square foot on average, compared to £1,600 in New York. In contrast, prime properties in Tokyo, Hong Kong, and Dubai were less than half the cost of London.7 A year later, by September 2008, London had begun to feel the effect of the carnage in financial markets - but only just. Monaco - where prices rocketed 30 per cent in a year in the crowded Mediterranean tax haven - had pushed it into second place.
While super-rich Russians seeking a foothold in the UK headed initially for London’s ‘oligarch belt’, they soon began to follow Abramovich’s example by buying up country mansions as well. In Russia the rich have long enjoyed their own suburban and rural dachas and it wasn’t long before they started trying to emulate that style of living by looking for country properties in England.
One of the first to do so was Eugene Tenenbaum, a former head of corporate affairs at Sibneft, a director of Chelsea FC, and Abramovich’s closest aide as Managing Director of Millhouse Capital. In 1999 the Ukrainian-born banker and Canadian citizen - who moved to London in the 1990s - bought a country house with a swimming pool in Walton-on-Thames, located conveniently near the head office of Millhouse. In 2005 Andrei Melnichenko, the banker and industrialist billionaire, bought the 27-acre Harewood estate near Windsor to add to his London home.
In 2007 Sunninghill Park, a wedding present from the Queen for the Duke and Duchess of York, was sold for £14 million - considerably more than its asking price - to a Kazakh tycoon. The 5-acre estate, built in 1986 in Tesco-style red brick, was not widely admired but still carried the cachet of being a former royal residence.
Despite Britain having a long history of foreign residents buying homes in the countryside, only in the last decade have they once again become dominant players. The number of Russians buying outside London rose more than sevenfold between 2005 and 2007, with a concentration on the gilded enclaves of Esher, Cobham, and Weybridge in Surrey, and Windsor and Ascot in Berkshire.
When an £11 million house near Guildford in Surrey was sold by Knight Frank in March 2007, half the viewers were Russians, as was the eventual purchaser. When the same agents sold a house on the Wentworth Estate for just under £10 million, 43 per cent of viewers were Russian. When another house near Virginia Water was marketed for £7 million, one-third of the viewers were Russians. In 2006 Russians accounted for more than half of the properties bought by foreigners costing more than £5 million in the Home Counties.8
One senior property agent, who worked only with Russian buyers, said in 2007, ‘I will quite literally drop everything (day or night) to ensure they get the service they want. I have four of the best helicopter companies and a number of chauffeurs on speed dial in order that viewings can be arranged at the drop of a hat. I once spent two days in a helicopter with my prospective super-rich buyers touring country estates.’
The wave of foreign money that broke in the UK slowly changed the social and architectural map of parts of rural Britain. Expensive country homes were once the province of the landed aristocracy and the commercial barons of the Industrial Revolution. Then, from the end of the First World War, they were joined by high-earning professionals, such as stockbrokers and lawyers.
From the 1960s, the original owners and post-war newcomers of exclusive, gated estates such as St George’s Hill near Esher found themselves sharing their plush surroundings with a diverse new group of neighbours. John Lennon bought Kenwood, a seven-bedroom mock-Tudor house set in secluded grounds in 1964, where he is said to have written ‘Lucy in the Sky with Diamonds’ and recorded two albums. He set a trend that saw the subsequent arrival of a wave of rock stars and celebrities, from Tom Jones and Cliff Richard to Ringo Starr and the comedian Eric Sykes. They, in turn, were joined in the 1980s by top celebrities and sporting stars as their earnings soared to take them into the rich lists.
By the height of the noughties boom, however, the stockbrokers and all but the top celebrities found themselves being priced out, as some of the outstanding country properties were bought up by stars of film, music, and the fine arts, such as Kate Winslet, Madonna and Guy Ritchie, and Damien Hirst.
But it was new money - home- (British financiers, tycoons, entrepreneurs, heads of investment banks, hedge fund and private equity partners) and foreign-grown - that was displacing the moneyed classes of the past. It was a Russian who ended up buying Torpoint on St George’s Hill from Tom Jones. As one local upmarket developer put it, ‘Once St George’s Hill was the favoured haunt of celebrities and pop or football stars. Today you are more likely to find a Russian than a pop star or a Premier League footballer.’
The Russians became especially keen on areas close to Windsor Great Park, such as St George’s Hill and Wentworth. Wentworth, which offers a period feel with modern living, has many Middle Eastern residents but also a scattering of recent Russian arrivals, among them Boris Berezovsky. One of his neighbours is Mikhail ‘Micha’ Watford, a Russian ‘minioligarch’ who made a fortune in energy with business interests in Russia and Ukraine. He then set up High Life Developments, a luxury property development and design company, based in the King’s Road, Chelsea. Watford’s £7 million high-security house on the Wentworth Estate has grounds which contain a five-a-side football pitch and cricket pavilion.
St George’s Hill is a large private estate near Weybridge built as Britain’s first gated community by local developer W. G. Tarrant in 1911 to provide ‘large country retreats for the wealthy gentlemen of London’. The 200 original homes built in the Arts and Crafts style on 900 acres around a private golf course, most of them with several acres of garden, were originally snapped up by London’s super-rich. With its breathtaking views of the local countryside, the estate became one of the most exclusive parts of the Surrey stockbroker belt in the mid-post-war years.
The first Russian believed to have bought in St George’s Hill was Tanya Dyachenko, Yeltsin’s daughter, in the late 1990s. She bought Hamstone House, a white-and-cream Art Deco house and the only listed building on the estate. There are also plenty of ‘big boys’, as one agent describes them, including Oleg Deripaska and Evgeny Shvidler. According to another agent, the latter was ‘always on the prowl’ for other properties in the area.
The impact of the surge in wealth did not only show itself in soaring prices on St George’s Hill. Increasingly, houses that had lost their former appeal, or had simply become outdated, were demolished and replaced by modern and grand, often ostentatious styles: mock-this, neo-that, a Spanish-style hacienda. New money would appear to have few qualms about history or heritage. While minimalism is not in the Russian psyche or lexicon, it is not possible in today’s property market to define a single Russian ‘taste’. Some bought traditional period properties, but the great majority wanted a period style or feel. In the summer of 2007 forty-eight sites were under development, more than 10 per cent of the entire estate. Another factor driving demolition was scale. Just as for a London town house, the super-rich wanted large properties, returning to the scale of mansions that were often commonplace in the nineteenth century. ‘Extravagance’, according to one estate agent, ‘is now the norm.’
Most of these new developments were finished to an exceptionally high standard. Take Hartlands, a super-luxury home built in 2005 on the site of one such property not considered up to scratch. The newly built seven-bedroom house, complete with staff flat and 12-metre indoor swimming pool, was bought by a Russian in 2006 and sold a year later, in the spring of 2007, for £14.5 million. The purchaser never even occupied the house. The property boasts a walnut-panelled study with a large handmade walnut desk to match. It comes with a range of gadgets that include a place to hold Rolexes and a plasma television screen that can be hidden behind a painted panel at the touch of a button. ‘No one in the UK,’ said the agent who handled the sale, ‘would spend that kind of money on a study. It is going back to the Edwardian era.’
While most Russian émigrés seeking a retreat preferred the Home Counties for their proximity to London, some ventured further afield. In 2007 a Russian bought a house near Falmouth in Cornwall for £3 million. In 2005 Leon Max, the Russian-born fashion designer, paid £15 million for Easton Neston near Towcester, in Northamptonshire. It had been the ancestral home of the Hesketh family for nearly 500 years. Max attended an English school and then emigrated to New York at twenty-one, building a worldwide fashion retail empire with 300 Max Studio shops around the world.
Easton Neston, a Grade II-listed building, was designed by Nicholas Hawksmoor and is considered a masterpiece of the English Baroque style. It came with two lodges, a stable, and 550 acres of parkland. Max spent millions renovating outbuildings and converting the Wren wing of Easton Neston, which was badly damaged by fire in 2002. According to newspaper reports, the new owners were welcomed onto the estate with a gift from Lord Hesketh - a bottle of vodka.
Leon Max has used part of the stately home as a base for his expanding European business, living there half the year and the rest in California with his American model wife. Shortly after moving in, he told the local newspaper, the Brackley and Towcester Advertiser, ‘I love the area. I have visited the local butcher, baker, and pub and feel that everything we need is here. I am hoping to lure some people away from London to this beautiful place.’ He is already well integrated into British life and counts the Earl of Dartmouth, Sir Elton John, Richard Littlejohn, Lily Safra, and Conservative MP Nicholas Soames among his friends.
Of the Russians buying rural properties, few, if any, have lived in them permanently. Many have one or more homes in London as well as one or more country homes, a place in Moscow, and in the South of France. Some are global businessmen who will spend more time abroad than in the UK. Some are Moscow-based entrepreneurs who will use their homes partly as an investment opportunity and partly for occasional spring and summer retreats. Other buyers have continued to work in Moscow but have moved their wives and children to the United Kingdom.
Just as some of the oligarchs, notably Boris Berezovsky, seemed keen to cultivate members of the aristocracy and the British royal family as contacts, so others were seen trying to emulate the lifestyles of the British nobility - ‘Playing lord of the manor’, as one property agent put it - quickly developing a taste for British rural and sporting traditions, even buying Scottish castles and estates. Berezovsky himself was said to have been ‘sniffing around the Highlands’ and has been an occasional visitor to Skibo Castle in Sutherland. Originally built by the Scottish-born American industrialist and philanthropist Andrew Carnegie, it later became a sporting and leisure club for the super-rich.
‘Scottish trophy properties - sporting estates, castles, and islands - soon attracted international interest’, according to John Coleman of Knight Frank in Edinburgh. ‘Very few in top condition come onto the market, maybe three or four a year, so when they do they are real trophies. They offer international buyers looking for a way to unload their wealth on something special and scarce. The buyers themselves may not spend that much time here, maybe a month a year, but they buy them to entertain in and to use as a sanctuary to escape the world now and again.’
One Scottish property broker liked to promote the Highlands as ‘Siberia without the cold’. ‘What has been driving the market has been money coming out of Russia. The Russian interest - some real, some perceived - fuelled demand elsewhere and raised expectations,’ says John Coleman.
Apart from the sheer size of the estates, Scotland had another great advantage. Trophy properties came relatively cheap: up to 2008, nothing sold for over £20 million - small change for oligarchs. In December 2005 Vladimir Lisin, then the fifth-richest man in Russia, paid £6.8 million for the sixteenth-century Aberuchill Castle, a sprawling 3,300-acre grouse-shooting, deer-stalking, and game-fishing estate over-looking Loch Earn, near Comrie in Perthshire. Lisin bought the property ‘off the market’. He put in a knockout bid, sufficient to kill off the competition.
Lisin worked as a welder in a coal mine in Siberia in the 1970s. He acquired the steel giant Novolipetsk during the 1990s by buying shares in the metals sector and then sold a small stake on the London Stock Exchange in 2005. At the beginning of 2008 he was estimated to be worth some £7 billion. Married with three children, he enjoys clay pigeon shooting and smoking Cohiba cigars. He reportedly used some of his wealth to sponsor the Fitasc Sporting British clay pigeon shooting Grand Prix at the Southern Counties shooting grounds in Dorset in 2004.
Nikas Safronov is another who has acquired a Scottish estate. A celebrity painter, he has made big money producing portraits of the rich and famous in the guise of lords, dukes, popes, and emperors from throughout history, a style that greatly appeals to his subjects. Close to the Kremlin, he has painted President Putin as a dashing Francis I of France. It is now de rigueur for the Russian elite to have their portraits painted, and Safronov charges some £40,000 to paint the wives (and sometimes the mistresses) of the rich.
Scottish estates offer the usual security, privacy, and isolation much sought after by so many Russians. How long those who bought into the dream will stay in Scotland is another matter. John Coleman doubts if they are in Scotland for the long term. ‘The ones I have sold to are not really here because of a deep-seated desire to live a feudal life. It is more of a matter of “What can I spend my money on?” They love and enjoy the experience of a large Scottish estate but it wouldn’t surprise me if in five years’ time they moved on and sold up because they had found another interest. They are likely to have a much more short-term interest than the original Victorian developers had in mind for their beautifully crafted estates.’
The arrival of the Russians had a dramatic impact on Britain’s top property landscape, both in the capital’s ‘golden postcodes’ and in the Home Counties. But the impact of Russian money did not stop at the acquisition of some of Britain’s finest town houses and rural estates. The steady outflow of Russia’s historic wealth helped to fuel a much wider spending boom on a scale not seen since the 1920s.