The central London property market stands to benefit from the crisis in Ukraine as wealthy Russians and Ukrainians funnel increased amounts of money abroad to escape domestic turmoil, investors have argued.
Property prices in the British capital have soared because foreign investors view London bricks and mortar as a safe haven for their cash. Research earlier this year found that geopolitical instability abroad had a direct positive effect on London house prices.
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Russian president Vladimir Putin declared a renewed fight last December against capital flight, which is estimated to have risen to $65bn last year. But property experts believe the sight of Russian troops entering Ukraine can only hasten the outflow.
"Are Kensington estate agents squealing with fear and pain, or with delight?" said Matthew Sinclair, senior consultant at Europe Economics, who rubbished suggestions that Russian buyers would desert the London market.
"If you're sitting in Russia, with huge pressure on the rouble, and Russia burning through its foreign exchange reserves, [investors] might equally see the possibility of their wealth being less secure in Russia. It all comes down to relative political risk."
Mr Sinclair argued that property prices in central London, which have risen by 12.3 per cent in the past year according to the Office for National Statistics, have benefited from rising political instability elsewhere within the eurozone.
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"[Foreign political risk] needs to continue to get worse for people to continue to move their wealth here on the same kind of scale," he added.
"We may well have some very wealthy Ukrainians coming in with money they've been hiding at the bottom of their pond or swimming pool," said Naomi Heaton, chief executive of London Central Portfolio, which launched its fourth central London residential investment fund on Tuesday.
Noting that Russian buyers tended to target "large, trophy properties at the upper end of the market", she added they were "a proportion [of the market] that has been dwindling over the past few years" as Middle Eastern and European investors became more active. "The eurozone crisis, the Arab Spring, the Paris crisis, all of these things are the political and economic themes that drive people to central London."
MPs on Tuesday expressed worries that ministers might be putting the economic interests of London ahead of political principles, after Hugh Powell, a Foreign Office official, was pictured holding a document saying the UK wanted to protect "London as a financial centre".
Ben Bradshaw, the Labour MP, said: "Up to two-thirds of Russian money in London is from corruption and other crime. At the very least, if Britain's tough words are to mean anything, should not those assets be frozen now?"
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New research has shown that the UK is the top destination for global investors seeking a new domicile, according to Knight Frank's Wealth Report 2014.
When the estate agent asked those with assets of $30m or more whether they were thinking of permanently changing their domicile or country of residence, some 37 per cent of respondents from Russia and the CIS said they were considering a move, against 15 per cent globally.
Liam Bailey, head of residential research at Knight Frank, said: "London is very important to Russia because it's the nearest truly global city to Moscow. There's an element of safe-haven investment but London's Russian community has grown over the last 20 years because it's a logical place for them to think about basing themselves – it allows them to tap into global finance."
About 4 per cent of buyers in the prime central London are Russians, according to data from estate agent Savills.
Yolande Barnes, director of world research at Savills, said that Russian buyers spend on average £6.3m on their London home.
"We do not foresee that they will liquidate their assets and suspect that geopolitical uncertainty may only add to demand for 'safe-haven' assets like London real estate," she said.
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