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Forget buying, wealthy Russians now renting in London

Foreign buyers and notably Russian oligarchs have been accused of inflating the London property market, buying up the "super-prime" properties with plus-£10 million ($17 million) price tags, but high end London estate agents say the rental market has seen an even greater rise in Russian interest.

International buyers have dominated the most expensive end of the London property market for years, with demand fueled by rich foreigners seeking London properties as a safe haven.

Russians in particular, in the aftermath of the Ukraine crisis, have reportedly been trying to stash their cash in London's most expensive properties, but this is not something chief executive of exclusive property finder London Central Portfolio, Naomi Heaton has seen much of.

Read MoreLondon house prices face boost from Ukraine turmoil

"From our point it hasn't been much of a story, there has not been a notable impact on the market as a result of the sanctions imposed in April and at the moment I would be really surprised if new sanctions would have any impact," she said.

"There were only 51 properties over $10 million sold last year, so we were never talking about a big quantity, and Russians only represent about 2 percent of buyers," she said.

However, while Russians may not be buying that many prime London properties – they are certainly renting them.

There are more Russians, particularly students, newly renting property in "iconic postcodes" in central London than any other nationality, Heaton said.

Read MoreLondon luxury housing market 'cooling', estate agents warn

"Russia represents the highest proportion of students at 13 percent of our tenancy start-ups this year. So we are seeing Russians, but interestingly we are seeing them at the other end of the process," said Heaton..

"We have more Russian students than any other nationality, which is a very interesting statistic – but we are not seeing the buying end," she added.

Global estate agent Knight Frank has found that international buyers are now retreating from the ultra-luxury London property market. Foreign buyers accounted for under half (47 percent) of the super-prime market so far this year, down from 64 percent last year and 73 percent in 2012.

Allan Baxter | The Image Bank | Getty Images

Investment from mainland Europe and Russia in particular has declined this year, while British buying has risen, according to a Knight Frank report released last month.

Read MoreThe Chinese replace Russians as top apartment buyers

Branch manager at premium property agent Greene & Co, Alex Dolley said most Russian students moving to London tend to rent first and then buy later.

"We are seeing more Russian renters. What the trend tends to be is they will rent for their first year of university if they are not in halls and then parents will buy a property for them for the second year, that seems to be the trend," he said.

"The renters now that are students, I would say they are very wealthy. They are very well financially backed by their parents," he added.

Read MoreAppeal of London property wanes for foreign buyers

This "rent first, buy later" trend away from the very top end of the market is also something London Central Portfolio is anticipating will grow, as tougher sanctions on Russia's top buyers could limit oligarchs from buying up more super-prime property.

"As the middle class Russians educate their children over here, they will be entering the private rented sector, but the oligarchs are buying in a completely different stratosphere and they are the ones that will be hit (by sanctions)," said Heaton.

"So I think dynamics could change, we could see more Russian influence and maybe a diminution of the people at the very top end. The mass affluent Russian classes, which is growing, they are the people that could be coming in," she said.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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