Russian Property Investment: Can A Crackdown Hurt Manchester Or Birmingham?

There are sure to be consequences for property from the ongoing row between the U.K. and Russia over the poisoning earlier this month of former military intelligence officer Sergei Skripal and his daughter, Yulia. The U.K. government is considering penalties of up to two years' imprisonment for failure to disclose the beneficial owner of shell companies holding property assets, The Guardian reports.

Whilst London gears up for some serious property fallout, will the U.K.'s big regional centres — Manchester and Birmingham — see similar upheaval?

Links between the two U.K. cities and Moscow have been as fitful as the history of Russian investment in the regions. There is a Russian Visa Application Centre at Peter House, Oxford Street, Manchester operated by the Russian Embassy's "preferred outsourced partner" — but no consulate, and neither a consulate nor a visa application centre in Birmingham.

Manchester enjoyed direct Easyjet flights to Moscow between 2013 and 2015, but they were slashed from four flights a week, to two, then cancelled altogether due to low passenger numbers.

The flights prompted a brief spurt of Russian-language recruitment by property professionals, but that has not been sustained.

Today, two-hop flights to Moscow from Manchester or Birmingham take six hours with Lufthansa or KLM-Aeroflot.

There is little evidence of direct Russian investment in both cities. This week Moscow and London-based AZ Real Estate bought a student block in Birmingham for £10.6M on behalf of a private Russian buyer.

Is this the tip of an iceberg? The appeal of the U.K.'s regional property markets is blunted by their limited capacity to digest large lumps of Russian money.

"I've never come across Russian money in Manchester," OBI Property Head of Investment Richard Lace said.

"It would simply be too conspicuous here. The Russians want relatively high-value but highly tradable properties of the kind London has lots of, but sourcing that kind of product is harder in Manchester. In the event that they found something suitable, everyone would know all about it, it would attract far too much attention."