Russian Spending In Britain Slumps 17% In Feb

Tyler Durden's picture

February 2013 saw Russian visitors spend 16% more than in 2012 as "investor" visas flowed, property soared, and hot money slooshed into the UK recovery. However, as AFP reports, Russian spending in British shops fell by 17 percent last month compared to February 2013 as the "unstable situation in Russia has shown its effect on tourism spend this year," already. Shoppers from the Middle East (up 31%) and China (up 23%) continue to represent the highest proportion of international sales in Britain, but it is clear, as The Economist points out, Russian wealth has permeated the upper reaches of society in Britain more completely than in any other Western country, with the health of "Londongrad" now at stake if sanctions are extended.

 

Via AFP,

Russian spending in British shops fell by 17 percent last month compared to February 2013, according to tax-free shopping statistics out Monday.

 

Visitors from Russia spent an average £669 ($1,103, 800 euros) per transaction, according to Global Blue, seeing them overtaken in third place by those from Nigeria compared to 12 months ago.

 

Spending by Russian visitors was up 16 percent for the year in 2013 but fell in February 2014.

 

"The unstable situation in Russia has shown its effect on tourism spend this year as the weakening economy leaves shoppers disinclined to travel," said Gordon Clark, Global Blue's UK country manager.

 

...

 

Shoppers from the Middle East (up 31 percent) and China (up 23 percent) continue to represent the highest proportion of international sales in Britain.

The problem of sanctioning Russia is a big one for the UK...(via The Economist)

Britain grants three-year “investor” visas to foreigners who invest £1m or more in government bonds. Two years later they can buy residency for £10m as long as they have held on to the bonds. Russians were granted 433 of these visas between the third quarters of 2008 and 2013, more than any other nationality. Only the Chinese came close, with 419.

 

 

Oligarchs are keen buyers of London mansions and penthouses. According to Savills, an estate agency, 4% of buyers in “prime central” areas, such as Chelsea and Westminster, are Russians, spending £6.3m on average. Interestingly, another estate agent says that he recently got a “peculiar” call from a Russian client eager to sell two large properties immediately, which might possibly be connected to the crisis.

 

...

 

The number of properties registered to Russians understates the true total by failing to capture offshore structures fronted by nominees, of which Russians are particularly fond. Britain’s offshore satellites, in particular the British Virgin Islands, known for their secretive shell companies, do well out of this. A leading BVI lawyer says that Russian clients make up 15-20% of his business. Only the Chinese are as active. The lawyer notes that business from Russians is up slightly in recent weeks.

 

London is the main foreign capital-raising venue for Russian firms, many of which crave a listing there to gain international financial respectability. Some 28 Russian firms, with a market value of £260 billion, are listed on London’s main exchange (compared with just two in New York). Another 15 Russian-focused firms are on the AIM market for growth stocks. Dozens more have depositary receipts (special overseas shares) that are traded in London. Some $46 billion of Russian stock has been sold in London IPOs since 1996, according to Dealogic.

 

The fate of offerings in the pipeline—including a bank and two retailers—is now uncertain, more because of market conditions than from a fear that listings might be blocked. Underwriters sneaked in an offering by Lenta, a supermarket chain, days before the crisis erupted. Its share price subsequently tumbled by 15%.

So, just like Germany's Russian envoy is playing down sanctions as a downward spiral, we suspect the UK will be quick to push back on any pressure from the US to want further economic constraints on Putin.