How Russia's very rich are buying up the World's very best art

In an art storage depot in south London, James Butterwick, an old Etonian art dealer in motorcycle leathers, is showing me the first piece of Russian art he ever bought. It is a pencil drawing by Léon Bakst, a painter and graphic artist who designed for Diaghilev's Ballets Russes.

James acquired the taste for Russian art while studying in the Soviet Union and bought the picture in 1987, when Russian art was going for a song. James was able to snap up pictures by important Russian artists for relatively modest sums of money. Most of the pictures in the storage were painted between about 1910 and 1930, the period of the Russian avant-garde that includes Malevich, Kandinsky and Chagall.

It seems to be Russia's fate to be a latecomer to global trends and then make up for it its tardiness with sheer intensity. Russia left it until the 19th century to produce any writers of global stature, and then Pushkin, Tolstoy, Chekhov, Gogol, Dostoyevsky, and Turgenev all appeared. In politics, Russia had a frankly medieval set-up until 1861, with a tsar and legal serfdom; just over half a century later, it was leading the vanguard of world socialist revolution. The hordes of Russian shoppers on New Bond Street may have a different political ethos, but their single-minded pursuit of luxury has a similarly frenzied air of making up for lost time.

With Russian art, it's the same story. For centuries, Russia was epitomised by icons and onion domes, but by 1917, the country was a hothouse of artistic creativity. In painting, design and architecture, Russian artists were innovating, experimenting and open to new influences.

James tears the bubble wrap off a picture and stands it against the wall for me to admire. It's an oil painting by Natalia Goncharova. Goncharova and her husband Mikhail Larionov were part of this golden generation of Russian artists who came of age around the time of the Russian Revolution.

This summer, at Christie's Impressionist sale in London, a painting by Goncharova sold for $10.8m and became the most expensive work by a female artist sold at auction; not bad for a woman whose paintings failed to reach modest reserves as recently as 20 years ago.

When Stalin got his grip on the Soviet Union in the 1930s, the artistic flowering ended. In 1932 Socialist Realism was declared to be the only legitimate form of painting. Any artist who hoped to make a living painted happy peasants, blast furnaces, and pictures of Lenin. The art of the Russian avant-garde was relegated to store rooms. Outside Russia, a few émigrés and connoisseurs collected it. Inside Russia, there was a small circle of enthusiasts who exchanged pictures or bought them for tiny sums.

I meet one of these enthusiasts in his house in west London. Alexander Shlepyanov amassed a collection of avant-garde art in the Soviet Union, buying from other collectors inside the country, and from the families of the artists themselves. He tells me he felt that he needed to save the paintings from the communists. "It was a kind of Atlantis," he says. For collectors like him, the avant-garde was the evidence of a flourishing civilisation that had been wiped out by the commissars.

But when I ask him if he still collects, Mr. Shlepyanov looks a little sad. He says collectors like him have been priced out of the market.

James Butterwick tells me that in the past three years the prices of Russian art have gone up by as much as 400 per cent. It's not hard to figure out the reason. A new generation of super-rich collectors started buying up the works of the Russian avant-garde with the same devotion that the earlier generation painted them.