x Abu Dhabi, UAEWednesday 26 July 2017

London's posh districts welcome billionaires as governments move out

Once the home of neighbourhoods of the nobility, where stern-looking nannies pushed big-wheeled perambulators along their leafy streets, London's most well-heeled districts are seeing a new wave of super wealthy inhabitants.

Once the home of neighbourhoods of the nobility, where stern-looking nannies pushed big-wheeled perambulators along their leafy streets, London's most well-heeled districts are seeing a new wave of super-wealthy inhabitants.

The 15 square kilometres around Hyde Park, famed for its Mary Poppins-esque stucco fronted Georgian townhouses and grand cobbled streets, have since the mid-20th century lost much of their residential flavour as many of the grandest London homes have been converted for other uses such as offices and flats.

Embassies and high commissions for foreign governments occupy more than 180 of the grandest London houses, most of them in Mayfair, Marylebone, St James', Belgravia, Kensington and Chelsea.

The UAE Government is reported to be talking to consultants about leaving its current 2,800 sq metre prestigious address at 30 Prince's Gate in Kensington and setting up in a square foot facility in Ballymore's 240,000 sq metre Embassy Gardens scheme in the Nine Elms regeneration area south of the river.

The United States announced in 2008 that it would be leaving its famous 21,000 sq metre 24 Grosvenor Square headquarters in Mayfair after selling the long leasehold to Qatar Investment Authority, which has estimated assets of between US$100 billion and $200bn.

The Americans will be moving in 2017 to a purpose-built highly secure 58,000 sq metre facility at in the much more affordable Nine Elms site.

The £600m 11-storey building, dubbed the "glass cube" by Londoners, is due to be completed by 2016. It is expected to be an anchor of the "new South Bank" stretching between Battersea and Vauxhall, which also includes the £8bn Battersea Power Station development. The station was bought by a consortium of three of Malaysia's biggest companies, SP Setia, Sime Derby, and the Employee's Provident Fund, for £400m last year.

There are 22 embassies in the Mayfair area alone. But with house prices there now worth at least a third more than offices, many of the governments that own them are waking up to the fact they can sell up to house-hunting billionaires in search of a family home or property developers looking to build prestigious apartment schemes.

Take a look at Portland Place, the grand Georgian thoroughfare linking Oxford Circus with Regents Park, once known as a smart London address and used by the novelist John Buchan as the fictional home of his protagonist Richard Hannay in The Thirty-Nine Steps.

Since the Second World War the area, just north of Mayfair, has become home to a string of company headquarters, professional bodies, charities and embassies. Here you can find the Polish embassy, the Kenya high commission and the Portuguese consulate.

But demand for luxury flats and houses in the area is prompting some of the buildings to change back to housing.

Number 7, originally built as an Edwardian apartment building, was converted to offices and used as a consulate for the state of Montserrat until it was redeveloped as seven luxury flats, which are currently being marketed for between £3.5 million (Dh20.16m) and £6m.

And the Chinese government, which occupies 20,000 square feet up the road at 49-51 Portland Place has instructed the property agent CBRE to put its embassy on the market. Agents say the building could be redeveloped as up to 60 luxury flats.

The Chinese are rumoured to be in talks with Royal Mail about buying its 52,000 square metre mail depot in Nine Elms for a new embassy although it is also thought to be considering sites in Earl's Court in west London and Wapping in east London.

A short walk away in Mayfair proper, the Brazilian government sold one of its former embassy buildings on Green Street for conversion into a single 1,900 sq metre house, raising £40m.

According to figures from the British government body Land Registry, residential prices in prime central London grew 7.2 per cent during the three months to the end of June to reach an average of £1,472,181.

Houses, a very small part of the market these days, saw particularly strong price rises with 230 sales - a 33 per cent increase on the previous quarter, at an average price of £3,136,615.

"Headline average prices in prime central London are becoming increasingly distorted by increasing numbers of 'super prime' transactions," says Naomi Heaton, the chief executive of the property fund London Central Portfolio.

The US was followed in April by the Dutch government, which is hoping to sell its current 2,300 sq metre embassy at 38 Hyde Park Gate in Kensington and move next door to the Americans in south London.

"I can confirm we will sell our current building as it is too big and not suitable for modern diplomacy," says a spokesman for the Dutch government.

"The sale will contribute to government cuts going through at the moment."