The smartest streets of central London are being revamped as a number of Diplomatic Embassies sell up their grand premises. Prime Mayfair and Kensington addresses are up for sale as embassies relocate further afield in a pattern that real estate agents believe could be a blueprint for other major world cities.
First the American Embassy was sold to Qatari Diar in 2006 for a rumored £500 million as the diplomatic mission announced plans to relocate south of the Thames to a purpose-built site at Nine Elms near Battersea Power Station. More recently, in 2013, the Canadian Embassy at 1, Grosvenor Square Mayfair was sold through Savills to India's Lodha Group for £306 million. Both buildings are to be converted to provide high-end residential apartments.
Other diplomatic properties sold in recent years in London include the Brazilian Embassy in Green Street Mayfair, the Dutch Embassy near The Albert Hall in Kensington and the Montserrat Consulate in Marylebone's Portland Place. The Dutch have announced they will follow the Americans to Nine Elms while the Canadians are concentrating their staff in Canada House in Trafalgar Square.
Security issues, historic listed properties that can be difficult to upgrade and new technologies have all been cited as reasons for the sell up but Andrew Langton, Chairman of elite London estate agents Aylesford International believes it is also a desire to capitalize on the buoyant London property market.
"With the sale of the American and Canadian Embassies in recent years, two of arguably the finest buildings in the finest streets of London are now available for redevelopment into residential property," comments Langton. "The value of many of the capital's embassies in today's market make it hard to justify keeping them and it is a pattern that could be repeated not only across London but also in cities such as Paris and New York."
The monetary value tied up in embassies has been a talking point ever since the sale of land around the Australian embassy in Tokyo in 1988. The sale, at the height of the Japanese property bubble, was reported to allow the Australian's to pay off a substantial part of their national debt.
In the case of the UK, where the government this year suggested the Queen save money by cutting back on maintenance of Buckingham Palace, their embassy in Paris is a 200-year old palatial residence close to the Elysee Palace in the prestigious 1st arrondissement.
"The British Embassy in Rue d'Anjou is arguably the grandest and finest residence in the whole of Paris," points out Langton. "The UK embassy in Tehran is allegedly the largest properties of any country in any city in the world. If diplomatic relations are restored surely this should be sold off for more functional offices."
Langton has been involved in discussions with several potential embassy relocations in the past including the Iranians on their Queens Gate embassy and the Israeli's on their site in Kensington Palace Gardens. He argues that a campus of embassies with excellent security is the model cities should adopt.
"Embassies want efficient office space with a high degree of security not grand, draughty old buildings which may have reflected a position of world dominance in a bygone age," he says "As the residential value of their properties has soared they will increasingly look elsewhere."
A survey from estate agents Wetherell and Diplomatic magazine in November 2013 found that at least 20 of London's 165 diplomatic missions had either sold or discussed the possibility of selling since June 2013. Of the 16 embassies and ambassadorial residences in Kensington Park Gardens, known as Billionaire Row, the report claimed at least five were for sale.
"Kensington Palace Gardens was the location for most Embassies after the war," says Langton. "The Russians occupied at least four of these buildings for their Embassy, their ambassador and consulates. Two have been sold off and they have concentrated services in the remaining two buildings."
Langton estimates that the Nepalese Embassy in Kensington Park Gardens alone would be worth at least $100 million