• Wed
  • Dec 24, 2014
  • Updated: 8:57am
NewsWorld
BRITAIN

Embassies pulling out of elite London districts as property prices soar

Foreign missions in British capital leave behind palatial houses as property prices soar and the face of global diplomacy changes

PUBLISHED : Thursday, 14 November, 2013, 8:13pm
UPDATED : Friday, 15 November, 2013, 3:53am
 

Foreign embassies are abandoning London's premier addresses such as Mayfair and Kensington as the world of diplomacy changes in the face of security risks and new technology, just as British property prices are reaching untold heights.

The trend to move farther afield to more secure, functional properties is being led by the United States, which on Wednesday marked out its future in a new site south of the River Thames.

Estate agent Wetherell and the Diplomat magazine found at least 20 of the 165 diplomatic missions in London have been sold or explored a sale in the past six months, after prices in upmarket embassy areas rose by up to 60 per cent since 2007.

But the exit from palatial houses in ritzy areas was also seen as reflecting the changing nature of diplomacy, with extravagant displays of nationalism deemed inappropriate in a tough economy and with greater security needed.

"Embassies took over grand houses at a time when diplomacy was serving drinks and eyeball-to-eyeball contact, which was the way of doing business then," said Peter Wetherell, managing director of Wetherell.

"Things have changed and nowadays these buildings are not really fit for purpose."

The US kick-started the exodus after announcing in 2006 it was moving from Mayfair.

It sold its current embassy to Qatari state property firm Qatari Diar for what The Wall Street Journal said was about £500 million (HK$6.2 billion. It will move in 2017 to a site in southwest London. The embassy declined to comment on the figure.

US ambassador to Britain Matthew Barzun told a ground-breaking ceremony at the site at Nine Elms, near Battersea Power Station, that the move would help develop that area of London.

"We're proud to provide an anchor for more businesses and jobs, bringing thousands of new neighbours to fuel economic revitalisation here," he said.

The US will be joined in the development by the Netherlands and possibly China, lured by the high security made possible by building from scratch and quick access to Westminster, the seat of the British government.

Wetherell said the embassy exit came amid a trend to revert grand houses in elite London areas back from offices into apartments, with residential prices at record highs.

He said foreign governments were increasingly aware they were sitting on property gold mines. Wetherell this year sold the Brazilian embassy in Mayfair for £40 million and almost all diplomatic properties are snapped up for apartments.

The Wetherell/ Diplomat survey found that other countries relocating or looking to move included Nepal, Greece, Lithuania, Belgium, Tajikistan, Kosovo, Turkmenistan, Gambia, Kazakhstan, Algeria, and the Czech Republic.

Real estate agent Savills last month won the contract to sell the Canadian High Commission in Mayfair, which is expected to fetch up to £250 million and could double that value as flats.

But as well as cashing in on property prices, Venetia van Kuffeler, editor of the Diplomat, said the moves reflected the changing world of diplomacy.

"Before, it was important for foreign governments to be in these majestic, historic buildings as a sign of status and as a visual representation of each country," Kuffeler said.

"But with the internet and 24-hour news, that isn't necessary as people know more about countries and such opulence can be deemed as tasteless and frowned upon in the current climate. I do think the US going first made it acceptable to move out."

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