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London’s £3 BILLION embassy sell-off bonanza

A sell-off of central London embassies will create £3 billion of super-prime homes in the most exclusive streets in the capital.

Twenty diplomatic missions and residences have been prepared for sale in the last six months. More are in the pipeline as foreign governments realise they are “sitting on a gold mine”.

Almost all the diplomatic properties are being earmarked for conversion into apartments to meet the demand from wealthy buyers, mainly foreign, in areas such as Kensington, Belgravia and Holland Park. The former European Council of Foreign Relations building on Old Queen Street near St James’s Park was sold this week to developer Galliard Homes for £21.5 million.The eight-story building will continue to house the ECFR until 2015 but will then be converted into 35 apartments that could be worth £100million.

Galliard sales director David Galman said: “These diplomatic buildings were built to impress so they tend to have grand facades, opulent foyers and spacious interiors which are ideal for conversion into large luxurious homes.”

The developer has already converted the former Montserrat embassy on Portland Place, Marylebone, into flats. Other embassies expected to be relocated include those of Nepal, Greece, Lithuania, Tajikistan, Kosovo, Turkmenistan, Gambia and Kazakhstan.

Peter Wetherell, managing director of Mayfair agents Wetherell, said: “We recently sold the former Brazilian embassy on Green Street for £40 million, and this has heightened awareness in the diplomatic community that the missions are sitting on a property gold mine.”

London’s top estate agents are also queuing up to handle the sale of Canadian High Commission, known as Macdonald House, at 1-3 Grosvenor Square in Mayfair.

The seven-storey block was first put on the market in 1999 at £50 million. It is now expected to fetch at least £175 million and could be worth more than £500 million as flats.

The trend was kickstarted by the US government, which is moving its mission from Grosvenor Square to a new £600 million site in Nine Elms in 2017. The current embassy building has been sold to Qatari Diar — the property development arm of the Qatari royal family — for an estimated £500 million. The 225,000 sq ft building could be worth as much as £1 billion when developed.

The Dutch embassy has indicated that it will follow suit and sell its 25,000 sq ft block on Hyde Park Gate near the Royal Albert Hall and move to Nine Elms. The Chinese are expected to move out of their huge building on Portland Place in Marylebone and move to Nine Elms though this has not been confirmed.

Kensington Palace Gardens — known as the “boulevard of billionaires” — has 16 buildings used as embassies or ambassadors’ residences. According to research by Wetherell and The Diplomat magazine at least five are being considered for sale and could have a combined value of £500 million.

The Nepalese government has said its embassy on the street — where Lakshmi Mittal and Tamara Ecclestone have homes — will be sold because it is too expensive to maintain. Several Victorian villas on the street have gone through an “embassy to residence” conversion including 9a Palace Green, formerly the Philippines embassy, which was sold to Mr Mittal for his daughter Vanisha for £70 million in 2008.

Steel tycoon Mr Mittal owns numbers 18 and 19 Kensington Palace Gardens, once the Egyptian Embassy and part of the Russian Embassy, but now combined into one huge home. Ms Ecclestone, daughter of the Formula One billionaire Bernie, lives at 8 Palace Green.

Venetia van Kuffeler, editor of The Diplomat said: “Dating back to the Victorian era, grand embassy buildings used to be an important visual representation of each country. However with the internet and 24 hour news that isn’t so necessary as people now know a lot more about countries from around the world.”