priced out

Canada joins the US, Brazil and the Netherlands in defecting from central London

November 29, 2013
November 29, 2013

London’s high-end central districts are witnessing diplomatic defections as rents skyrocket, leases expire, and foreign governments decide other locations are simply more functional.

Canada yesterday said it has sold its six-story embassy building in Mayfair to an Indian developer for a cool  $530 million. Ottawa will now consolidate its operations another of its buildings in Trafalgar Square, “saving valuable operational dollars,” the government said. Indeed, prices for homes were up 11% in Mayfair last month from a year earlier—compared to a 7% rise across the UK, according to The Globe and Mail.

The central London diplomatic sell-off began with the US in 2009 and has gathered steam since. Washington sold its Mayfair embassy to Qatar’s sovereign wealth fund in a deal said to be worth some $800 million. Uncle Sam’s new digs, as of 2017, will be a high-security, cube-shaped compound being built in South London.

Earlier this year Brazil sold its embassy in Mayfair, and The Netherlands will also move its embassy, now in Hyde Park Gate, according to Diplomat magazine. China could sell its headquarters, in Portland Place, and there is speculation that Greece and Nepal are among several other countries considering relocating. Some 20 of London’s 165 embassies are “are now known to be in the process of sale consideration,” the magazine said.

In addition to rising property values, with foreign firms snapping up properties to turn into residential offerings, governments are now more cost-conscious, preferring more practical offices that are more secure and better suited to the information age. “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,” Peter Wetherell, managing director of the estate agent Wetherell, told Reuters. “Things have changed and nowadays these buildings are not really fit for purpose.”

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