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Embassies quit elite London streets as diplomatic life changes

LONDON (Reuters) - 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 property prices are reaching untold heights.

A police officer stands on duty outside the Iranian embassy in Kensington, central London December 2, 2011. REUTERS/Toby Melville

The trend to move further 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 up-market embassy areas rose by up to 60 percent 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 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,” Peter Wetherell, managing director of Wetherell, told Reuters.

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

The United States 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 pounds ($800 million) and it will move in 2017 to a site in southwest London. The embassy declined comment on the figure.

U.S. 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 United States will be joined in the development by the Netherlands and possibly China, lured by the high security made possible by building from scratch on a new site 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 prices of up to 5,000 pounds per square foot.

He said foreign governments were increasingly aware that they were sitting on property goldmines and opting to sell and save costs or not to renew leases and move further afield.

Wetherell this year sold the Brazilian embassy in Mayfair for 40 million pounds and almost all diplomatic properties are snapped up for apartments for wealthy Britons or overseas buyers.

The Wetherell/Diplomat survey found other embassies 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 pounds and could double that value as flats. Bids are due in by the close of this week.

Property developer Galliard Homes in August bought the European Council of Foreign Relations building by St James’s Park for 21.5  million pounds to convert into 20 luxury flats.

The developer has already converted the former Montserrat embassy in Marylebone into apartments.

“Embassies are always in good locations and tend to be very grand buildings that lend themselves well to residential development,” Galliard sales director David Galman told Reuters.

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

“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 told Reuters.

“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 U.S. going first made it acceptable to move out.”

Editing by Alison Williams