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Luxury houses take over from offices in central London

Guaranteed rent – Luxury houses take over from offices in central London

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Offices in London’s West End are disappearing as developers convert buildings into luxury housing to take advantage of demand for prime residential property.

Guaranteed RentPlanning consent has been given for more than 2m sq ft of offices to be converted into residential buildings in the West End, on top of 202,000 sq ft that was lost in 2010 and 3.2m sq ft in the past decade, according to H2SO, the property agent.

Furthermore, a number of West End office buildings are being marketed for sale to residential developers, such as the £65 million property at 3 St James’s Square.

Demand from overseas buyers means residential conversions in the West End core of Mayfair and St James’s are worth more than £3,000 per sq ft when the value for offices is less than £2,000 per sq ft.

Westminster council has shown little opposition to residential conversion, while new planning laws could mean developers do not need permission to change office buildings into housing.

Paul Smith at H2SO said: “Much of London’s West End – particularly Mayfair and St James’s – was originally built as exclusive homes and it is now seeing many properties return to that use.

“As high-end residential values continue to outstrip their commercial counterparts, an increasing number of property owners will explore the option for residential conversion.”

Mr Smith warned of the impact on traditional West End office occupiers, such as hedge funds. “With office development in these areas at a historically low level, this further constraint on supply can only put greater pressure on office rents and leave occupiers with a narrowing range of choice,” he said.

“We have already recently seen rents for the best refurbished space in Mayfair once again pass the £100 per sq ft mark.”

However, he added: “The conversion trend is to be welcomed in that it repositions a whole raft of mostly period buildings back to their appropriate – and often original – use and brings new life to them.”

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Source: http://www.marketwatch.com/story/uk-house-prices-rise-fastest-in-10-years-2012-02-19?reflink=MW_news_stmp

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