The ‘Great Embassy Exit’ returns London to its residents

* International embassies are moving further afield, leaving their former neo-classical ‘palaces’ to be remodelled into luxury apartment schemes and family homes in Marylebone and Mayfair.

* Many embassies, including the US and Netherlands, are moving to Nine Elms at Vauxhall. Thousands of new apartments will be built around the new bases, including 2,000 new apartments at Embassy Gardens in Nine Elms.

* Missions that will be sold include the Chinese Portland Place headquarters, the Netherlands Hyde Park Gate mission and the Brazilian embassy on Green Street, Mayfair.

The US Embassy’s move from Grosvenor Square, Mayfair, to a new home south of the river in Vauxhall has sparked an exodus of diplomatic missions from prime central London.

There are 22 embassies and consulates in Mayfair alone, and 19 in nearby Marylebone, and many seem to have woken up to the fact that they are sitting on property gold. By moving to a less-costly area they can work in more modern and efficient buildings while pocketing millions in profits from the sale of their grand current addresses.

Their move out will delight home-hunting billionaires as many of these neo-classical ‘palaces’ are likely to return to being single family homes or prestigious apartment schemes, set among some of the finest squares and wide stucco avenues in London.

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New diplomatic quarter

The shift is set to turn Nine Elms at Vauxhall into the capital’s new embassy quarter. The US government’s new £620 million base there has been carefully monitored by the Dutch, who have now bought land next door to create a new 50,000sq ft Netherlands Embassy to replace its current Hyde Park Gate mission. The move will be completed in 2017. The two new embassies will be at the heart of Nine Elms developer Ballymore’s 2,000 new-home Embassy Gardens scheme.

The Chinese government is also selling its Portland Place headquarters. International property consultant CBRE is leading the search for a new embassy site and has shortlisted the 13-acre Royal Mail depot at Nine Elms, one of the few available sites big enough to accommodate China’s needs.

Meanwhile developers are already moving into Mayfair. Last month “super-prime” builder Finchatton paid £250 million for 20 Grosvenor Square, the US navy’s home in Europe until 2009 and Dwight Eisenhower’s military HQ during the Second World War. Sold by restaurant entrepreneur Richard Caring, the 180,000sq ft building has planning permission for 41 luxury flats.

Another recent deal was the £40 million sale of the former Brazilian embassy on Green Street, Mayfair, bought for conversion into a single 20,690 sq ft mansion.

For developers, acquiring and converting such impressive buildings can be big business. In Mayfair, residential buildings are worth at least a third more than office premises, meaning a potential uplift in capital values of £1,000 a sq ft, according to research by Savills.

Embassy moves could push up values more in Marylebone, which is fashionable yet significantly cheaper than Mayfair, says estate agent Peter Wetherell. The value gap is already closing, claims David Galman of developer Galliard, which has been buying up office and embassy buildings and has assembled a pipeline of 100 new homes selling for between £1,600 and £3,500 a sq ft.

In its late Georgian heyday, Marylebone’s Portland Place, north of Oxford Circus, was as prestigious address as any in Mayfair. Laid out in the 1770s by Robert Adam, it formed part of a grand thoroughfare, later Nash’s Royal Route, running from Regent’s Park to Piccadilly. Several of the most notable buildings are now embassies and corporate headquarters — among them the landmark Royal Institute of British Architects — but the residential renaissance is under way.

For many years, 7 Portland Place was the consulate for the Caribbean island of Montserrat. Built in the Edwardian period as a Champs Elysée-style apartment building, it later converted to offices. Now it has come full circle with reinstatement back to luxurious homes — seven spacious apartments, including a duplex penthouse. Prices from £3.5 million to £6 million. Call 020 7620 1500.

Redevelopment of the Chinese embassy on the same street could create as many as 60 luxury homes. The original 1785 building was demolished in 1980 and the replacement, though handsome enough, is not listed. Here too is the Polish Embassy, the Kenya High Commission and the Portuguese Consulate.

The Landmark is another Marylebone launch — 25 flats priced from £595,000 — while 43-45 Great Cumberland Place is a redevelopment of two listed townhouses into seven opulent apartments. Prices from £999,999. Call 020 7620 1500.

“Marylebone used to be Mayfair’s ‘poor’ neighbour but its status has risen and prices have jumped 107 per cent since 2005,” says Peter Wetherell. The two districts face each other across Oxford Street. Previously, addresses butting up against this bustling retail strip were less salubrious but are now smartening up due to co-ordinated neighbourhood improvements.

A very secret hideaway

Property company Grosvenor is refurbishing Brown Hart Gardens, near Duke Street, one of the capital’s secret hideaways. This raised public space is built above an electricity sub-station and enclosed by classical stone pillars and listed domes. It will soon have a café and pavilion, too. And coming soon next door is The Beaumont, a new restaurant by the team behind The Ivy.

Sixteen apartments have been created out of previous office space with meticulous attention to detail and great architectural sensitivity behind a listed red-brick façade at 65 Duke Street. Rents are from £1,250 a week but the quality of the apartments makes them very good value compared with hotel stays. Call Grosvenor Lettings on 020 7312 6449.

Actors on the world stage

For most of the 20th century, Marylebone was a genteel backwater populated by thespians and retired doctors. Its high street retained the character of a county town rather than an urban thoroughfare moments from Marble Arch. Decline set in during the Eighties and by 1995 the high street was in crisis. Half the shops were empty or let to charity shops, residential values were suffering and office occupiers were leaving.

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The remarkable turnaround is due largely to the astute management of the area’s main freeholder, Howard de Walden Estate, which wants to attract more families to sustain the area’s village-like mix of schools, shops and restaurants.

Homes are becoming available in the Harley Street medical zone as clinics and surgeries relocate to state-of the-art spaces such as the newly extended London Clinic in Devonshire Place.

Redevelopment of the Royal National Orthopaedic Hospital in Bolsover Street has resulted in Fitzrovia Apartments — 70 designer flats, including penthouses with vast terraces. Prices start at £2.42 million. Call 020 7578 5100.

Amanda Rajkumar, 40, an HR director who rents an apartment at the development says: “For me, the area is the epicentre of London, with everything on the doorstep: Regent’s Park for jogging; Marylebone, Mayfair and Soho for shopping and dining out; and Fitzrovia and the West End for the theatre and galleries.”

In nearby Fitzroy Place, the former Middlesex Hospital has 235 private homes. It claims to be one of the fastest-selling schemes in London. Prices start at £1.25 million. Call 020 7323 1077.

Other coveted embassy addresses include Fitzroy Square, a Georgian gem, where Mozambique’s and Liberia’s embassies are based, and the Swiss and Swedish embassies in Montagu Place, W1. Both are nondescript modern buildings and strong redevelopment candidates.