Rising residential property prices in London are fuelling a growing trend of office to home conversions. In desirable areas including Mayfair, Soho and Fitzrovia, developers are actively seeking commercial space which could be turned into residential units to yield a high profit.
According to Mayfair estate agent Peter Wetherell, this unprecedented rise in demand is largely due to the influx of super-rich buyers seeking large town houses in the area. As many such properties were turned into office blocks in past, the logical solution is to reverse this process and once again make the office spaces fit for habitation.
Mr Wetherell told the Evening Standard; “The square footage is worth a lot more for residential.
“With offices, you’re only selling the floor space and the toilets – a grand staircase isn’t worth anything to someone buying an office but it is a key selling point for a home.”
Surprisingly, the prestige of certain office blocks has not been enough to protect them from this redevelopment boom, with 30 Old Burlington Street in Mayfair already earmarked as an apartment block opportunity. Furthermore, the former Brazilian embassy in Mayfair was recently sold for £40 million, with industry experts forecasting yet another “super-rich” sale on the property in the near future.
It is hardly surprising that developers have proven keen to cash in on this lucrative venture, as average house prices in the city rose by 9.4 per cent in the year to September. Yet this amount seems very small fry compared to recently released forecasts – economists believe house prices could climb by as much as 24 per cent in 2014.
Should these forecasts prove correct, it will not only be developers who profit, as estate agents will also see increased turnover and rising margins. Mr Wetherell certainly believes that this period of prosperity will continue.
He says; “We have sold over 100 office buildings in Mayfair back into residential use in the past year.
“All the period office buildings that have been used as offices for 50 years are being turned back into homes.
“It’s the biggest thing going on in central London right now.”
Unfortunately, this seems set to compound the issue of commercial property shortages in central London, with small businesses already struggling to find affordable premises from which to expand. With demand growing and available space dwindling, it may be that start-ups and SMEs could be forced out of the capital city altogether in the coming years.
Do you think residential or affordable office space should be the major priority in London from an economic growth perspective?
