British Land Co. won local-government approval to build luxury apartments near The Ritz hotel in London’s Mayfair district as foreign demand boosts home prices in the city center.
British Land, the U.K.’s second-largest real estate investment trust, can demolish properties at 82-84 Piccadilly and develop four buildings that will also have offices and a club, the Westminster borough council decided late yesterday in a 6-0 vote. The company can sell 36 apartments on the open market, while 11 units will be affordable housing.
Home values in Mayfair have risen 139 percent since 2005, the most of any district in London, Savills Plc said in a report today. The average U.K. home has fallen more than 19 percent in the same period, according to the broker.
“The residential building is located fronting onto Piccadilly, making best use of the prestigious address and views afforded into and over Green Park,” Squire & Partners wrote in a filing to the borough on behalf of British Land. “This reflects the historic residential nature of Piccadilly as a street where the gentry’s London palaces were located.”
British Land will have to pay 1.85 million pounds ($2.91 million) toward affordable housing as a condition of approval. The London-based company bought the buildings, a short walk from Bond Street’s luxury stores, for 129.6 million pounds in July 2012. The project may generate a profit of more than 20 percent, according to JPMorgan Chase & Co.
The new buildings together will have 26,620 square meters (286,320 square feet) of space. The project is also close to the former In and Out Club at 94 Piccadilly where billionaire property investors David and Simon Reuben won approval to develop what’s likely to become the U.K.’s most-expensive home.
Brokers Savills and Knight Frank LLP forecast in July that luxury-home values in districts such as Mayfair, Belgravia and Knightsbridge would rise 6 percent this year as a weakened pound makes the market more attractive to overseas buyers.