The recent announcement of the conversion of 3-5 Great Scotland Yard into a new 5-star hotel is a clear sign of the changes that Whitehall will undergo in the near future: we can expect to see the development of many more hotels and luxury residential developments.
In the view of Peter Wetherell, Managing Director of Wetherell, the leading estate agents for Mayfair and Westminster and specialists in super-prime property:
“Whitehall’s government quarter is being transformed into a residential and leisure address. Within the next 10 years No.10 Downing Street will be surrounded by hotels and luxury residential buildings with most of the adjacent government buildings relocating south of the River to Nine Elms and Battersea Power Station.
“Hotel room occupancy rates in London are currently amongst the highest in the world. Central London hotels have a room occupancy rate of 81%, compared to 79% for Dubai, 78% for Paris, 70% for Moscow and 63% for Madrid.
“Despite a spate of high profile openings, there also remains an undersupply of 5 star hotel accommodation in Whitehall and Westminster. Of the supply growth since 2005, only 14% of new rooms and suites have been 5-star accommodation, the rest has been budget or 3/4 star rooms.
Prestigious trophy assets for residential or hotel properties
“Behind the scenes, the developers are being funded by a network of UK and overseas banks, Gulf Royals, billionaires and overseas Sovereign Wealth Funds who see these historic government buildings as prestigious trophy assets which they want to help fund as long term triple-A investments.
“The government and diplomatic office buildings are more valuable as residential or hotel properties, and their sale or lease is a huge revenue generator for the government. The whole government quarter is changing, the Corinthia Hotel was once a government building, Admiralty Arch is being converted into a hotel and residences. Now the Scotland Yard headquarters is turning into a hotel.”
The developer’s perspective
This view is reinforced by Stephen Conway, Chief Executive of Galliard Group, the developers of 3-5 Great Scotland Yard:
“Over the last 14 months, Galliard has developed a series of former headquarter and government buildings including the BBC’s Marconi House, the Monserrat Embassy, the EU Foreign Relations Building, and now the Scotland Yard headquarters.
Designed to impress
“These buildings were designed to impress visitors and have grand facades and high quality interiors.
“The residential and luxury hotel sectors are generating higher real estate values than the office market, and technology is creating the paperless office and reducing the need for commercial premises with back office space.
“The government buildings and Embassies are gradually relocating to lower cost sites in Nine Elms, Victoria, and around Battersea Power Station, and this is why the government quarter around Westminster and Whitehall is being transformed into a luxury address characterised by prestigious hotels and high quality residential developments.”