Wetherell Mayfairs Fitnes Properties

By Richard Holledge

LONDON — What could be more English than Mayfair? Elegant Georgian townhouses and solid Edwardian mansions line the streets of this sophisticated neighborhood, which has been a haven for the rich since the Great Plague and then the fire of 1666 drove the capital’s aristocracy out of the City of London and into the area to the west.

Today, many residents come from farther afield — including Asia, Saudi Arabia, Russia, Greece and Italy — drawn by glamorous clubs like Harry’s Bar and Annabel’s, Michelin-starred restaurants like Le Gavroche and duplexes that cost as much as £25,000, or $38,000, a week to rent. And thanks to a change rooted in the dark days of World War II, its real estate market is thriving with an increase in the number of properties coming on the market.

“Scores of Mayfair’s mansions were requisitioned and turned into offices” during the blitz, said Peter Wetherell, managing director of the Wetherell real estate agency in Mayfair. Since 1990 those temporary use permits have been expiring and, although the process has been slow, the buildings have been reverting to residential use.

Initially landlords like Grosvenor Estates, the biggest in Mayfair and owned by the Duke of Westminster, were reluctant to end commercial usage as rents could be raised periodically while residential property, in contrast, could produce just a single sale. But the move to residential was given a push by the Leasehold, Reform and Urban Development Act of 1993, which gave leaseholders the right to buy their property.

So with London’s chronic shortage of high-end homes producing astronomical sale prices in recent years, landlords realized that they could make a handsome profit per square foot — and the pace of change quickened. (The other large landowner is Berkeley Estates, once part of the BP pension fund and now owned by the United Arab Emirates.)

“Since the general election on May 6, I have handled one converted property for £12.5 million, one for £25 million and another £18 million,” Mr. Wetherell said. And a block near the Dorchester Hotel on Park Lane, owned in part by the pharmaceutical group AstraZeneca, is being considered for renovation back into apartments. Mr. Wetherell, who has been running his business in Mayfair for 27 years, has been involved in the return of about 90 buildings to use as houses, apartments and maisonettes.

As an example, he pointed out a house on Mount Street that recently had reverted from commercial use and was being sought by a Russian oligarch, an American hedge fund manager and a Middle Eastern prince. The price is £30 million.

Farther along the street a solid red-brick mansion, the former headquarters of the now defunct Burmah Oil, has received planning permission to be converted into six apartments. The asking price for the 10,279-square-foot, or 955-square-meter, building is £10 million.

On nearby Queen Street, a graceful six-story building dating from 1883 has the go-ahead for conversion to six apartments and is on the market at £5 million, while an old pub, The Red Lion, is being converted into a townhouse with a separate mews at £6.75 million.

Still, Mayfair is a bastion of tradition. Many properties are offered leasehold, a system that gives ownership of the land for only a limited period, sometimes as little as 25 years. Many foreign buyers are not familiar with leasehold and can be put off by it, said Richard Cutt of the Knight Frank real estate agency. “They don’t understand the concept of owning what seems to be a diminishing asset,” he said. “But it is easy and relatively cheap to gain an extension of a lease for anything up to 99 years. That, in turn, can be extended. There are rights of appeal and the process is transparent.”

Even with recent improvements, Mayfair properties still are valued at about 10 percent less than those in Belgravia and Knightsbridge, at the very top of the residential market in London, Mr. Cutt said.

“There is a stigma because of the mixed use of the properties compared with Belgravia and Knightsbridge, which prospered and have been able to offer trophy homes,” he said. As examples, Mr. Cutt cited a 4,945-square-foot, seven-bedroom townhouse in Chester Square, one of Belgravia’s most elegant addresses, which is on the market for £11.5 million. In Knightsbridge, a 7,000-square-foot apartment overlooking Hyde Park is offered for £29.5 million and includes seven bedrooms and eight bathrooms.

Yet what Mr. Cutt called “big ticket” developments are in the offing in Mayfair. The building that has housed the U.S. naval attaché on Grosvenor Square, across from the U.S. Embassy, is earmarked for a luxury project. And the embassy itself, which is moving out of central London, may become either a hotel or apartments.

The Grosvenor House Hotel, built in the 1920s on Park Lane, is for sale by the Royal Bank of Scotland and estimated to be worth £700 million. And the Piccadilly mansion that once was the home of the 18th-century statesman Lord Palmerston is being offered at £150 million.

“Now Mayfair is back on the radar of the wealthy and of the developers,” Mr. Cutt said. “Prices are beginning to catch up and as the housing stock goes up, more wealth comes into the area, the retail offer becomes more desirable, it attracts more people and more wealth. Everything improves.”

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