US embassy could fetch €441m

Overseas PropertyThe US embassy in Mayfair, London, could fetch more than £300 million (€441 million) if and when it goes on the market, property experts predict.

The building is in Grosvenor Square, in the heart of one of London's most expensive areas. As such, it is likely to attract a ferocious bidding war from UK property companies, Middle Eastern money, Irish investors and others.

The US government insisted recently that no decision had been made to sell, saying "no options have been ruled in or out".

Given its plum spot, the building might sell for well ahead of the £90 million (€132 million) figure recently reported by the BBC.

Chelsea Barracks was recently bought by Qatari Diar and CPC Group for close to £1 billion (€1.47 billion) - more than four times the initial price sought by the UK's Ministry of Defence.

One agent said: "£90 million [€132 million] would only be £700 per sq ft, while many residential buildings in the area are fetching three times that."

The embassy is one of America's biggest, employing 750 staff. Recognisable from the aluminium eagle on its roof, the nine-storey building was built in the late 1950s and opened in 1960.

Given its age, the successful buyer is likely to knock down the premises and replace them with more glamorous, modern buildings. It would be expected to submit plans for a larger scheme than the existing 12,384sq m (133,300sq ft) building.

The embassy has 939 years remaining on a 999-year lease from Grosvenor, the Duke of Westminster's private property company. It is understood the US is considering moving the operation to another part of London, but has not yet made a firm decision.

The embassy has had increased security in recent years, particularly since the September 11th attacks of 2001.

Experts said its departure could increase the value of homes and offices in the surrounding streets of Mayfair, as residents would then be less concerned about the threat of a terrorist strike.

Rumours of the US embassy's departure first broke in February, when the US government said any decision was still in the early stages. It said it was "assessing various property management options, among which are the continued possession of its current premises or relocation".

Cushman & Wakefield is procuring new premises for the embassy. It is also understood to be seeking a buyer for the former US navy building at 20 Grosvenor Square and 1-7 North Audley Street. The 9,290sq m (100,000sq ft) premises could fetch close to £200 million (€294 million).