A flat in central London has become the most expensive home in the world, with a price understood to exceed £115m.

The flat in St James’s Square, equidistant from 10 Downing Street and Buckingham Palace, was granted planning permission last week. The value of the off-plan sale indicates that the world’s most expensive properties are not yet being hit by the international financial crisis.

It is to be carved out of a seven-storey 1930s office block, which will be used to create a total of six extravagant apartments.

The figure exceeds the £100m asking price for the most expensive apartment at One Hyde Park, the Candy & Candy development designed by the Richard Rogers Partnership.

It is also far in excess of the highest completed sale of £80m, paid for a house on Upper Phillimore Gardens in Kensington last month. Four years ago Lakshmi Mittal, Britain’s richest man, achieved a world record by paying £70m for a 12-bedroom mansion near Kensington Palace.

A source close to the deal for the flat at 8 St James’s Square, which has not yet been registered in public documents, said: “The price has been agreed. It is between £115m and £120m.” The identity of the purchaser has not been disclosed. Three of the other flats, which have been sold privately and not through estate agents, have also been “reserved” according to the source.

Only the most basic building proposals have so far been submitted. There will be large solar panels on the roof, a car lift to take vehicles to the basement parking – and cycle racks, to comply with regulations.

The St James’s district has become the centre of London’s hedge funds and private equity houses. Old money is represented by the clubs on nearby Pall Mall, and Clarence House, home of the Prince of Wales. The Hinduja brothers bought a family home in Carlton House Terrace in 2006 for £58m. It will provide accommodation for 38 members of their extended family.

The office block at 8 St James’s Square was bought in November 2007 by Labarre Trading, a British Virgin Islands-registered company. The firm paid £125m for the block together with the next door house, designed by Sir Edwin Lutyens.

Labarre is understood to operate on behalf of an unnamed Swiss family. The property development company Pacific Group is coordinating the project. It declined to comment.

Westminster council granted planning permission despite concerns from a local conservation group about plans for a private bar on the ground floor.

The council has secured an unusual payment from the developers, forcing them to contribute £3,978,000 towards affordable housing in the borough because of the “exceptional size” of the flats. Normally developers need to contribute to affordable housing only if they are creating 10 or more flats.

From the outside, 8 St James’s Square looks unremarkable. However, Peter Wetherell, a specialist in St James’s properties for more than 25 years, said: “The main selling point could be sheer exclusivity These will be the only flats available in St James’s for a long time – the last ones were sold eight years ago.”

He said that while there are 86 flats in the One Hyde Park development, this project will command a premium because it comprises only six flats. Half of the 80 apartments available at One Hyde Park have now been sold, although completion is not due until 2010. The average price paid has been around £20m or almost £6,000 per square foot.

Guy Bransby – director of planning at Jones Lang LaSalle, which coordinated the planning permission application – said: “Residential values have continued to rise in this area, and there has been a movement away from using properties as offices to housing. There will be only one flat on each floor.”

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