The news that the US Embassy is to depart from Mayfair, W1, in favour of Wandsworth, SW8, caused an almost audible sigh of relief to flow from the mansions of Upper Brook Street to Mount Street, home of the hip Scott's restaurant and Christian Louboutin shoe shop. For the residents of Mayfair, deliverance from concrete bollards, traffic snarl-ups and other signs of the Embassy's heavily fortified presence in Grosvenor Square was now assured. Hurrah!

Peter Wetherell, of Wetherell & Co, a local estate agent, said: “If we all still wore hats, as we did in the 1930s, we would be throwing them into the air.”

The neighbourhood gossip will now focus on the future of the Embassy's site, estimated to be worth £500 million, despite research indicating that even the super-prime property market is now feeling not so chipper.

The final figure will depend on a number of variables: whether the building, designed by Eero Saarinen (famous for the Tulip chair), will be listed and, if it is, whether its use can be changed to commercial or residential. Brian D'Arcy Clark, of Savills, commented: “It would make a great hotel or apartment block.”

If residential use was granted, social housing units would be part of the deal, which would also affect the sum raised by the US Embassy. (These affordable dwellings would be built elsewhere, just in case you were hoping to move to Mayfair for next-to-nothing).

Richard Caring, the restaurant entrepreneur, is turning the former US naval offices in Grosvenor Square into oligarch-standard apartments. His £250 million purchase of these premises in 2007 was seen as the moment when Mayfair became once more a smart address rather than a dreary corporate HQ zone.

Houses in St John's Wood, North London, rather than flats near Vauxhall Bridge are the preferred pads of top American embassy staff. How they will miss the square gardens of Mayfair and nearby Selfridges! A compromise could be a £599,950 one-bedroom apartment in Grosvenor Waterside, a luxury block on the north side of the river, reassuringly close to Chelsea but within jogging distance of the new embassy site at Nine Elms.

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