Tim Craine, a director of London Development Research, a company that advises developers and investment companies on property issues, believes 90% of residential development in the capital is on ex-commercial sites, and estimates that 500-600 conversion schemes are currently being undertaken, many of them in expensive enclaves such as Knightsbridge, Mayfair, Belgravia, Kensington and Chelsea.

Australia’s richest man, James Packer, son of Kerry Packer, the late media mogul, has reportedly just paid £15m for a newly converted flat set across three floors at 44-46 Park Street in Mayfair. The building, originally residential, was turned into office accommodation in the 1940s, when Sir Winston Churchill held cabinet meetings in its rooms.

The latest makeover has converted it back into six luxury flats, designed to appeal to ambassadors and the super-rich. Northacre, the developer behind 44-46 Park Street’s reconversion, has also turned the buildings of Queen Elizabeth College, set in four acres in Kensington, into 66 flats, now known as the Phillimores.

In Mayfair alone, according to estate agency DTZ Residential, “reconversion” has increased the supply of local homes by 15% over the past five years. The explanation is simple: according to estate agency Knight Frank, the price of residential property in prime London locations has risen by more than 26% during the past 12 months. In Kensington and Chelsea, Rightmove, a property website, reports asking prices have risen by 55.8%.

“There is such a huge demand for big, swanky apartments that people are looking far and wide to create the opportunity to provide them,” says Cliff Gardiner, director of The Buying Solution, a property search agency.

“International buyers want something that is absolutely ‘trophy’ in terms of address: they want to be in über-prime London; in Chelsea, Mayfair and Knightsbridge. So developers are taking more chances and becoming more adventurous.”

Office buildings give developers a blank canvas to work with; they allow the flats created within them to have large amounts of lateral space, something that international buyers demand. Significantly, too, new developments allow for underground parking, the installation of air- conditioning and all the latest security gizmos, from bulletproof CCTV cameras to number-plate recognition systems for residents’ cars — must-haves for many high-end buyers.

One of the pioneers of extravagant living, ex-office-style, was the novelist Jeffrey Archer, who snapped up the top two floors of Alembic House, a 1960s building on the Albert Embankment with views of Big Ben, in 1975. Developer Regalian saw the wisdom of Archer’s ways and followed suit, converting the remaining offices there, installing a basement gym and renaming the building Peninsula Heights.

“People would say to me, ‘Jeffrey, you’re on the wrong side of the river,’ and I would say, ‘Yes, but I’m looking at the right side — I’ll race you to the Savoy!’ ” the author says.

Barratt Homes can claim to have been one of the first developers to see the potential in dingy commercial premises. Back in 1994, it converted Royal Tower Lodge, an office block in Wapping, east London, into 41 flats.

The trend was further encouraged by the ending of temporary office permissions in 1990. Granted by Westminster city council to get the borough back on its feet in the post-war years, the permissions saw aristocratic townhouses becoming offices. Their demise gave the council carte blanche to permit reconversion back to residential use, which it is enthusiastically doing.

Now, the race to swap desks for duvets has reached fever pitch. For several months, the busy junction at the top end of Knightsbridge has been even more hectic than usual, as cranes and scaffolding have risen up around Bowater House, opposite Harvey Nichols. An ugly 1950s block, it is currently being demolished and will be replaced by 86 luxury apartments. Known as One Hyde Park, the scheme is scheduled to be completed in 2009 and is managed by super-trendy interior designers Candy & Candy.

Individual units, designed by the Richard Rogers Partnership, are expected to go on sale for up to £25m. The message? If you can’t convert an office block to suit today’s super-rich, just knock it down and start again.

Down the road in Grosvenor Crescent, the Blackstone Group, a property investment company, has just been granted permission to convert eight buildings, previously the headquarters of the British Red Cross, into flats (again, aimed at the luxury end of the market), while Savills estate agency is selling a penthouse at 131-132 Park Lane, in what used to be a bank, for £4.95m.

There is just one small hitch for developers who hope to attract the world’s super-rich to their office-block reconversion schemes — if a site consists of more than 10 units, then Ken Livingstone, the mayor of London, will expect up to 50% of them to be given over to “affordable housing”.

This expectation has sometimes created a standoff in development schemes, as the creators of new housing try to “offset” the affordable units from high-cost developments onto other sites that they own. Candy & Candy, for example, has relocated the affordable housing quota for One Hyde Park to Peel House, a derelict building in Regency Street — to the apparent disquiet of local residents.

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