The price of land in central London soared almost a fifth last year in a dramatic bounce-back from the post-Lehmans slump.
The value of residential development land rose 3.2 per cent in the last quarter and 20.3 per cent over 2011 as a whole, according to agents Knight Frank. The sharp rise means that buying part of London’s “blessed plot” on which to build homes now costs almost as much as in the peak of 2006 and 2007.
With planning permission land typically fetches between £800 and £1500 per square foot in prime areas, said Ian Marris, Knight Frank’s head of development consultancy.
Land prices have not recovered as quickly as built property values because of a shortage of bank funding for development since the financial crisis. Many purchases are now funded by private equity.
Mr Marris said more land was expected to come on to the market this year as banks sell off holdings picked up from failed developers.
Sales last year included the St John’s Wood barracks site for £250 million to Asian tycoon Ananda Krishnan, the South Audley Street car park in Mayfair for £155 million to mobile phones billionaire John Caudwell, and North Wharf Gardens in Paddington for £120 million to property developer Zog.
D2 Private, run by Irish property duo David Arnold and Deirdre Foley, have put a for-sale sign over 23 Savile Row, likely to fetch some £200 million. The block includes an art gallery and offices for financial firms.
