Daylight robbery? New Scotland Yard is bought for £370m by developer

Possibly the world’s most famous police headquarters, New Scotland Yard in London, has been sold for £370m to a Middle East investor who plans to replace the 1960s block with luxury apartments.

In a further sign of intense international interest in the London property market, Abu Dhabi Financial Group (ADFG) paid £120m more than the asking price for the block in Westminster, which has housed the Metropolitan police since 1967.

It plans to demolish the 600,000 sq ft building and build blocks of flats along with shops and offices of a similar height – 70m (230ft) – giving views of Westminster Abbey, Buckingham Palace, the Houses of Parliament and the London Eye.

The force will, however, keep the famous rotating sign that stands outside the building. It is moving to a smaller HQ, the Curtis Green building on Victoria Embankment, which has stood empty since late 2011. The £58m move will save more than £6m a year in running costs, it estimates. The sale proceeds will be used to kit out bobbies on the beat with tablets, smartphones and body cameras.

They will also help to pay for the display of a collection of crime memorabilia stored at the building and known as The Black Museum, which dates back to the Met’s formation in 1829, and includes a letter from Jack the Ripper.

Charles Pinchbeck, head of West End development at Jones Lang LaSalle, which handled the sale, said it showed “continuing international confidence in the London market”. “What was clear was that all the bidders could appreciate just what a special opportunity it was,” he added.

Marketed as Ten Broadway, the 1.7-acre site New Scotland Yard site attracted interest from around the world. The London mayor’s office said it picked ADFG from 11 credible bids. The investment company is also building 72 luxury flats and a restaurant at 1 Palace Street next to Buckingham Palace, a £310m project.

ADFG’s chief executive, Jassim Alseddiqi, said the firm hopes to create a new London landmark. “The New Scotland Yard site will be one of the most important redevelopment projects undertaken in central London this decade, replacing a world-famous headquarters with a world-class development.”

The new luxury apartments are expected to generate up to £100m in stamp duty when they are sold, as they will be priced over the £925,000 level that attracts a 10% rate.

It is the latest London landmark snapped up by foreign investors. The Gherkin office tower in the City was bought by Brazilian billionaire banker Joseph Safra for more than £700m last month, while the Qatari Investment Authority acquired HSBC tower in Canary Wharf for more than £1.1bn. Qatar’s sovereign wealth fund has teamed up with North American property firm Brookfield to make a £2.6bn bid for the owner of Canary Wharf in east London.

The Mayor’s Office for Policing and Crime put New Scotland Yard on the market in September and said it would have cost over £50m to bring the building back up to standard. It bought the freehold for £123.5m in 2008. The sale forms part of a major revamp of the Met estate, which has raised £215m so far through the sale of 52 buildings (with plans to sell up to 200 buildings by 2016/17). The overhaul is estimated to save over £60m in annual running costs by 2016.

The Met has already moved several times – from Whitehall Place to Great Scotland Yard in 1875, to the Norman Shaw building in 1890 and to the current 600,000 sq ft building in 1967. The move the Curtis Green Bilding, an annex to the Norman Shaw Building, will take it closer to its founding location.

Met commissioner Sir Bernard Hogan-Howe said: “Police funding continues to be under extreme pressure. We now expect to need to be making savings of up to £1.4bn by the end of the next spending review, including some £600m which we will have delivered by 2015/16. This is equivalent to a third of the Met’s original budget so this money is absolutely vital to us.”