Indian conglomerate links up with Spanish investor to buy London's War Office

Indian investment company the Hinduja Group has bought the Old War Office in partnership with Spanish group Obrascon Huarte Lain Desarrollos, whose main shareholder is Grupo Villar Mir.

The Ministry of Defence (MOD) building at 57 Whitehall is being disposed of by the Defence Infrastructure Organisation (DIO), which in September hired UK property adviser GVA to market the asset for an asking price of around £300 mln (€380 mln).

The 580,000 sq ft (40,000 m2) property was sold on a long-lease arrangement to the joint venture for an undisclosed sum following a competitive marketing process. It is believed the building will be redeveloped mainly as a hotel and residential apartments.

DIO, which is responsible for managing and maintaining land and property on behalf of the MOD, appointed GVA to market the building after it was declared surplus to defence requirements in August 2013. It is estimated the sale will generate savings for the department of around £8-10 mln per year in running costs.

Defence staff located in the Old War Office building will finally move out in around 12 months with most operations transferring to MOD’s main building.

Richard McCarthy, DIO's chief executive, said: 'The building has played an important part in our country’s history and now presents a unique redevelopment opportunity in an unrivalled location in the heart of Westminster. The purchaser will be granted a new 250-year lease to ensure that heritage and security of the building is well managed.'

See pages 21 to 28 in the December edition of PropertyEU Magazine for more on hotel investment.