Bloomberg – Hedge funds and other tenants in London’s Mayfair and St. James’s district, the world’s second- most expensive business location, face a doubling in property taxes in the next five years, real estate brokers said.

Tenants in central London may start demanding rent cuts to compensate for municipal business property taxes, known as “rates,” that may increase to 50 pounds ($81.50) a square foot by 2014 from 25 pounds now, according to adviser Jones Lang LaSalle Inc.

The tax, reset to property rental values in April 2008, will rise even as rents in London’s West End area are tumbling. Since that reference date, prime rents have fallen 46 percent to 58.50 pounds a square foot after inclusion of rent-free incentives, JLL said. The financial crisis and the recession have cut demand from financial services firms, which account for 60 percent of tenant seeking to locate in the district.

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The Independent – Rents for plush offices in Mayfair and St James’s plunged almost 30 per cent last year, hammered by the declining fortunes of many of their hedge funds tenants.

The commercial property agency NB Real Estate has released new research that shows the rent in swanky west London offices tumbled from £120 per square foot at the end of 2007 to £85 at the end of last year, a consequence of a bad year for hedge funds. They have been vilified for short selling bank shares, have suffered mass redemptions and experienced their worst ever full-year losses.

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Tags: commercial property agency, consequence, fortunes, london-offices, losses, mayfair, real-estate, redemptions, rents, square foot, st-james, west london