For sale: Ottawa's Foreign Luxury Homes
Quiet real-estate deal ruffles feathers in diplomatic corps
Doug Saunders, Globe & Mail
Tuesday, July 24, 2007
LONDON -- They are some of the most desirable properties in London and New York: large and historic houses and apartments worth as much as $12-million in the most exclusive neighbourhoods.
For decades they have been part of Ottawa's little-known real-estate collection, home to generations of lucky civil servants.
Now they are about to go on the block, in a quiet real-estate selloff that Canada's Department of Foreign Affairs and International Trade is hoping will yield millions. In the discreet world of diplomacy, it's a deal that is ruffling feathers, raising fear that Canada is moving its diplomatic service into anonymous high-rise office towers.
Visitors to Ottawa's computerized public-tender system have begun to notice collections of luxury homes in foreign capitals appearing for sale.
The houses being sold include 36 Chester Terrace. On the edge of London's Regent Park, it was designed by John Nash in 1825 and is valued at $8-million to $12-million.
Though these houses have been used for decades to house mid-level diplomats, they have become extremely valuable properties. As an indication, Ottawa is offering between $100,001 and $250,000 just for "property assessments and evaluations" on one of the houses.
Canada's diplomatic real-estate portfolio is one of the country's best-kept secrets, a collection of some of the finest houses, apartments and public buildings in London, Paris and Rome, probably valued at billions of dollars. Now Ottawa is beginning to cash in on this inadvertent investment.
In London alone, Canada owns 75 houses, with an estimated value of more than $150-million, which are used by the lucky civil servants who get appointed to diplomatic, military or security postings in the British capital. That doesn't include Canada House or Macdonald House, where the Canadian high commission does its work, properties that are valued at hundreds of millions of dollars each.
Federal officials also told The Globe and Mail that in September they will look into selling the palatial Macdonald House on Grosvenor Square, in exchange for cheaper office space elsewhere in London, a move that follows the United States's sale of an embassy building on the other side of the same square, for close to $540-million this year.
Similar plans to look at selling properties in France are also afoot. But the source added that there are no plans for a repeat of the decision made by the Brian Mulroney government to sell Canada House * the symbolic home of Canada on the edge of Trafalgar Square * in order to relieve Canada's fiscal crisis. That decision was cancelled by the Jean Chrétien Liberals after a loud public protest by senior diplomatic staff.
This time, officials say, the goal in London and New York is more modest: putting people in houses more appropriate to their jobs.
In an interview, the London-based Canadian official responsible for selling the houses explained that it's part of a plan to put hundreds of public servants in more "normal, family-type semi-detached houses of two to three bedrooms," which in London would be valued at a mere $1.5-million to $2.5-million.
"I realized that we could make improvements by selling flats that were too large for our needs," said Guy Saint-Jacques, the deputy high commissioner in London.
"This reflects a change in the way that diplomacy is practised. In the old days, every diplomat would entertain at home and would host dinners and lunches. But apart from the high commissioner, myself, the head of programs and the military attaché, other people very rarely entertain at home. I know, because I sign all the hospitality forms. So it becomes difficult to justify having a large flat if you are not going to use it for representational purposes."
A senior federal source confirmed that the government is considering the sale of Macdonald House, but that a final decision has yet to be made.
The building, said the source, requires extensive and expensive upkeep and is difficult to get to for employees who work there.
"Costs for our officials there have gone up exponentially * as you would expect, in downtown London."
Mr. Saint-Jacques will put houses on the market over the next two years. He will also sell a large number of houses Canada owns in the distant outer suburbs of London, in neighbourhoods such as Northwood, Harrow, Moor Park and Pinner, which are hated by diplomats forced to live in dull neighbourhoods a long commute from the office. Using the profits from the stately homes, he will buy a large number of medium-sized $2-million family homes.
The houses being sold include 36 Chester Terrace, a four-storey house on the edge of London's Regent's Park. It was designed by architect John Nash in 1825, and is surrounded by elegant Corinthian arches, with a big garage building at the back and an internal elevator. Its value is estimated at between $8-million and $12-million.
It was most recently home to Judith St. George, the senior trade commissioner, a position that does not generally involve presiding over large dinners or receptions.
Mr. Saint-Jacques explained that he hopes to make Ottawa a profit of $5-million from the London selloff.
He also explained the proposed sale of Macdonald House, where the Canadian diplomatic service is based in London. The building, a former U.S. embassy, was bought by Canada in 1959, after Canada House became too crowded.
"In the fall, we may launch another project to try to find another chancery for the high commission, because there are a number of problems with Macdonald House," he said.
"We believe that we will get very interesting proposals. That will result in us getting a better building, better suited to our needs, ideally closer to Canada House * and also that will generate lots of savings for the government."
The New York property deal is more complicated: Rather than selling individual properties, which are scattered across the city and house the staff of Canada's United Nations embassy and its New York consulate, Ottawa is trying to find a firm that will manage all its properties, selling overlarge apartments and buying more modest ones, and possibly combining the two diplomatic missions in one, cheaper building.
Attempts at this have failed in the past.
The last time Ottawa suggested combining the leased offices of the consulate general with those of the United Nations, there was a disagreement over location: The UN mission, which is located at One Dag Hammarskjöld Plaza, wanted to remain close to the United Nations, while the consulate preferred to stay near its current midtown location in the Rockefeller Center. Together, the two offices account for more than 80,000 square feet.
The jewels in Canada's New York real-estate portfolio, however, are the personal residences of the consul general and UN ambassador at 550 Park Avenue. The 17-storey limestone building, built in 1917, has just 32 apartments, with each floor divided into two separate co-ops. The sprawling residences are located not far from the southern stretches of Central Park, and are routinely used for entertaining and parties.
Given the heated New York real-estate market, they would easily be worth several millions of dollars.
With reports from Steven Chase and Brian Laghi, Ottawa, and Sinclair Stewart, New York.
© The Globe & Mail 2007
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