SOME penthouses on the former Royal Hotel site could exceed £6m. – the most expensive the island has seen. The cost of transforming the area has risen by £10m. to £130m.

Work is now under way on a 60,000sq. ft office building, Royal Chambers, and a mixed-use residential and commercial scheme, Royal Terrace.

‘Both buildings are targeted to be complete by the end of next year,’ said Long Port Group chairman Charles Billson.

He believes the office scheme is urgently required.

‘There is a massive shortage of quality office space in St Peter Port and the island. We don’t see any new product coming out in the marketplace now for the next two years.

‘There is a squeeze. We are wondering where the new offices will come from to meet the States’ and finance industry growth plans.’

Royal Terrace, with a total area of 90,000sq. ft, will include 48 apartments and penthouses and a 30,000 sq. ft commercial and retail area. A £3.75m. two-storey rotunda will house a restaurant/cafe/bistro with alfresco dining and a public area with water features and art.

‘The whole Royal development is a massive inward investment for Guernsey, with a total end value of over £200m. invested, including fit-out.

‘It’s a shot in the arm for Guernsey and will boost its reputation in the long-term, providing a quality live-work location for people and companies who are global players.’

Mr Billson said it would be comparable with the best quality buildings and projects in the world.

‘We are building 40 very high quality apartments for locals with fabulous sea views – we are achieving all the objectives the States have set and delivering the quality we promised.’

Five major organisations have expressed an interest in bidding for the office space.

‘We are also having competitive bidding between people who want the same apartments, with the price being determined by the competition for them. The Royal penthouses could sell for £6m.-plus and the phase one release of two units is sold out, with all the phase two release under offer.’

Phase three will comprise four units and will be released at the beginning of next year.

‘There are now only four of the eight left.

‘We are seeing people living in London thinking of moving to Guernsey who want the best of the best for both their primary residential location and office.’

All 13 local market properties in the phase one release at Royal Terrace have been sold, with three-quarters of the 13 phase two units now under offer.

‘The interest is phenomenal – it’s more a question of rationing.’

Long Port is doing the work itself – but construction and development costs on the phases have gone up from £40m. to £50m. each.

‘It’s building-cost inflation – the cost of building materials has gone through the roof globally caused by the growth in the Chinese economy and energy costs – the shortages are driving up costs significantly.’