Hedge funds are being priced out of their favoured London homes in Mayfair and St James's as wealthy foreign buyers snap up properties and landlords ramp up rents to levels even the financial elite cannot afford.
With the funds under pressure from investors due to generally declining returns and now trying to cut costs, they are looking to more modest areas of the capital for accommodation.
Bloomberg reported yesterday that properties which might have been offices are being converted into residences costing £2,000 a square foot or more.
The price of luxury homes in the capital has jumped by nearly 40 per cent in the last five years, according to the estate agents Knight Frank.
"It's a wonderful problem to have," said Andrew Lax, co- founder of Lancer Property Asset Management, which oversees Mayfair's Berkeley Square Estate. "Holding the line becomes increasingly difficult."
Data compiled by the Bloomberg news service shows that hedge funds lost nearly 3 per cent of their value in May as they, like many other investors, struggled to cope with the implications of a Greek exit from the euro and Spain's bank crisis.
Even Arki Busson, the hedge fund guru who has found fame due to charity work and relationships with Elle Macpherson and Uma Thurman, has seen his assets tumble from a $14bn (£9bn) peak in 2008 to about $7bn now.
It is likely that he can still afford to keep his office above Green Park Tube station in London, however.
The shortage of property in Mayfair has been exacerbated by the banking crisis. Banks have hacked back on their lending to property ventures, so new buildings are scarce.
Data from property consultancy Cushman & Wakefield show that half of all hedge fund managers in central London are now based in either Mayfair or St James's. Five years ago that figure was 70 per cent.
Some industry insiders say that investors are increasingly less impressed by lavish offices in expensive bits of town in any case, and would rather see the people who are managing their fortunes have less obvious expenses.