Property: The millionaires are on the move: As new money melts away, the mansions of Hampstead Heath fall victim to repossession. David Lawson reports

'I will give you pounds 2.3m,' says the man on the phone. 'Then we can stay friends.' The person at the other end is silent for a while, calculating whether 'friendship' is worth a pounds 200,000 price cut.

The combatants, of course, are not friends. They have met only a couple of times, and had parted angrily after failing to agree on the property's price. Their 'friendship' is the restrained politeness expressed as a deal is being struck. 'OK, I'll live with that,' comes the eventual reply. 'I'm very happy we could do business.'

Big money is returning to 'Millionaires' Row', and when the high-rollers start spending, the rest of the world may not be far behind. The property that was being sold over the phone is on The Bishop's Avenue. Note that all-important 'The': it hints at the exclusivity of the address. The street and its neighbours, running north of Hampstead Heath, London, show not only how new money was ploughed into property during the boom, but also how the mighty have fallen.

The grand, ostentatious mansions sitting smugly behind electronic gates and cameras house more Arab sheikhs, Greek shipping millionaires and mysterious Indian tycoons than the rest of the country put together. But they also are witnesses to a clutch of bankrupts and repossessions.

A pounds 25m palace called The Towers, once touted as the most expensive new home in the United Kingdom, was unloaded recently for less than pounds 10m. Mona Bauwens, the millionairess who sued the People over its reporting of her friendship with David Mellor, has seen the asking price for her mansion, Sunningdale, fall from pounds 8m to pounds 4m.

One building society is licking its wounds over the pounds 3.5m it lent on a more modest mansion, around the corner from The Towers, that eventually went for about pounds 1m. Another coughed up pounds 2m for a neighbouring house, now worth about pounds 900,000, only to discover that the buyer had taken out two further mortgages.

This area of London led the way into the property boom, and collapsed at the first whiff of recession. Now buyers are moving in again. 'You could walk in here today for pounds 500,000, half the minimum entrance fee in 1988,' says a local agent, Trevor Abrahmsohn, whose career has closely matched the rise and fall of 'Millionaires' Row'. A few years ago he was worth pounds 8.5m on paper, after floating Glentree Estates on the stock market. Now he has returned to drumming up deals, after buying back his company for less than a thousandth of its peak value.

His technique, he admits, would turn most agents' hair white. He does not allow buyers and sellers to hum and haw over deals; he drags them by the scruff of the neck to meetings (or at least to the telephone) to make sure that they strike a bargain. Mr Abrahmsohn's success has won him few friends among the refined rivals fighting for this expensive slice of the market. 'But,' he insists, 'it is how all homes should be sold. You have to work hard to make sure things happen, and not take no for an answer.'

The area has long been home to new money. It was once an enclave for company chairmen and show-business stars, but captains of industry crippled by the Seventies slump sold out to the very Arab sheikhs whose oil-price rises had brought about their downfall. The Saudi royal family alone is reputed to have accumulated almost a dozen homes over the years, including a clutch of new ones bought as a job lot for about pounds 8m not long ago.

Lulu and Ringo Starr came and went, as did Emil Savundra, the insurance swindler, and Asil Nadir (whose Polly Peck company collapsed. in the Sixties and Seventies). The demolition of Gracie Fields's old home to make way for the monstrous neo-classical Towers, led to the Ombudsman ordering the local council to pay a neighbour pounds 50,000 for failing to enforce the original plans for a more restrained scheme.

Greek tycoons crowded in after King Constantine settled nearby, as did wealthy Iranians exiled at the same time as the late Shah. Nigerian chiefs floated in on a tide of oil money and outbid each other for the grandest homes.

Many of the properties are forgotten investments that have never been occupied by their foreign buyers. One house in Winnington Road, which went to a sheikh for pounds 1m, was put straight back on the market. 'His wife threatened to divorce him if they moved in,' Mr Abrahmsohn said.

At least that sheikh bought at the bottom of the market. About a dozen vacant houses are in the hands of receivers. Many were picked up in the mid-Eighties when any price seemed worth paying for the exalted address. As times got harder, owners often borrowed against their properties to prop up ailing businesses. Now the lenders can expect to get back only a fraction of their money.

One house on The Bishop's Avenue was worth about pounds 150,000 when Mr Abrahmsohn first set up his business in 1976. At the peak of the boom it hit pounds 2.2m, and it is now on the market for pounds 1.75m. Another, on Winnington Road, went from pounds 200,000 to pounds 2.5m before subsiding to pounds 1.65m.

The most evocative example of the rise and fall of 'Millionaires' Row', however, is Spaniard's Field, a boarded-up house surrounded by a 12-acre bird sanctuary just off the heath. Empty for more than a decade, it has had a succession of owners who saw riches slip through their fingers.

The first was Rajendra Sethia, who became the world's largest bankrupt in 1985. Then Godfrey Bradman is reported to have forked out more than pounds 2m for it, about seven times its value 10 years earlier; Mr Bradman made his name from clever tax schemes, created Broadgate, Europe's biggest office complex, then saw his company, Rosehaugh, go down last year, owing millions to the banks.

Long before then, his plans for a classical mansion on the site had fallen victim to objections from planners and neighbours, but at least he made a profit on the house - and from an apt buyer.

Olympia & York had just started work on the notorious Canary Wharf tower in the London Docklands in 1988 when the company's chief executive, Paul Reichmann, snapped up Spaniard's Field as a UK base for what he expected to be a lifelong project. He is understood to have paid more than pounds 3m for the estate. The collapse of Olympia & York led to another change of ownership last year. At pounds 2m, the new owner - rumoured to be the Sultan of Brunei, or a sheikh - may have a bargain. 'Anyone buying at current prices will be heralded as a genius one day,' Mr Abrahmsohn says.

That day may be a long way off, however. Just as in the real world, values in The Bishop's Avenue will not boom overnight; they may even continue to fall if Mr Abrahamsohn's hagglers on the telephone are anything to go by. But at least buyers are back: Glentree alone has racked up pounds 4m worth of sales during the holiday period.

(Photographs omitted)