The tallest building in London’s Covent Garden looks set to be converted into prime residential flats by Achilleas Kallakis’s Pacific Group

The Greek shipping tycoon is set to pay £78m, reflecting a yield of 5.2%, for the 87,937 sq ft office building, Orion House, at Upper St Martin’s Lane.

The price is a healthy one in today’s tricky market and bodes well for the vendor, GE Real Estate, and the selling agent, Strutt & Parker.

Orion House is let to 13 tenants, among them Metlife Investments and Marathon Asset Management, and generates £4.3m a year. The leases expire between 2009 and 2017 and it is understood that Kallakis will consider high-end residential development at the 15-storey building.

The latest deal, which is expected to be signed next week, is the latest in a history of Kallakis buying office buildings with the potential for residential redevelopment. Last night his Pacific Group was set to win planning consent to convert 8 St James’s Square into six luxury flats.

Kallakis is understood to want to sell the penthouse at £5,000/sq ft – which would make it one of the capital’s most expensive homes.

The plans involve converting each floor, ranging from 3,600 sq ft to 9,150 sq ft, into flats overlooking St James’s Square.

The ground floor will become a bar and restaurant.

A Westminster planning report said the size of the flats was ‘exceptional’ and more units could fit inside the building. Because of this, Pacific is being asked for a £4m affordable housing contribution.

The St James’s Conservation Trust welcomed residential development in the square. Its only concern was over the bar and restaurant, which it fears might encourage short-term residents or a ‘quasi-hotel’ scheme.

Kallakis bought the block, with 7 St James’s Square and 7 Appletree Yard, for £120m last year from Hermes.

The properties were previously under offer to IVG Asticus at £140m. In January Kallakis also bought a 220,000 sq ft government-let building at Vauxhall from the Reuben brothers for £75m.