IVG Asticus has pulled out of £150m deal for a prestigious Hermes site in the heart of London’s West End because of the recent hiatus in the market.

The German fund, a part of the IVG Immobilien AG Group who own ‘the Gherkin’, has backed away from purchasing 7-8 St James’s Square after their period of exclusivity ran out last week.

It is believed IVG backed out because of the recent jitters in the property market, especially in relation to hedge funds, and wanted to wait and see what happens.

But pension-fund Hermes has said it is not concerned about finding another bidder.

A spokeswoman said: ‘We can confirm that we are no longer proceeding with the proposed offer from IVG Asticus for 7-8 St James’s Square as their exclusivity agreement has expired.

‘There has been an extremely high level of interest in this property and we expect a satisfactory conclusion to the sales process shortly.’

There were a number of bids for the site when it went on sale, including one from Irish investor D2 Private and another described as being ‘in the stratosphere’.

The site was granted planning permission by Westminster City Council in April for a scheme to replace 8 St James’s Square and 7 Apple Tree Yard.

The 55,000 sq ft scheme will be linked to the 10,000 sq ft, grade II-listed 7 St James’s Square, which will be refurbished.

CBRE acted for IVG on the scheme while Jones Lang LaSalle advised Hermes.