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Regeneration projects in London banking on overseas demand
[SINGAPORE] Developers of some of the largest regeneration projects in London are banking on overseas buyers' interest in the live-work-shop experience of mixed developments.
The Malaysian-backed developer of Battersea Power Station aims to transform the area along London's South Bank into "the next London village with a different character".
In its global launch for phase three starting from Oct 31, it is releasing some 539 homes and also 3.5 million square feet of commercial space to bring the best retailers, food and beverage players and businesses worldwide to London.
To convince firms to set up shop there, the developer is blazing an 11-country tour to major cities including New York, Paris, Milan, Doha, Tokyo, Hong Kong, Shanghai, Kuala Lumpur and Singapore.
The Malaysian consortium comprising SP Setia, Sime Darby and Employees Provident Fund had acquired the power station for £400 million (S$821 million) in 2012, beating rival bidders from as far afield as Brazil, China and Kazakhstan.
It has just secured financing of another £1.35 billion from several banks to undertake phase two and three of the £8 billion redevelopment project.
Rob Tincknell, chief executive of Battersea Power Station Development Co, told BT that he hopes to draw foreign brands that have not made their foray yet in London to its 1.25 million sq ft of retail, restaurants and leisure space.
Mr Tincknell believes the unique setting will attract companies in the creative industries and the TMT (technology, media and telecommunications) sector to open offices there. Some 1.62 million sq ft of office space will be housed in both the power station and new buildings.
There are also three hotels with a total of 400 rooms. They will fall into the "business", "boutique" and "trendy" segments, said Mr Tincknell.
The developer is now in talks with a few hotel players, including some in Singapore, he added. The tender will be issued only in the middle of next year.
When completed, the project will also have a total of 4,000 homes ranging from studios to townhouses. So far, it has already received 16,000 expressions of interest from UK residents, including previous buyers in phase one who have offloaded their units, Mr Tincknell said.
Liew Kee Sin, chairman of Battersea Project Holding Company, noted that phase-one buyers who flipped their uncompleted units enjoyed capital gains of between 15 and 60 per cent.
The average pricing for phase-three units will be £1,800 per square foot (psf), according to marketing agents for the project, higher than the £1,100 psf achieved for some 860 units sold in phase one.
Mr Tincknell explained that phase-three pricing will be lower than the average £2,300 psf for the London-only phase-two sales of 254 homes, which are located within the iconic power station.
He added that he is expecting a larger proportion of international buyers, up from 55 per cent in phase one. Buyers from Hong Kong, Singapore and Malaysia formed the bulk of international buyers in phase one.
"The US market, in particular, is something we are very keen to explore," said Mr Tincknell, citing the project's proximity to the American embassy.
According to Savills, prices across the prime central London - which include Mayfair, Marylebone, Knightsbridge, Belgravia, Regent's Park, Kensington and Holland Park - have risen by 13 per cent, compared to 23 per cent across Greater London.
Charles Calverley, regional director of London-based Quintain Estates and Development, told BT on Thursday that he believes the real growth in property prices will be in zones three to five, due to the shortage of supply in the mainstream mid-market.
In two weeks' time, Quintain will also embark on a global launch for phase two of Wembley Park, a mixed-use development in north-west London, and will be holding exhibitions in Singapore and Hong Kong.
Mr Calverley said he is confident of the project's potential, having sold 92 residential units in phase one at an average price of above £570 psf. Last year, Quintain opened London Designer Outlet with a cinema for the "retail-led regeneration scheme" next to Wembley Stadium.
Savills associate director for residential research Katy Warrick noted that several large-scale regeneration projects undertaken by private developers are taking place outside of London's established prime areas.
There are some 22,700 new homes priced at more than £1,000 psf, of which 48 per cent are located in six key clusters along the River Thames. Some 13,000 units could enter the rental market, which will be tested when a large supply of new prime stock is completed over the next few years, she said.