EDITOR’S COMMENT: It’s a little more than nine months since the start of the Gulf crisis. The world’s attention may have moved on, but the Saudi Arabia-led boycott of Qatar – a boycott backed by the United Arab Emirates, Bahrain and Egypt – has forced the world’s richest country to change course.
Overseas investment has been reviewed. Gas production increased. And thousands of cows have been trafficked in as the state seeks to be self-sufficient in meat by the end of the year.
And now Qatari Diar is pausing construction on the latest phase of its high-profile redevelopment of Chelsea Barracks in London.
There are other factors that have had a more direct affect on the scheme than the Gulf crisis, but it’s hard to conceive that the changed environment in the region has not had a bearing.
Committed to delivery
It should be stressed that Qatari Diar says it is “committed to delivering Chelsea Barracks” and expects the first residents to move in during the first half of 2019. Phases one, two and three are in the process of being fitted out and construction works are ongoing. Some 65% of homes for these phases have been sold.
What’s more, Qatari Diar has already paid its section 106 agreement to Westminster council. According to the agreement with the council in December 2011, beginning construction on phase four would trigger a second affordable housing payment of £39m.
That agreement stated that payment would have to be made by 2020 in any event, but it is to the company’s credit that it appears to have settled early.
But with ground works and piling completed on phase four of the project, Qatari Diar acknowledges it is now “considering how best to procure the subsequent building works in an increasingly difficult construction market”.
Construction costs across London have risen nearly 15% since preparation work on the barracks site began in 2014. That surge in costs has caused every major developer in London headaches over the last five years.
And, of course, a shrinking market is a major consideration for any prime central London resi developer these days. Political and economic uncertainty, combined with rises in stamp duty, have depressed the top end of London’s residential market, though the pound’s fall has provided something of a cushion.
Prime London residential sales prices have fallen by 7.3% in south-west London and by 15.9% in central London, according to Savills. Across prime London, prices are 3.5% below where they were a year ago.
Geopolitical factors are kicking in too. China is concerned about outbound investment. And since the recent Salisbury attack, Whitehall officials have briefed that Russia has “shown itself to be a strategic enemy, not a strategic partner”. Sustained demand from either location cannot be relied upon.
And neither, for Gulf crisis-related reasons, can Middle Eastern demand for the barracks themselves.
It is a point that is best made by a sports story which – as the escalating row with Russia shows – is seldom separable from politics.
There haven’t been many football matches between clubs in Qatar and the UAE over the past nine months for understandable reasons. However, in at least two of the recent contests, UAE teams have replaced a local captain with one of their foreign players. And why?
To avoid shaking hands with a player from Qatar.
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