Judging by the reaction on Twitter – and was this the first property story to “trend”? – Chelsea fans were celebrating a historic loss this week. The club won’t be moving to Battersea Power Station.
The victory by Malaysian investors SP Setia and Sime Darby Property in the race to become preferred bidders for the south London landmark has seemingly kiboshed the Premier League club’s bid to build a new stadium at the power station site.
And while the news disappointed the club’s owners and development partner, Almacantar – though, conspicuously, they haven’t entirely ruled out their ongoing interest – it was welcomed by most supporters.
Lenders on Battersea had most to celebrate. The £400m purchase price means Ireland’s National Asset Management Agency and Lloyds Banking Group will have their £330m of debt repaid in full. The balance will go to previous owner Victor Hwang’s Oriental Property Company. He won’t get all his £180m back, but recovering any of that money was by no means a certainty.
There were other winners too. The heritage lobby was delighted the plans will preserve the façade of the power plant with its iconic chimney stacks. And Wandsworth council was similarly moved by a resolution to the saga, especially as the 38-acre site is being sold with planning consent for 3,700 new homes, 1.6m sq ft of offices and 500,000 sq ft of shops and restaurants.
Given the direction of travel in the capital’s property market, don’t be surprised if the resi component rises and the office element shrinks. Yet since the investors have committed to the extension of the Northern Line, expect such a request to fall on receptive years.
What follows is 28 days of further due diligence and contract negotiation. Oh, and a fair amount of carping too.
Some will argue that only a domestic developer could and should deliver the redevelopment. Others will say that preserving a structure with little unique, historic value – we have Tate Modern, after all – is an unnecessarily costly, inefficient and backwards-looking endeavour.
I disagree on both counts.
As for whether Battersea is worth preserving, it comes down to matters of preference and taste. And expounding extensively on these is always a risky business.
More significantly though, the home nation of any developer in an increasingly internationalised property industry matters little. The ability to deliver is what counts.
And it may well turn out that a domestic developer, an Argent or a Capital & Counties, say, both of which have taken a serious look at the site previously – do end up involved in one way or another.
In the final (for now) analysis, credit should go to Ernst & Young – and agents Knight Frank – for realising so much value from such a troubled asset. It was only last December that a bid for £262m – from SP Setia – was rejected. E&Y was confident more value could be realised on the open market.
They have been proved right, achieving the same price paid by previous owner Treasury Holdings in 2006. Nama and Lloyds have 138 million reasons to be grateful.
There’s another good reason why no one should be surprised that the power station has been bought by an overseas investor. According to Jones Lang LaSalle, more than one in four purchasers of stock on the City of London in the first half of 2012 were from the Far East – outstripping buyers from the UK. Overall, 77% of purchasers were from overseas.
Good luck to Allsop’s Allan Collett, who will be inaugurated as the new RICS president on 2 July. Ahead of our interview with Collett, who is also chairman of Allsop Residential Investment Management, we want to know what would you like to ask the new president. E-mail your questions to noella.pio.kivlehan@rbi.co.uk
