Lodha’s name is synonymous with the highs of the London prime residential market.
The Indian giant threw itself headlong into the sector in 2013, when it paid £306m for the Canadian High Commission at 1 Grosvenor Square, SW1.
The developer’s first foray into the market oozed confidence, and it looked to be the beginning of a line of megadeals.
Then in 2014 it picked up the equally prime Lincoln’s Square for £90m.
Abishek Lodha, Lodha’s managing director, told the Times of India at the time that he planned to invest $5bn (£4bn) in London. Abhinandan Lodha, the deputy managing director, said the firm intended to invest considerably in the Mumbai and London markets.
And then… nothing. Lodha, after its first two acquisitions, went quiet, and sentiment worsened about the state of the London prime market.
High-end prices started to slide in 2015, as reports of flipping hit the London new-build market and stamp duty changes took their toll on demand. Last year brought the 3% surcharge on second homes, and a decision to leave the European Union.
Rumours emerged about a search for an equity partner for the Canadian High Commission. There was talk about the high price paid. Had the developer got its fingers burnt?
Nothing much seemed to happen, but in India, and Mumbai in particular, development continued, including the world’s tallest residential tower, World One, and the development of Mumbai’s Trump Tower.
But quietly, the Indian giant was working through some issues. The planning on both London schemes was changed. At Lincoln’s Square, flat sizes were reduced and unit numbers increased, making homes more affordable.
At 1 Grosvenor Square, the changes were more drastic. The existing façade no longer had to be retained, allowing total demolition, while unit sizes and numbers were increased. The efficiency of the design was improved.
Lodha is readying itself for another go. Charlie Walsh, Lodha’s director of sales, says the developer has been concentrating on delivering the best it can for the Grosvenor and Lincoln’s Square schemes.
The UK team has grown in size to 30 staff and Lodha is starting to look at sites again.
Sales started in May 2014 for phase one of Lincoln’s Square. About 60% of the 70 units have been sold, a sales rate of around one a week, with prices averaging £2,100 to £2,200 per sq ft. The first crane is up on site, and development is about to begin in earnest.
While the process has been slow, the location is a long way from the heavily oversupplied Mayfair and Kensington Markets.
At 1 Grosvenor Square, demolition finished last week. Mace is in a pre-contract phase to do the build out. The sales process is beginning tentatively.
The 44 flats, on arguably London’s most prime square, aim to set a new height of luxury. Assuming the land value was half of the development’s gross development value, the 44 flats will need to sell for an average of £13.5m each. They will also have to compete with Finchatton’s 18 Grosvenor Square scheme, which is about 18 months ahead.
The next phase of Lodha’s expansion will be done with more caution. “I would like our next project to be a significant masterplan scheme,” says Walsh. “We would continue to look at prime, but also something that has masterplanning potential.”
That means larger, multi-phased schemes that have more flexibility, ones that could be more suited to the vagaries of the London residential market.
Despite a first dip into the London residential scene near the top of the market, it does not look like Lodha is giving up just yet.
Lodha’s London projects
• Scheme: Lincoln’s Square
• Bought: February, 2014
• Price: £90m
• Planning: 202 homes
• Progress: construction started
• Sales: 60% of phase 1 sold
• Scheme: 1 Grosvenor Square
• Bought: November, 2013
• Price: £306m
• Planning: 44 homes and four servants’ quarters
• Progress: demolition finished
• Sales: about to commence
Fact sheet: Lodha Group
• Abhishek Lodha, managing director
• India’s largest developer by sales value
• Established in 1980 by Mangal Prabhat Lodha
• Developing 43m sq ft of prime real estate with 28 ongoing projects across London, Mumbai, Pune and Hyderabad and Bangalor
• Delivered 6.5m sq ft in 2016.
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