The three parties involved in the development of the 39-acre Battersea Power Station project in London can expect to recover their land cost post-phase 3 which is expected to be launched at the end of this year, Battersea Power Station Development Company Ltd says.
The consortium comprising S P Setia Bhd, Sime Darby Bhd and the Employees Provident Fund purchased the site in 2012 for £400mil.
Battersea Power Station chairman Datuk Teow Leong Seng says land cost has gone up about three times since. At 5% of its gross development value (GDV) of £8bil, this is considered “low”.
Generally, land cost to GDV is generally between 20% and 25% for high-rise development in Malaysia, 50% in Singapore and 65% of GDV in Hong Kong. Although this is a mixed commercial development, at 5% of GDV this is low by any standards.
The consortium has also contributed £200mil towards infrastructure, which involves the Northern Line extension and the building of a train station. The three parties have also invested £100mil towards the refurbishment and restoration of the external facade of the four-chimney building.
“If we are looking at £700mil, we have to sell a bit of phase 3 in order to breakeven,” says Teow.
Phase 2 sales (GDV: £770mil) was sold at an average of £2,360 per sq ft with prices ranging between £1,400 and £4,000 plus. About 95% of it was sold in the first week of its launch, 75% to UK dwellers. This constrasts with phase 1 sales; 70% purchased by Asians and 30% UK dwellers with price averaging about £1,100. Off-plan sales involve a downpayment of between 10% and 20% and the rest on completion in UK.
The strong sales in phase 2 is an indication “that the British are returning to the market” after the debilitating slowdown which saw prices plunge as much as 30% to 35% in some areas post-2008 crisis in London.
The highlight of phase 3 are two projects by renowned architects Sir Norman Foster and Frank Gehry. They will add premium to the development, says Teow. Comprising 1,300 units of residential units, the plan is to have a partial launch of both in order to facilitate the development of the train station. Half of the site will be tied up for construction for the next four years, he says.
“When we finish part of phase 3, our land will be ‘free’. This will give us flexibilility to price subsequent developments. We will not be constrained anymore (in terms of pricing),” says Teow. Phase 3a is expected to be completed 2017/18 and 3b in 2019, in align with the opening and running of the underground.
Teow says there will be no piling needed for phase 2 as the building is already there. The consortium is also developing a walkway over the Thames to link the development with Chelsea.
BPS, to have a zone 1 address, is separated by Chelsea, London’s most high-end area by Chelsea River Thames. The closest underground to the power station site today is Sloan Square, a brisk 20-minute walk away.
Teow says there are several positives about BPS which seem to have been overlooked by many. There will be a town centre with a one-acre Malaysia Square located behind the iconic BPS building while the main entrance fronts an open space and river. A boulevard with retail on both sides will lead pedesterians from the tube station to Malaysia Square.
The project fronts the Thames. There is a 200-acre park and there is an iconic building, says Teow. These are the factors that will work towards building a destination. On its plans for the power station itself, Teow says there will be three levels of retail, a single basement car park and a large concourse area where the famed London fashion week will be held one day, he says. On both sides of the building will be offices and apartment units.
“The retail and office portion will be not be sold in order to continue with the vision for the town centre. The moment we sell, we will lose control,” says Teow.
While modernity reigns on the inside, the external industrial facade will be preserved to retain the history and legacy of the place.
There are plans to install a lift car in one of the chimneys to take passengers to the top, a height of about 30-storeys the likes of the elevator ride in Burj Khalifa in Dubai, the tallest man-made structure in the world.
He says the development of the 39 acres is much looked forward to by the locals. “The fact that it is finally happening is something they are very happy about. The BPS is under-loved,” says Teow. The development of BPS, the relocation of the US, Chinese and Dutch embassies in the swathe of land fronting the Thames and the overall interest by different groups in the regeneration of the area is expected to boost the one-time industrial area which has remained rather dilapidated for decades.
The company has also purchased a piece of land earlier this year near the site to fast track the construction of affordable housing.
The development of the BPS will help to create jobs for its entire 12-year duration besides contributing billions to the UK construction industry.
