| LONDON, Sept 5
LONDON, Sept 5 The new owners of London's
Battersea power station must sell homes at more than double the
average rate for the capital to hit financial targets, raising
doubts about their plans for the site with a track record as a
The crumbling riverside edifice with its quartet of art deco
chimneys has been derelict for 29 years, defeating a series of
redevelopment attempts that included a theme park and a plan to
put a restaurant table at the top of a chimney.
Its latest owner, a Malaysian consortium, bought the
protected 39-acre landmark site for 400 million pounds ($635
million) in July.
The consortium is planning to build apartments, 1.7 million
square feet of offices, shops and a hotel and must sell 3,400
homes to help the development reach a value of 8 billion pounds
in 15 years' time.
That equates to selling 227 homes per year versus an average
in London of 100, a number cited by property developers and
brokers including consultant Savills. The first batch of
homes goes on sale next Spring and the consortium aims to sell
800 by September, ploughing the proceeds back into the scheme.
"I think 800 homes is ambitious," Ravi Govindia, leader of
Wandsworth council, told Reuters on the sidelines of a launch
event on Wednesday, adding he would keep a close eye on sales
rates. The council has planning powers over the site, a major
part of the wider area's regeneration.
The owners, developers SP Setia and Sime Darby
and government-run Employees Provident Fund pension
fund, are betting on the buoyancy of the central London housing
market and buyers wanting a piece of a building that has adorned
a Pink Floyd album cover and featured in the Beatles film Help!
Prices for the best London homes have risen 49 percent since
March 2009 said consultancy Knight Frank, mainly driven by
foreign buyers investing in London property as a safe haven from
the financial crisis and because of the weakness of sterling.
But they will have to contend with a huge batch of
high-quality London homes hitting the market in the next decade.
A report this week by consultancy EC Harris said 15,500 homes
were planned, a 70 percent jump on last year that could hit
developers as they flood the market by trying to cash in on the
boom in luxury property.
The owners will also have to pay 203 million pounds to help
fund the extension of London's tube network to Battersea as well
as preservation costs that include rebuilding its chimneys, a
fixture on the skyline for 80 years.
"The location sells itself," said Dato' Mohd Bakke Salleh,
the chief executive of Sime Darby, who studied at the London
School of Economics. "We have no problem selling 200 or 300
units in one go."
"All my friends have apartments in London and we will sell
strongly in the UK and the Far East," added Tan Sri Liew Kee
Sin, the chief executive of SP Setia who personally owns London
The site came onto the market after a 5.5 billion pound plan
by Irish developer Treasury Holdings for homes, shops and
offices collapsed in December. It was placed into administration
by Lloyds Banking Group and Ireland's "bad bank" the
National Asset Management Agency.
The Malaysian team, which beat a bid from Chelsea Football
club, appointed Rob Tincknell - who spearheaded the failed
Treasury scheme - to lead its UK-based operation.
Tincknell defended his track record at Wednesday's launch
saying the Treasury team did "an incredible job" getting the
scheme approved in a short space of time and that he had a good
record of delivering large projects in the UK.
($1 = 0.6295 British pounds)
(Additional reporting by Alex Frew McMillan in Hong Kong;
Editing by Erica Billingham)