Arada Looks To London's East For Growth Even As Costs Rise

United Arab Emirates-based Arada has wasted little time since last autumn’s acquisition of London developer Regal — fast-tracking its ambition to triple the latter’s 10,000-home pipeline as it spreads its real estate empire from the Middle East to Australia and the UK.

Yet since the acquisition of a 75% stake in the 30-year-old Regal business, construction costs have continued to increase and President Donald Trump’s initiation of conflict with Iran has destabilised the parent company's home region, damaged the global economy and spiked costs once again.

However, Arada London CEO Jonathan Seal says the company continues to see major opportunities in the UK capital and is still buying new sites to build out its pipeline as the developer casts its eyes to London’s east and Docklands for continued growth.

What Arada could not have predicted was that soon after buying Regal, a fresh war would break out in the Middle East, which has put scrutiny on residential development viability once again due to a rise in the cost of construction and debt, though Seal said political and financial upheaval has now become part and parcel of real estate planning.

“The positive news from our perspective is that it's business as usual in Dubai, and it's business as usual here,” he said in an interview.

Arada is well capitalised and is not reliant upon government support, he added, while the umbrella group has diversified operations all around the world, from cranes to cookies.

“I think they always saw London as the global benchmark, a safe and attractive location to invest,” Seal said. “And that was before the current crisis. I suspect today that those thoughts are even stronger. As CEO of Arada London, I continue to fly a single flag, and I still think London is one of the greatest cities on the planet.”

Yet inflation has crept back into the market and, as Seal acknowledged, has a direct impact on the real estate space.

“In a pre-Arada world, our integrated model, the fact that we would look at a global supply chain, gave us the ability to control costs. We would always look at flexibility, and we've been very successful in that,” he said.

“Within Arada, we've got more buying power, which will allow us to keep a close eye on inflation. It’s something that we feel that we can do our best to control. We’ve got a strong procurement cycle, we can look out to the future, and we can then look at ways of dealing with it in our own way.”

It has been a whirlwind since Arada purchased a three-quarters holding in the long-established Regal. As part of that transaction, Arada committed an initial £500M of capital to acquire and invest in the Regal, its debut in the UK after launching in the UAE in 2017 and expanding into Australia in 2024.

Outside the UK, Arada has launched 10 projects across the UAE, plus nine upcoming developments totalling 5,000 units across New South Wales, representing a combined £19B investment across 42,000 units, with more than 10,000 of those delivered.

For its part, Regal has built more than 4,000 residential units and 1M SF of commercial space, and at the time of the purchase, it had a pipeline of 10,000 homes across 11 projects, spanning for-sale residential, purpose-built student accommodation and a town centre regeneration scheme. Those projects include Orchard Wharf in Tower Hamlets, which will deliver 1,365 PBSA beds and 200 affordable homes.

Having inked the takeover, Arada also agreed to acquire an 80% stake in Thameside West, a 5,000-home waterfront mixed-use development at the western end of London’s Royal Docks, master-planned by Foster + Partners and with a kilometre of waterfront.

Spread over 47 acres, Thameside West has a gross development value of £2.5B, and 1,000 homes are expected to be delivered in the project’s first stage, with construction set to begin next year.

“We're not the type of organisation that is looking to buy revenue or turnover. We want to make sure that we can build and grow our business while generating the right profits,” Seal said.

“As a result, I think we'll end up doing more eastwards. And really, our acquisition of Thameside West demonstrates that there are a lot of exciting opportunities within the Docklands area, and I'd expect us to be doing more downstream.”

He described the quick purchase of Thameside West as a “statement” acquisition, followed by its purchase of the Salvation Army UK and Ireland’s former headquarters at 99-101 Newington Causeway in Elephant and Castle. The 0.65-acre site comprises two buildings, including a 10-storey building with a basement that will be redeveloped as a coliving and hotel scheme. 

Most recently, Arada pressed go on a former petrol station and derelict industrial site, which will be revitalised with a 941-bed PBSA scheme as well as 200 affordable homes, stores and new neighbourhood amenities on the Old Kent Road.

Called Devonshire Place, the project is now set to move forward following completion of a deal between Arada London, Shaw Corporation and Legal & General, with the 200-affordable-home element acquired by L&G’s Affordable Homes division.

Three major purchases have set out the company’s intent to focus on growth in London, while Seal said a long-term view means that its living strategy will not be deflected by events in the Middle East.

“[Arada has] the same kind of ethos and mentality around having a fully integrated model, operating across the entire life cycle of real estate assets and connecting people to places,” said Seal, formerly the boss of Regal.

“Our ambitions are to triple our number of homes, and following our acquisitions — which took us from 10,000 to 15,000 units — we are targeting 30,000 over the coming years. But I don't want to get too fixated on numbers. We want to deliver at speed and at scale, and we think there's a massive shortage of product.”

Seal highlighted Arada’s experience creating “urban places” offering lifestyle and amenities, and it is an element he wants to bring to London. Arada also owns several wellness and food and beverage brands, which it often integrates into its developments.

“Being able to take that long-term view of how we blend homes with other uses and amenities is what we're talking about,” he said. “That really allows us, hopefully, to make sure that every decision we take is focused on creating the best homes and lifestyle and experience.”