More Than £400M Of Debt, 14 Flats Sold: London Luxury Resi Administration Laid Bare

A luxury London residential scheme once anticipated to be worth more than £500M has sold less than 20% of its flats, seven years after it was originally scheduled for completion and two years after it went into administration. 

An administrators progress report for the special-purpose vehicle that owns One Palace Street next to Buckingham Palace showed that as of May, 14 of the 72 apartments in the high-end scheme had been sold. 

The sale of nine units had been completed when administrators at FRP Advisory were appointed to the company in May 2023. Contracts for another 12 sales had been exchanged, but since then, seven of those buyers have pulled out because the contractual long-stop date for completion was missed. 

The remaining five sales have been completed for a total of £22M, or an average of £4.4M a unit.

One Palace Street was one of a wave of luxury residential schemes conceived in London a decade ago as a steady flow of wealthy buyers came looking for posh flats. 

But it was hit by development delays, cost inflation and a dampening of interest in high-end London housing that started with the Brexit vote. 

The project’s lender, First Abu Dhabi Bank, was owed £392M through a senior loan facility at the time administrators were appointed, the report for the six months to May says. It has since provided another £20M to keep the project going and is owed £100M in interest. 

One Palace Street is a 271K SF block that has frontages on Buckingham Gate and Palace Street, and some of the apartments have views into the gardens of Buckingham Palace.

The project was owned by Shuaa Capital, a Dubai-based investment firm. The site was acquired by Abu Dhabi Financial Group for £310M in 2013, and ADFG merged with Shuaa Capital in 2019.  

The scheme was developed by Northacre, a luxury residential developer that is also owned by Shuaa. 

Northacre no longer has any staff and has gone dormant, Bisnow revealed.

Luxury hotel brand St. Regis was tapped to provide branded residences, but its involvement in the project is being reviewed, the administrators report says. 

Built in 1860, the building was once home to one of London’s first five-star establishments, the Palace Hotel.

Completion of the scheme was initially scheduled for 2018 but has been delayed several times, including by the onset of the pandemic.

The administrators, in consultation with First Abu Dhabi, parted ways with contractor Balfour Beatty and pressed ahead on the development with a project manager overseeing various firms undertaking unfinished work. Part of the scheme, which is on one site split into four sections, had practically completed in 2022.

FRP said it could not give an exact date for delivery of the rest due to the difficulty in securing long-lead-time materials, but “it is anticipated that significant progress towards practical completion is likely to be achieved throughout the remainder of 2025.”

Parties had approached the administrator about buying the scheme outright, but no formal term sheets or lending proposals were received, the report says. 

Vehicles that invested in the scheme, Palace Investor Holdings and Palace Preferred Partners, are listed as unsecured creditors owed £222M. The report says there was no clarity as to how much creditors would be repaid.

FRP declined to comment. Shuaa and First Abu Dhabi did not respond to requests for comment.