These 7 Developers Have Committed To Building Big In London Post-Brexit
Uncertainty about the future of London’s commercial and resi property markets is high, but overseas developers are still undertaking big land deals and planning big schemes in the city.
The second quarter saw £722M of development land transactions according to CBRE, the highest figure since before the EU, and activity is weighted to international investors.
“We expect overseas investors to remain a dominant presence in the London land market attracted by the capital’s underlying strengths whilst also capitalising on the exchange rate benefits,” CBRE Managing Director of U.K. development Peter Burns said.
Here are the seven developers that have undertaken the biggest land deals so far in 2017, and are betting that Brexit will not have a significant effect on the U.K. capital.
Chinese developer R&F has gone big in London this year, and having never previously invested in the city undertook two of the 10 largest land deals in 2017 in the space of a fortnight.
In March it bought Queen’s Square in Croydon from Delancey and Ares Real Estate, a site which has an estimated gross development value of £500M and could comprise up to 1,000 apartments.
Then in early April it paid £157M for Vauxhall Square, a site with planning permission for a 1.5M SF mixed-use scheme, including 578 flats across two towers, right next to Vauxhall station. The development cost of the scheme could be as much as £1B.
Another company to have completed two of the 10 largest deals in 2017 is Auriens, the investor and developer set up by Johnny Sanderson and Karen Mulville. Sandelson said in an interview recently that he finds working out of his Rolls-Royce preferable to an office.
In May, Auriens bought the 2.7-acre King’s Gardens site in Kensington for around £100M. The site houses a training college for Catholic priests that is closing down because it is taking a loss, and could be turned into a luxury senior living development or apartments.
Auriens also completed a deal this year to buy a tract on Dovehouse Street just off the King’s Road in Chelsea and has planning permission to create a luxury senior living scheme comprising 55 units.
HB Reavis had one of the most significant successes of any office developer post-Brexit, when it sold its 33 King William St. development in the City to U.S. bank Wells Fargo for £300M for a new HQ less than a month after the EU referendum. It is clearly confident about London’s prospects for the future, having bought the 2.5-acre site of Elizabeth House near Waterloo for £250M, where it will undertake a major redevelopment creating two new buildings with an estimated end value of £1.3B.
Dalian Wanda has shown a big commitment to London, but will it get the chance to see this commitment through? In June the giant Chinese developer exchanged contracts with St. Modwen and Vinci on a £470M deal to buy a 10-acre site in Nine Elms where there is planning consent to build 1,821 flats on the site of New Covent Garden Market.
But the deal has not yet completed, and in the meantime reports have emerged from China that Wanda is one of the firms being scrutinised by state regulators about its overseas deals and the level of debt it has taken on.
U.S. student housing and multifamily firm Greystar has made a big splash in London over the past few years, and it has not let up in 2017.
In April it bought the site of the Quill tower, a scheme close to the Shard that had planning consent for either luxury apartments or student accommodation. Greystar is planning a student scheme that will comprise 470 apartments.
And in June it paid Royal Mail £101M for a 2.7-acre site in Nine Elms where it will build an as yet unspecified number of private rented apartments.
Singapore-listed City Developments is betting that the Nine Elms area and its close surroundings will prove a profitable place for development in the long term. In February it paid £58M for the Ransomes Wharf development, where there is planning permission for a 142-apartment scheme with a potential end value of £222M.
This purchase is on top of one of the largest developments in London, which is further down the river in Mortlake. City Developments bought the site of the Stag Brewery from Brewer ABInbev in 2015 for £158M, where it has plans for a scheme comprising more than 1,000 homes.
Al Shawaf family
In spite of fears of an oversupply of prime apartments in Nine Elms, it has been a big area for development land sales this year. The Middle Eastern Al Shawaf family completed a deal to buy the Vauxhall Cross site from Wendover Investments. The site has planning consent for 291 flats and a 180-bedroom hotel that could have an end value of more than £400M.