“The Malaysian developers of Battersea power station are preparing to replace planned apartments with as much as 1 million sq ft of extra office space, following a slump in the market for luxury homes“, announced the FT on February 24th. It means twice the size of the Gherkin tower in central London. However there are questions raised as the Brexit perspective and the consolidation in the insurance industry is already reducing the need for office space in the City.
Rob Tincknell, chief executive of the Battersea Power Station Development Company, is blaming the stamp duty rise for expensive homes. Back in 2013, almost all of the 865 units where sold within the first weeks and about 1460 have now been sold in total. According to the developer’s website, you can purchase a 2-bedroom flat for £1.33 million and a 3 bed from £1.9 million (they don’t say if that’s the price for their quota of affordable units… ).
Back in 2014, the Guardian warned in an article that “sites for close to 30,000 homes are owned by just 10 investors in Hong Kong, China, Malaysia, Australia, Singapore and Sweden, sparking warnings from politicians and housing industry experts that too many are being built to act as “safe deposit boxes” for international investors rather than for Londoners in housing need“.
Boris Johnson, former London Mayor, was encouraging all those investments, while advocating that they would benefit Londoners (the famous trickle down economics). Nicky Gavron, the former deputy mayor of London and member of the London assembly said at the time: “There is a perception these major residential developments backed by international money, particularly in super-high towers, only serve a market for overseas investors who want to buy a luxury flat in a skyscraper to treat as a safety deposit box. Such properties often become buy-to-leave investments and don’t meet the needs of Londoners. London is in the midst of a housing crisis – what we need is mixed-income housing where people actually live.”
It appears now that even those foreign investors are reluctant to spend more money in accommodation in London. But instead of taking this occasion to turn those super-rich units into homes for Londoners, the investors prefer to bid for more office space. At least it might act as a deterrent for the future schemes of luxury flats popping around…