London: Battersea Power Station Home Sales Update
There was a time when riding into or out of Victoria Station you could see one of the most iconic of London's buildings from your rail carriage that being Battersea Power Station. Today that view has been greatly diminished as a result of a years long regeneration and at times controversial series of schemes to restore life and save the building from being demolished. Mixed use plans have always included cafes, shops, residences and commercial space with the Apple computer company expected to take up space for its European headquarters in 2021.
Surrounded by new flats, Battersea Power Station in the back.
But problems continue in the delivery of new apartments and the schedule for delivery is once again delayed and plagued with cost overruns. The Financial Times (FT) finds that 255 apartments overlooking the river Thames are not near completion which means buyers of the flats are eligible to get back their deposits and move on or can continue to wait for when completion might be made.
The FT quotes one individual as saying:
“The long stop dates are blown."
“It doesn’t take a genius to work out that when you’ve got the steelwork still going in, there’s no way the dates can be made.”
The first phase built since 2012 outside the station is now home to 1000 people but the second and third phases have been problematic. Some buyers have reclaimed their deposits with other buyers in phase three cancelling their purchase contracts as the dates of completion are not going to be met. This will require a re-sell effort during what has been a slow sales period for luxury flats as prime home prices have dropped 20% since 2014.
Those close to the massive project once proclaimed as the 'Everest of of real estate' are reporting that discounts on sales of the residences could be reduced by 40%. The blame for the deep price cuts is the lack of confidence by buyers when it comes to delivery by the developer according to FT.
As one former insider stated:
"The perception of Battersea within the market has been damaged by the late delivery of phase one and the off-the-scale late delivery of phases two and three."
“That will affect the psychology of sales and people’s confidence in buying.”
Simon Murphy, chief executive of the development company:
“We are leading the biggest regeneration project in Europe and so of course there have been some big challenges for us to overcome that have been well-documented.”
“...real momentum on site . . . to deliver the next key stages of this new town centre for London”.
Per square foot value for the homes at the power station in 2014 were at £2,000 on average.
This means that a three-bedroom roof terrace flat was available for £8 million with an expected completion date in 2018. Since 2015 the third phase has seen half of the 1000 planned residences be made available for sale. Of the 500 available flats two thirds were bought by the end of 2018.
The third phase had 100 buyers of flats requested to return the units in 2018 with the developer offering perks such as payments holiday and other discounts to keep the contracts from being giving up. It is expected that about a fifth of the sold properties in phase three will be returned. But the developers deny this claim saying that £125 million in sales of flats were made in the past year and said no discounts had been made as a sales incentive.
The development company says:
“The majority of people who were told two years ago that their apartments were going to be late have opted to stay in despite the delays and despite the state of the market.”
The Battersea Power Station Back In The Day (Photo: Courtesy of Brian Barnes MBE)
It has been recently reported by the Evening Standard that three senior executives working on the £9 billion Malaysian funded regeneration of the power station have departed the company.
The report claims that Chief operating officer Simon Jenner and head of delivery Matt Lusty resigned last week. Also departing last month was Kevin Bundy head of the phase two development.
Perhaps the most well known to leave the Battersea Power Station Development Company was its leader Rob Tincknell who resigned last April after 10 years on the job and replaced by Simon Murphy
Others have been promoted to new positions Ian Feast, head of Phase Three, now will become head of delivery, Scott Grant takes over operations of Phase Three and Nigel Parrish is now head of commercial.
BPSDC chairman Datuk Wong Tuck Wai said to the ES:
“These internal appointments demonstrate the strength, experience and capability of the Battersea team.”