It is time for us to drop in again on what is an enormous redevelopment project in London and my part of South West London in particular. This runs in geographical terms from Chelsea Bridge to Vauxhall Bridge where the barrier is the MI 6 building. It has laid waste to a broad sweep though here such that when my mother was staying with me after my father’s demise in early 2015 my attempt to take her to her favourite supermarket faced a South Park style “And it’s gone” moment. In terms of scale if you cycle along Nine Elms you can count 40 cranes which is upon the 25 when I began counting as a measure of construction activity.
JLL is a big developer here and describe it thus.
Evolution is well underway in Nine Elms & Vauxhall with residential and commercial development centre stage. While there is still some way to go, it’s clear that the next three years will see the greatest advancement.
The restaurants and bars around Circus West Village and the riverfront attract plenty of visitors, and have made Nine Elms a vibrant neighbourhood, whilst the employees of the newly opened workplaces, such as the new US Embassy, are an additional boost.
I must have missed the vibrant neighbourhood bit on my journeys through the area and according to the Wandsworth Guardian President Trump was somewhat harsher.
He said: “They go out and they buy a horrible location. And they build a new embassy. That’s the good news. The bad news is it cost over a billion dollars.”
Mr Trump, a billionaire who made his fortune as a property magnate, cancelled a planned trip to London to open the embassy earlier this year, complaining the move to an “off location” south of the Thames had been a “bad deal”.
Returning to the JLL view there are these highlights.
Nine Elms sales market active with 852 sales taken place within the last year
• 2,438 of the 3,698 units at Battersea Power Station are close to completion
• 7,051 units in the planning pipeline in Nine Elms
• A number of large scale developments are in the pipeline for Vauxhall that will improve the area as a whole
• C.1,900 residential units set for completion in Oval.
It makes me wonder at what price those 852 units were sold at? Especially if you head north from the power station and cross the Thames you very quickly come across the Chelsea Barracks development some of which looks if not completed very near to it to me. Still JLL are keen to add to the numbers with this helpful message if you visit their website.
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This morning’s Rightmove update tells us that the boom is over according to Estate Agent Today.
Asking prices of homes coming to the market have fallen for the second month in a row – and Rightmove says it’s more than just the usual seasonal slowdown.
They have dropped 1.5 per cent in the past month: that’s an average of £4,496 for each home coming to the market in the past four weeks.
Combined with November’s drop that means the average asking price is now 3.2 per cent lower than two months ago – that’s a hefty £9,719 for the typical UK home.
This is the biggest fall over two consecutive months since 2012, when asking prices dropped by £11,836 over the same period.
They have London asking prices some 1.1% lower than a year ago. Whereas the LSL Acadata survey tells us this.
The annual rate of change in London remains at 0.8%, the same level as seen in the previous month. Prices have risen by £4,865 over the last twelve months, taking the new average price to £622,508.
Their report does take us down to the borough level where we see that Wandsworth saw a 2% rise in house prices in October but that still left it some 10.8% lower than a year before. So we have an idea of the Nine Elms effect but as ever it is a broad sweep rather than pinpoint accuracy as this bit of detail informs us.
The average price in Lambeth has been marginally assisted
(+£7k) by the purchase of an apartment named “Parliament View” in October 2018 for £1.1 million.
Battersea Power Station Problems
The Financial Times reported at the weekend that there has been a rinse and repeat cycle over the past couple of decades or so.
Since Battersea power station stopped generating electricity in the 1980s, development proposals for one of London’s biggest landmarks have included a theme park, a football stadium and a shopping centre with an ice rink on top. Each time, developers ran out of cash.
Actually that is harsh on the football stadium plan as for all the faults and issues with Roman Abramovich cash rarely seems to be a problem. But yes the various displays at the Millennium Arena have merged into each other over time. The current plan is being built but seems to have run into what might be called, trouble,trouble,trouble.
A refinancing arrangement between its Malaysian owners has been delayed for the third time; the cost of labour and materials is increasing; the developers have more than halved their expected returns and there are disputes with Transport for London over the cost of the Northern Line Underground extension to the area.
By the standards of HS2 or the Smart Meter programme this doesn’t seem too bad.
This has already seen the price of the renovation rise from £750m in 2012 to at least £1.15bn in 2017.
But there are other issues.
There are other signs of financial pressure. A first phase of the broader redevelopment, called Circus West, has been completed, with 855 flats sold and occupied. But Carillion, the bankrupt contractor, made a loss on the work, contributing to its demise. At the power station itself — known as phase 2 — a long-running dispute over the contract with Skanska led to the company being replaced by Mace last year.
It is hard not to wonder if the news concerning one Vampire Squid is in play here. From the New York Times.
Malaysia filed criminal charges against three subsidiaries of Goldman Sachs on Monday, accusing the Wall Street bank of making false and misleading statements.
The Malaysian authorities also charged several individuals in connection to a multibillion-dollar international scandal, which has ensnared Goldman and led to the ouster of Malaysia’s former prime minister, Najib Razak.
The government said it would seek criminal fines in excess of $2.7 billion related to the charges.
But if we return to the FT we have another question which is how has more value and revenue been created please Mr.Murphy?
Simon Murphy, who took over as the company’s chief executive in May, insisted the project would be completed on time and that the financial strain had been resolved. “We’ve generated more value and revenue to compensate for the costs going up,” he said. Indeed, he said the biggest risk was that, with some European labourers deterred by Brexit and the weak pound, “the workers will go home for Christmas and won’t come back again” — although he doesn’t expect this to happen.
There are clear signs of indigestion as we look at developments in the Nine Elms area. Some things have gone well as the Circus West development mentioned earlier now has shops and restaurants and some of my friends live there and like the place. Along Nine Elms some of the riverside developments are have a delightful location by the river. But regular readers may recall the Sunday I counted how many apartments appeared to actually have someone living there in a particular block and if we are generous it was circa 10%. Now maybe some were more acclimatised to heat than a Londoner like me and kept their windows and french doors closed during a long hot summer or were embarrassed to admit they lived in a place described as “lousy” and “horrible” by the US President, but not all surely.
But supply is rising and prices are falling leading to something of an oncoming crunch. Looking ahead we see that developments can be reborn. There was a time when Canary Wharf was associated with bankruptcy and failure. Now though. if social media is any guide, we see people celebrating the O2 after feeling lucky enough to have seen Ringo Starr and Ronnie Wood join Paul McCartney on stage last night as opposed to the disastrous Dome it once was. But for now Nine Elms is facing plenty of challenges.