Battersea Sales Show Two-Speed UK Property Market
One of the most recognizable buildings in London has seen substantial interest from buyers, as its latest developers try to create an 8 billion pounds ($12.9 billion) "new city center" south of the Thames.
Battersea Power Station has been through several different owners since it was decommissioned nearly three decades ago, but none has succeeded in putting their redevelopment plans into action.
The latest investors, a Malaysian consortium, bought the site from Ireland's National Asset Management Agency, which manages debts that have been taken on by the Irish state, after its previous owners were put into receivership.
Rob Tincknell, chief executive officer of Battersea Power Station Development Company, told CNBC he was confident of the latest scheme's success, with close to 600 of the high-end apartments and townhouses -three-quarters of those available - already reserved less than a week after they went on the market. The properties come with a hefty price tag of more than 1,000 pounds ($1,600) per square foot,and the most expensive penthouses are expected to reach more than 6 million pounds ($9.6 million).
"We are the town center of a bigger area – Nine Elms. This whole site is now under development and we are the new town center," Tincknell said. "We are just a mile from Westminster [home to the U.K. parliament]."
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The news came after some better-than-expected data on the U.K. housing market. The influential Royal Institution of Chartered Surveyors survey said that estate agents are more optimistic than they have been for nearly two years – and added that banks were finally bringing mortgage rates down.
Yet forecasts for 2013 are mainly for prices to either stay flat or fall slightly, as London continues to decouple from the rest of the country. "This development reflects the strong demand there is in central London but not necessarily what's happening in the rest of the country," Tincknell said.
"London is a market in its own right. The rest of the U.K. market is beginning to show signs of more confidence although it is pretty stagnant."
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The U.K. market has been dogged by difficult lending conditions, which may be alleviated by the government's Funding for Lending Scheme, and a glut of supply outside of London.
(Read More: Bank Lending to UK Property Market Shrinking)
One of the factors driving London's success – and prices in high-end developments like Battersea Power station and Qatari-owned One Hyde Park – is the level of interest from wealthy foreign buyers.
"Our buyers are from all over the world and they're attracted by the uniqueness of the building," Tinknell said.
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He added that there had been plenty of "local interest" in the properties too.
The redevelopment of the 39 acre site will also include shops and offices. It will be helped by a new extension to the Northern Line that will make it quicker to get from the historically underdeveloped area to the West End of London.
Written by CNBC's Catherine Boyle. Twitter: @cboylecnbc.