Earlier this month, it was revealed that a consortium of Malaysian buyers - comprising SP Setia, Sime Darby and the Employees' Pension Fund of Malaysia - had acquired the Battersea Power Station site in London for GBP 400 million. The consortium beat off competition from bidders around the world and was described by Stephan Miles-Brown, head of residential development at Knight Frank (a joint agent in the sale), as a "skilled and extremely professional purchaser". It now aims to regenerate of the Grade II listed building and the rest of the 39.1 acre site.
Battersea Power Station's origin
Despite being hotly-contested real estate in 2012, Battersea Power Station has not always been so desirable. Construction on the original power plant began in the 1930s, following protests by local residents over the plans. However, it was not until the 1950s that the iconic building still standing today became a reality, after the addition of the 'B' power plant to the site.
Although there were misgivings initially, it did not take long for Battersea Power Station to become one of the nation's favourite landmarks - little wonder given that it was designed by Sir Giles Gilbert Scott, the man responsible for the red telephone box, Liverpool Cathedral and Waterloo Bridge. It is still the tallest brick structure in Europe.
Both sections of the power station were shut down in the mid-1970s and the site has been disused ever since.
A new incarnation
There have been numerous suggestions over the years to breathe new life into the London landmark, including a proposal to create a large leisure and retail centre, but these have largely failed due to funding difficulties.
Now, the SP Setia consortium has stepped in, and aims to reinvigorate the Battersea Power Station site with 3,500 new homes, 1.7 million sq ft of office space, hotels, retail and leisure facilities and two new Underground stations, which will be extensions on the Northern Line. Mr Miles-Brown commented: "It's one of London's largest mixed-use schemes, [...] pretty much every use known to man [is] there." He added it is more than just a redevelopment scheme as they are "regenerating a whole area, it's nearly 40 acres - that's huge for London".
Nine Elms: developing a district
It's no secret that Nine Elms is a target for regeneration in London, but the new owners of the power station site have brought a new impetus to the district. Jo Eccles, director of Sourcing Property, explained this means more than just new homes and office space. "The biggest benefit to the sale is the Northern Line extension of the tube, which will make a huge impact on the desirability of the area," she stated. One of the biggest challenges will be to "build a genuine community", Ms Eccles added.
Head of residential development lettings investment at Savills Gavin Sung pointed out it will require large-scale input from the government to ensure the necessary infrastructure is provided. He stated this means more than just providing transport services, with schools, retail outlets and leisure facilities also essential to "meet the demands of so many new residents to the local area".
What does it mean for London property?
So, how will all this fit into the wider London property market and what will it mean for real estate investment in the capital? Ms Eccles said savvy buyers who have acquired assets in Nine Elms already "are set to benefit substantially from the expected price uplifts". However, much of the new development is expected to be targeted by overseas investors, she added, commenting it is likely they will be "particularly keen to buy into such an iconic and well-known building".
Mr Sung agreed, asserting: "There is no doubt that a scheme of this magnitude will attract investors from all over the globe, people who will want to invest in a new regeneration area in a world-class city." Mr Miles-Brown, meanwhile, believes the planned redevelopment of Battersea Power Station "will send a very good signal to the market that London is still the global city to invest in", adding it only serves to boost the Nine Elms district as a whole and highlight the property investment opportunities available in this part of the capital.