Nine Elms area affected by downturn in demand for prime property
China’s largest property developer, Dalian Wanda, has deepened its commitment to London’s largest residential development district by agreeing to pay £470m for more land in the area, in spite of a downturn in demand for luxury homes.
The owners of the 10-acre Nine Elms Square development site, previously home to the New Covent Garden flower market, said on Wednesday they had exchanged contracts to sell it to Wanda’s Hong Kong division. The site is being sold by a joint venture of St Modwen and Vinci.
The land forms part of the Nine Elms development district championed by the former London mayor Boris Johnson, where several property developers are building 20,000 mainly luxury homes south of the river Thames.
Wanda already owns the One Nine Elms site located in the same area, which is slated for a 200-metre-high development that includes 437 homes and 3,584 sq ft of retail space. It is also due to have the first Wanda Vista hotel to open outside of China.
But the One Nine Elms site has had a chequered history, after Wanda failed to agree terms with a series of building contractors.
After buying the site for £700m in 2013, Wanda fell out with its original contractors, a joint venture between Interserve and China State Construction Engineering Corporation. It then appointed Balfour Beatty, which walked away from the project last year, and went on to hire Multiplex in January.
The Nine Elms Square site is set for transformation into “a vibrant mix of residential, commercial, retail and leisure uses”, said St Modwen.
But the wider Nine Elms area has suffered from a downturn in prime property prices, partly because of a steep rise in the supply of upmarket apartments.
The owners of the Nine Elms Square site wrote down its value by 10 per cent, or £21m, last year, blaming a drop in residential prices. They said on Wednesday the Wanda transaction was “in line with book value”.
The Battersea Power Station Development Corporation, which is redeveloping the well-known 1930s power plant in the Nine Elms area, on Tuesday applied to cut its affordable housing commitments by 40 per cent.
Such commitments are required as a condition of planning permission, but the group told the local council it wanted to cut its undertaking from 636 affordable homes to 386, saying the scheme’s viability would be at risk otherwise.
It blamed an “economic environment where sales values are at best static and costs have increased by more than 11 per cent over the past year”.