Canary Wharf Group Plc and Qatar’s sovereign-wealth fund are seeking to build as many as 790 homes at the site of Royal Dutch Shell Plc’s London headquarters to gain from surging prices and rising rents in the U.K. capital.
Canary Wharf, which controls the financial district of the same name, and a unit of the fund will spend more than 1 billion pounds ($1.61 billion), including land purchased last year, to develop eight buildings on the south bank of the River Thames. Six of the buildings, including a 37-story tower, will be residential properties, John Pagano, Canary Wharf’s managing director of development, said in an interview.
“Our aim is to enhance an area in need of a renaissance,” Mohammed bin Ali Al Hedfa, chief executive officer of Qatari Diar Real Estate Investment Co., said in a statement today. “We are confident that our proposed development will put a reinvigorated South Bank at its rightful place at the capital’s heart.”
London home prices have risen 24 percent from a May 2009 low as a resilient job market fueled demand and foreign investors bought property to protect their wealth from volatile markets elsewhere in the world. Home-rental rates in the U.K. capital have risen more than 6 percent in the past year to a record, even as employment in the financial-services industry fell to a 20-year low, according to HomeLet, the U.K.’s largest tenant reference checking and rentals-insurance company.
Shell, based in The Hague, will lease one of the two new office buildings and will also continue to own its existing 27-story office tower at the site near Waterloo rail station, the three companies said in today’s statement. Shops and streets will also be built at the project, which is scheduled to be completed in 2019.
Qatari Diar and Canary Wharf agreed to buy the 5.25-acre (2.12-hectare) site for 300 million pounds, according to a July 2011 statement. The deal was contingent on the project winning planning approval within three years.
Planning permission is likely to be sought from the borough of Lambeth in the next week. The companies are seeking to get approval by June and complete construction of the new Shell building in 2015 or 2016, Canary Wharf’s Pagano said by telephone. One of the housing buildings may be kept and used for renting out units, he said.
Lambeth has asked developers around Waterloo station, including Qatari Diar and Canary Wharf, to improve the area’s appearance and to build more attractive buildings than those currently there, according to a document published by the borough last month.
“The intention is that the station becomes part of a network of buildings and streets, rather than a single structure that dominates at the expense of other ‘place making’ ambitions,” the borough said in the document.
Qatari Diar projects, including CityCenterDC in Washington and Chelsea Barracks in London, have a combined value of more than $35 billion, according to the fund’s website.
Canary Wharf is controlled by Songbird Estates Plc, in which a separate Qatari investment fund owns almost a 28 percent stake.