Buyers reserved three-quarters of the apartments and townhouses to be built at the Battersea Power Station site in London in the five days since they were put on the market, according to the developer.
About 600 properties have been reserved in the Circus West part of the project since Jan. 9, the Battersea Power Station Development Company said today in a statement. They are the first homes to be offered as part of the station’s redevelopment.
A dwindling supply of homes for sale in areas such as Kensington & Chelsea is driving foreign and domestic buyers to look outside of neighborhoods traditionally considered prime. That’s prompting luxury-home developers to expand east toward the City of London and south of the River Thames, where major projects are under way in Battersea, Vauxhall and Nine Elms.
“Battersea isn’t prime central London and prices are already in excess of 1,000 pounds ($1,600) per square foot,” Camilla Dell, founder of broker Black Brick Property Solutions LLP, said by e-mail. “So investors are betting on prices reaching similar levels to prime, which is a gamble.”
Battersea Power Station, featured on the cover of Pink Floyd’s 1977 album “Animals,” has frustrated a series of developers since it closed more than 29 years ago. Malaysia’s SP Setia Bhd. and Sime Darby Bhd. bought the site for 400 million pounds in July after its previous owner was put into administration.
The reservation fees were around 2,500 pounds for the apartments, which cost as much as 3.3 million pounds for a 2,383 square-foot (221 square-meter) property including outdoor space, according to Jo Eccles, managing director of broker Sourcing Property.
The Battersea development is part of the Vauxhall Nine Elms Battersea Opportunity Area south of the River Thames and across from the Kensington & Chelsea and Westminster boroughs. It is London’s largest redevelopment area and includes a new U.S. embassy and an extension of the London underground.
Less than a mile from the Battersea station, Ballymore Group Ltd. is developing Embassy Gardens, where a three-bedroom apartment is being marketed for 2 million pounds, according to the developer’s website. Around 90 percent of the apartments offered so far have been sold, the developer said by e-mail today.
Berkeley Group Holdings Plc, the U.K.’s second largest homebuilder by value, is marketing penthouse apartments through its St. George’s unit, which is about 5-minute drive from the derelict power station.
“We are warning clients to be extremely cautious not to get swept up in the hype with the huge amount of development in the Battersea and Nine Elms area,” Eccles said by e-mail. “A lot of the prices per square foot being paid in a number of these developments -- for example St. George’s ‘The Tower’ in next door Vauxhall -- in our opinion just don’t stack up.”
Dell of Black Brick said she expects to see some “flipping,” of the properties, where early investors try to sell on their sales contracts at higher prices.