London Battersea Developer to Cut Home Sizes as Demand Fallsby
The developer of Battersea Power Station is seeking approval to cut the number of large homes at the project because a slowdown in the housing market is limiting demand, the project’s chief executive officer said.
Smaller residences will allow the developer to offer homes at a 25 percent lower price, Battersea Power Station Development Co. CEO Rob Tincknell said in an interview on Wednesday. The price per square foot would remain unchanged, he said. The Power Station is the biggest project in the Nine Elms district and is being developed by a venture between Sime Darby Bhd., SP Setia Bhd. and the Employees Provident Fund.
"People are realizing that you aren’t going to bring up your family in central London, so let’s not build so many three- or four-bed units because they end up costing several million pounds and the only people who can afford that are foreigners,” Tincknell said.
Demand for London apartments and houses under construction slumped by 19 percent in the fourth quarter ahead of a sales tax increase for landlords and second-home buyers in April. The developer of the power station is seeking approval for almost 410 additional homes at the project, 109 of which would be smaller properties, according to a filing by the developer. A planned hotel would also be replaced by residences as part of the plan.
Tax increases hurt sales in the latest phase of the project, according to Sime Darby. While 53 percent of homes in phase 3a have been sold, those priced above 1.5 million pounds remain on the market, the Malaysian company’s CEO, Mohd Bakke Salleh, said in February.
The stamp-duty sales tax will climb to as much as 15 percent of the costliest homes for landlords and second-home owners in April, and add 90,000 pounds to the levy on a 3 million-pound apartment. Home prices in the best areas of central London fell 0.6 percent in the six months through February, the most since June 2009, as turmoil in financial markets and higher taxes deterred buyers.
"When the application was done back in 2010 there was a requirement to have a very large amount of larger units," Tincknell said. "Time has moved on. Build costs have gone up exponentially and the result is that the average cost of our homes has become higher than we would like and, I think, higher than London would like."