A long haul before they are pulling up trees at Nine Elms

Peter Bill
30 Oct 2009

Just under 200 sweating delegates crammed into an airless basement in the Building Centre off Tottenham Court Road on Tuesday morning to hear all about the largest development opportunity in London since the great fire of 1666.

The 480-acre tract in question lies south and west of Vauxhall Bridge. The Vauxhall Nine Elms Battersea Opportunity Area, as it is called, is three-quarters the size of the City of London. If only the landowners were as rich. If only it was as easy to reach.

But first, the vision. The Northern line tube will be extended from Kennington down to Battersea Power Station.

A footbridge will connect Nine Elms with richer pastures on the north bank of the river. A great central strip of parkland will skirt a new United States embassy and a rebuilt New Covent Garden market.

There will be a “superhighway” for cyclists, a Thamesside esplanade for pedestrians. There will be 16,000 new homes, millions of square feet of office space, hundreds of new shops and dozens of new restaurants.

Who knows, someone may even plant nine elm trees.

A 362-page document detailing these plans was presented by Sir Simon Milton, deputy Mayor of London. Sir Simon was followed by Wandsworth council leader Edward Lister, who rightly concluded that “the potential here is absolutely enormous”.

Indeed. And so is the potential for absolutely nothing to happen across more than half the site for years to come. The Americans will build their embassy. New Covent Garden may get on with plans due to be unveiled on Monday for a 540,000 sq ft market, a “foodie” centre, and 2000 new homes.

Beyond that, the entire venture rests on raising £400 million-£500 million from local landowners to pay for the extension of the tube. No tube, not much development: especially on the power station site owned by Real Estate Opportunities.

REO has assets of £1.6 billion; assets almost exactly matched by debts. The Irish-owned developer will need at least £1 billion in equity and perhaps the same in debt before it can begin on the £4 billion redevelopment.

Planning director Jeremy Castle says they were “working hard” on the funding. But investor pledges will no doubt be conditional on the tube extension happening. That condition is not entirely in the hands of REO.

A development quango will almost certainly have to be set up to coordinate the cash raising and spending from all the major landowners, including New Covent Garden.

On Tuesday their chairman (sic) Baroness Brenda Dean signalled a strong reluctance to pay.

Boris Johnson gave the project a boost at the meeting by confirming a levy, which developers are normally charged for Crossrail, can go towards the tube. But there will be no public grant. All the cash will have to come from the increase in value of those 480 acres.

That brings huge complications and inevitable delays.

Those in the room on Tuesday will have to sweat for 20 to 25 years for their money rather than 10 years.

* London is in line for a new square if fresh plans for the development of three empty acres to the north of Oxford Street come to fruition.
The empty acres in question were set to bulge with luxury flats and flashy offices in a development dreamed up by Nick and Christian Candy, who bought the site in 2006 for £175 million, with the help of a very large mortgage from Icelandic bank, Kaupthing.That plan has melted away like all things Icelandic — the bank went bust, the Icelandic Government owns the site and the mortgage has swollen to £220 million.
But a deal has been done with developer Stanhope. It is drawing up new plans in return for a right to buy the site or take a stake in the development.These scaled-down plans are said to include a large open square to replace the tiny slit allowed for by the Candy brothers.

For a Viscount, a £350m drop in value is simply academic'

The Portman Estate will be holding its annual reception at Hertford House, in Manchester Square on bonfire night, next Thursday. Will the fact that the value of the Estate has fallen by £350 million to £950 million spark fireworks at the event hosted by Viscount Portman, head of the family that has owned the 110 acres north of Oxford Street since 1533?

No. In fact it would be a surprise if 51-year-old Christopher Portman even mentions the numbers included in last week's Estates Gazette Rich List.

For one thing, he is not alone. All of the great estates — Grosvenor, Cadogan, de Walden and Portman — which own a total of 643 acres of prime London property, have suffered a £1.83 billion fall in their combined value (see table).

For another, the drop is academic. “The value doesn't make a difference when you have no plans to sell and have very low borrowings,” says Richard Lay, chairman of the Portman Estate for the past 10 years. 

But you can't just sit on your assets. Lay joined at about the time the 10th Viscount took control. “He gave the estate quite a jolt. There were a large number of derelict and vacant buildings. So, the past 10 years have been very much of a catch-up operation.”

Lay says the estate, which redeveloped the Cumberland Hotel at Marble Arch, has probably got the biggest collection of small listed buildings in Britain. “It does mean we don't do large-scale schemes. We are in the business of restoring what we've got.”

Unfortunately the Estate no longer owns Hertford House. The home of the Wallace Collection was “lost” more than a century ago, says Lay. Still, it must be nice to rent the old place for a party once a year.