Thursday 28 Mar 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on November 11, 2019 - November 17, 2019

WINNER | Circus West Village, Battersea Power Station, London, UK The consortium of S P Setia Bhd, Sime Darby Property Bhd and Employees Provident Fund

Battersea Power Station Development Co Ltd (BPSDC) CEO Simon Murphy has just arrived from London and would be in town for less than 78 hours. Despite his extremely tight schedule, Murphy is impeccably dressed, sharp and energetic as he updates City & Country on the iconic Battersea Power Station in London. Its first phase, Circus West Village, won the inaugural The Edge Malaysia Outstanding Overseas Project Award, which recognises impressive projects undertaken wholly by Malaysian property developers abroad.

“We had a lovely appreciation dinner with our lenders at W Kuala Lumpur last night,” says Murphy. “We have been travelling back and forth to KL [from London] to ensure that all the plans are going smoothly.” He travels to KL bimonthly.

An event that made the headlines recently was Prime Minister Tun Dr Mahathir Mohamad’s visit to the £9 billion (RM47.014 billion), 42-acre Battersea project on Sept 29.

“Tun was engaged with all aspects of the project and before he left, he said it was something that all of us should be proud of,” says Murphy. “It was a special moment.”

“This is something that is being done for [and by] Malaysia. The ingenuity, the commitment and the drive of our shareholders have made this project come to life,” he adds.

To recap, Battersea Power Station is a regeneration site that was acquired by the consortium of S P Setia Bhd, Sime Darby Property Bhd and the Employees Provident Fund (EPF) in 2012. The consortium set up BPSDC to capitalise on the site’s status as of one London’s most emblematic landmarks.

Facing the River Thames, the mixed-use development has seven phases. The first phase, Circus West Village, has been completed while four components — Phase 2 (the Power Station), Phase 3A (the Electric Boulevard), Phase 3B and the Northern line extension — are being built. The remaining phases (Phases 4 to 7) are still on the drawing board. The development will offer three million sq ft of commercial space and over 4,000 new homes.

Launched in 2013, Circus West Village is 99% taken up while Phases 2 and 3A are 90% and 70% taken up respectively.

“The footfall at our first phase, Circus West Village, has increased to nearly three million since we opened the doors in 2017. It is now home to 1,000 residents and its commercial units are 95% leased, with 20 of them (businesses) up and running.

“Another Malaysian restaurant will be opening soon. We also have a theatre that just opened in July, the Turbine Theatre, which has 180 seats. It is fully booked for the next few months,” he adds.

Earlier this year, Malaysia’s largest asset management firm, Permodalan Nasional Bhd (PNB), and the EPF agreed to jointly acquire the commercial assets of the second phase for £1.58 billion.

In September, BPSDC secured a £600 million debt facility. “This additional debt facility is to fund the construction of our third phase. It is a combination of selected local and Singaporean banks such as Standard Chartered, Maybank, DBS, CIMB, RHB and OCBC,” says Murphy.

 
The uniqueness of Circus West Village

“This was how Battersea Power Station looked like in the 1930s and 1940s,” marvels Murphy as we look at old photographs hung in the meeting room. “It is quite remarkable how much the site has changed since.”

Designed by Sir Giles Gilbert Scott and launched in 1933, the former coal power station’s iconic turbines provided a fifth of London’s electrical supply. It was decommissioned in 1983 and remained dormant for over four decades before being acquired by BPSDC.

“We have identified some interesting, independent retailers for Circus West Village,” says Murphy. The highly curated list of retailers and operators includes Cinnamon Kitchen, Fiume, Mother, The Coffeeworks Project, The Battersea General Store, Wright Brothers and Megan’s. Other tenants include celebrity hairstylist Paul Edmonds London, Boom Cycles and Archlight Cinema.

According to BPSDC’s leasing team, the brand selection strategy is segregated into phases. There will be a good mix of upscale and High Street labels for Circus West Village and Phases 2 and 3A.

“We are also quite fortunate [in terms of location] to have this iconic development by the River Thames. This is a piece of prime real estate in the Nine Elms area,” says Murphy.

Nine Elms comprises Battersea, Hyde Park, Kensington, Chelsea, Southbank and Fulham, among others, and offers 500 acres of offices, amenities and homes for 50,000 new residents.

Circus West Village boasts a 450m river frontage and sits next to the verdant six-acre Battersea Power Station Park. The site is also accessible via the London river bus. “Apart from the tube, the river bus adds more footfall to the site, with about 20,000 to 25,000 visitors per month,” says Murphy.

 
A touch of Malaysia
Apart from the Turbine Theatre and new Malaysian restaurant, Circus West Village will have a few new shops. “We will also have an indoor golfing space in one of the arches as well as a dental clinic,” Murphy reveals.

He gestures to the images on a laptop. “The coal jetty just opened about three weeks ago as a new event space. It is about 100m by 50m.”

“We had a pretty good summer, holding events such as the London Seafood Festival and Art Night, which was a success. We also opened a street market.”

The consortium plans to add more Malaysian flavour to the retail selections at Phase 2. “We have been in talks with a number of Malaysian brands. It is important to us to capture the spirit of Malaysia in this development,” reveals Murphy.

“We will feature Malaysia Square in Phase 2, which will be the heart of the development. The design of the square is inspired by the Mulu caves in Sarawak. We are also going to source stones from each state of Malaysia and incorporate them into the building of the amphitheatre,” he highlights.

Malaysia Square, a two-level urban canyon with stairways and bridges, is inspired by Malaysia’s landscape and geology. It will be anchored by elements of marble, sandstone, limestone, granite and dolomite striations that will guide visitors through the amphitheatre. The square will also include a fountain in the shape of the hibiscus, Malaysia’s national flower.

“We have been busy with Phase 2, which is set to open in 2021. We are pleased to have a strong selection of tenants. One of them is Apple Inc, which has pre-let 500,000 sq ft of the Boiler House office, apart from unique features such as the Chimney Lift, event space, food hall and cinema,” says Murphy. “We shall announce our next list of confirmed and exciting tenants next month.”

Phase 3A is scheduled to be completed in 2021 as well.

The project has a strong line-up of architectural visionaries. London-based WilkinsonEyre was commissioned for Phase 2 while Foster Partner is in charge of Phase 3A. Gehry Partners is responsible for another part of Phase 3A, Prospect Place, and The Flower Building.

Meanwhile, the Northern Line extension is on track and will be completed by mid-2021. “One of our biggest challenges was accessibility to the site. To overcome this, we signed on the Northern Line extension in 2014. With the extension, Battersea Power Station will be about 13 minutes from the West End and 12 minutes from the city centre,” notes Murphy.


Demand and sales amid challenges
“When we first launched Circus West Village, we were overwhelmed by interest. We found that consumers were excited about the buildings, the spacious apartments and even the winter gardens or balconies, which can be used throughout the year regardless of the weather, says Murphy.

The consortium is addressing the challenges of the entire project. “In the past, there had been numerous attempts to regenerate this global icon since the plant was decommissioned in 1983, and none were successful until this Malaysian consortium of S P Setia, Sime Darby Property and EPF.  Since 2012, we have been proud custodians of the project,” BPSDC chairman Datuk Wong Tuck Wai tells City & Country in an email.

According to BPSDC, it saw sales of £120 million from the residential projects in the last 12 months. “Our sales performance remains relatively strong despite the sluggish [property] market in London. There has been an average blended uplift of 36% (on resales) since the launch date,” adds Wong.

“In September, we did some unofficial marketing events for the project in the UK and Asia, and we saw a collective £40 million in sales, [even] against the challenging [property market] backdrop,” adds Wong.

Battersea Power Station Holding Company chairman Datuk Ahmad Pardas Senin in an email says, “Malaysia enjoys a strong trading relationship with the UK, offering a robust platform for

Malaysian businesses looking to invest. The board and the management team are very conscious of the responsibility that we collectively share to exemplify the success of the project. In terms of rental, Circus West Village has outperformed the London prime market so far.”

According to JLL UK, the rental growth in 2019/2020 in Nine Elms will be 12% as opposed to 7% for Central London.

“The value of apartments in Circus West Village has risen to at least 50% since the launch in 2013. The London market has been tough but has stayed resilient in the last few years. We believe the project remains an attractive proposition for our consumers,” says Ahmad.

“In terms of our demographics, there has been a good mix of investors and owner-occupiers. The first phase saw a majority of Malaysian buyers while the subsequent phases attracted more buyers in the UK and markets such as the Middle East and other parts of Asia,” highlights Murphy

He touches on the challenges in the market. “Due to Brexit, we found opportunities in foreign markets [since their currencies have gained strength against the pound due to the planned withdrawal of the UK from the European Union]. We sold more units to foreign buyers,” he says.

“Apartments in Battersea Power Station have become 15% cheaper [for foreign buyers]. We have benefited and not suffered negatively from Brexit,” he adds. “Activity [in London] will strengthen once political uncertainty with regard to Brexit starts to recede and pent-up demand is released, with growth forecast at 1% this year,” says the Knight Frank Wealth Report 2019. The report states that London remains the No 1 global wealth centre, followed by New York.

Upon its scheduled completion in 2026, Battersea Power Station will have 25,000 people living and working there and an estimated 40 million visitors per annum. “It’s been 10 years since the initial master plan was created, so we are looking at ways to evolve with the times. We may change certain design aspects and solutions in the later phases,” says Murphy.

“Our vision is to create an exciting, thriving community and a mixed-use development that promises longevity. We are confident that we will provide good returns on investment, and we will strive to make Battersea the hub of London,” concludes Murphy.

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