Dubai: Out with the new … Scotland Yard. And get set to welcome The Broadway.
Abu Dhabi investors are helming the full-scale redevelopment of a 2-acre spread right in the heart of Westminster, where nearby landmarks include Buckingham Palace, the Palace of Westminster, and Westminster Abbey. It will take the form of a six-tower cluster making up The Broadway project in a patch earlier occupied by the old Scotland Yard building.
Gross development value will touch £1.5 billion, with the first major contracts due to be issued by April next. Completion is scheduled for 2021.
Abu Dhabi Financial Group (ADFG) owns 40 per cent of the project. For the remaining 60 per cent ADFG brought on board investors associated with it, which includes a sovereign wealth fund. Sales of the 268 units were launched early last month with prices averaging £3,000 a square foot, in line with super-premium residential properties in Central London, one of the costliest real estate stretches anywhere.
ADFG had earlier secured a £700 million loan from First Abu Dhabi Bank to finance development. Northacre, the upscale UK developer it acquired in 2013, is helming the build out process.
It was in late 2014 that ADFG acquired the New Scotland Yard site for £370 million.
“The project’s fully funded … and we are not too worked up over where Brexit will lead,” said Jasem Al Seddiqi, Managing Director and CEO of ADFG. “We see London strictly from that long-term perspective.”
Before the Northacre acquisition, ADFG already had a portfolio of property assets in London. Including Northacre’s assets, the ADFG Central London exposure stands at £3 billion, according to its website. It is also build-up an exposure in central Europe, and in the UAE has launched a real estate investment trust and also picked up a significant stake in Shuaa Capital. The latter recently launched a high-profile tower on Shaikh Zayed Road.
The New Scotland Yard building has been demolished and the initial project works have been underway for some time. The Broadway thus represents one of the most high-profile projects going on in an area where greenfield sites are non-existent (minus Hyde Park, of course), and any redevelopment has to account for the many heritage sites dotting it.
That — plus the fact that investors from dollar-denominated territories can avail of an average 30 per cent price benefit — should be enough to get sales momentum behind The Broadway. The 30 per cent represents the 10 per cent price decline Central London locations have had since touching the peak in mid-2014 and the 20 per cent the average currency benefits for overseas investors from the pound’s dip following Brexit, according to Niccolo Barattieri di San Pietro, CEO of Northacre.
“There haven’t that many good entry points for investors in Central London in the last 20 years,” he added. “There was a point in 2001-02 when prices softened, but then home prices took off in another six months. Even in 2009, there wasn’t much of a lag before recovery set in.”
Sure, right now there is still a lot of unsureness over how cleanly the UK will emerge from its Brexit process. Plus, the higher stamp duty has been no help either.
“Because the market is sluggish, probably now is the right time to buy into London.” said di San Pietro. “It’s been so every time there’s been uncertainty surrounding London’s property market in the last 20 years. This time needn’t be any different.”