An aerial rendering of the planned Vauxhall Square site
Chinese developer Guangzhou R&F Properties is jumping into London with both feet – one in south London’s Croydon and the other in Nine Elms just south of the Thames. In late March, R&F bought its first London site, a 2.2 hectare London residential site, for $74.8 million, and this week the company bought Vauxhall Square from CLS Holdings for £157.7 million ($196 million), according to a statement by the seller to the London Stock Exchange.
The 3.4 acre site is in the Nine Elms regeneration area of London and has planning permission for development of 1.5 million square feet (139,000 square metres) of residential-led, mixed-use properties. R&F Properties is expected to invest around £1 billion ($1.24 billion) to deliver the site which will involve two 52-storey towers, two office buildings and 578 apartments.
“R&F Properties has extensive residential development experience,” said Henry Klotz, executive chairman of CLS, adding that his UK-based property investment business still has over £330 million ($411 million) in long-term investments in the Vauxhall area.
R&F Won’t be Lonely in London
Zhang Li, founder and co-chair of R&F
R&F’s Vauxhall purchase, which was announced on April 5th, comes just two weeks after the Hong Kong-listed mainland developer made its maiden acquisition in London with the purchase of a pair of adjoining residential sites in south London’s Croydon area for £60 million ($74.8 million),
Local real estate player Minerva sold the Croydon project to R&F after consolidating the site into a pair of freehold parcels for what is said to be a £500 million ($623 million) development project. Planning permission has already been granted for the conversion of the former Nestle office building on the site into residential flats.
For its Nine Elms project R&F will have some familiar neighbors from back on the mainland, as Dalian Wanda’s $1.1 billion One Nine Elms project is just across the street from the Vauxhall Square site. Wanda acquired its piece of Thameside real estate in 2013, but has since struggled to find a builder that it can work with.
Nine Elms Oversupply and the Brexit Effect
Where Wanda has stumbled, however, R&F remains keen to rush in, seeing some special benefits from the Vauxhall Square project’s mix of homes, hotels and offices. “The generous retail and leisure offering will supplement the hotel and office space and will bring a significant number of jobs to Vauxhall and enhance the local economy,” said Xia Ning, an R&F Properties representative.
Nine Elms has been notorious for oversupply of residential property for years now, but that hasn’t dimmed the hopes of Chinese investors. When valued on December 31 of 2016, Vauxhall Square was worth £100 million, and CLS reports that it is making £40 million ($49.6 million) on the sale of the site to R&F. In exchange for assuming an obligation to relocate a hostel, R&F Properties will pay CLS a net of £144.1 million ($179 million).
Britain’s decision to leave the European Union and stamp duty increases have had had knock-on effects for the price of luxury flats in the UK. The number of properties in Central London under offer was 22 percent higher year-on-year in the three months leading to February, according to a report from Knight Frank, adding that annual price growth eased to -6.4% in March. The £15 billion Nine Elms redevelopment scheme is expected to create more than 20,000 new homes.
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