Only The Super Cash Rich Can Afford To Play The Big London Property Development Game

"Therell be very little competition in terms of new development

, Irvine Sellar, whose Sellar Property Group developed the Shard along with Qatar Central Bank, said in a July interview. "Take Battersea Power Station, which I think was overrated as a site, but half a dozen companies were chasing it down.

This means that sovereign wealth funds, private-equity firms like Carlyle Group LP (CG) and U.K. REITs such as Great Portland can construct buildings that will be in demand when theyre completed.

Martin Jepson, Brookfield Office Properties Inc. senior vice president for development and investment, said in an interview with Bloomberg.

"The ability of people to play the development game in London is pretty much limited to those with large equity checks, sovereign wealth positions or very strong balance sheets who can bring on board corporate debt,

"Thats one of the reasons London is attractive to us.

Brookfield agreed last month to develop an office building on London Wall Place in the City with Oxford Properties Group Inc.

Brookfield will fund the purchase of Hammersons London buildings by taking on 66 million of debt. It plans to add further borrowings against the property before the deal closes and will also use its own cash. Development of the 1.1 million square feet of office space planned for the two sites will cost about 300 to 350 million including Oxford Properties share, Jepson said.

Brookfield also owns half of 100 Bishopsgate, an office tower planned near Liverpool Street station. The purchases are "a big bet on the City marketplace but were pretty confident long term, he said. "Weve got three very good buildings that appeal to different tenants.

Development Securities today reported that it had made 6 million profit from three of the schemes which it had purchased from the proceeds of a 100 million equity raise in 2009, which it followed with another in 2010. The firm, which is perhaps best known for it's Paddington development, has some 40 similar schemes in progress.

Great Portland Estates, the cash-rich REIT, has seen a 10% uplift in the value of a 1.3 acre development site in Hanover Square Mayfair in Q2 without laying a brick.

Qatar, which owns 95% of the Shard, will redevelop most of the Royal Dutch Shell Plc complex near Waterloo station in a venture with Canary Wharf Group.

"This is a long-term investment, Qatar Central Bank Governor Sheikh Abdullah Bin Saoud Al Thani said of the Shard at a briefing recently. "This is part of our relationship and our confidence about the London market.

Qatar has invested more than 20 billion in London since the economic crisis, Prime Minister Sheikh Hamad Bin Jasim Bin Jabr al-Thani said at the opening ceremony for the Shard. "There are a lot of things in the pipeline, he said.

Malaysian consortium SP Setia Bhd., Sime Darby Bhd. and the Employees Provident Fund will start the 8 billion development of Battersea Power Station next year.

by: UkBiz

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