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British Land’s 53-acre (21.4ha) Canada Water development in southeast London, UK. (Picture: British Land)
SINGAPORE (EDGEPROP) - Representatives of British Land, one of the largest listed property development and investment companies in the UK, were in Singapore over the May 21 and 22 weekend to showcase its most ambitious master-planned development project in Central London.
Spanning 53 acres (21.4ha) in Zone 2 in Central London, the project is called Canada Water, and it aims to rejuvenate an often-overlooked area of the docklands in southeast London. This master-planned development has a gross asset value of GBP474 million ($819.3 million) as of Sept 3, 2021, and will be gradually completed across several phases over the next decade or so.
For British Land, Canada Water is an ambitious project, given its scale, proportion of mixed-use components, and the high sustainability targets the developer has imposed on itself throughout this project, says Emma Cariaga, head of residential at British Land.
When the entire project is completed, it would have injected up to 3,000 new residential homes, office space for up to 20,000 workers, and one million sq ft of new leisure, cultural and educational spaces. The developer has also planned it as a net-zero neighbourhood (where there is no net carbon emissions) by 2030.
Two developments are under construction in Canada Water — a 35-storey residential tower and a neighbouring commercial and recreational building. (Picture: British Land)
“Canada Water will have a nearly 50:50 mix of residential and commercial spaces. This sort of planning gives us a good degree of risk mitigation across different market cycles. But most importantly, it creates footfall during different times of the day, and over the course of a week, to help sustain our retail and leisure options,” says Cariaga.
A decade in the making, another decade of development
British Land started the Canada Water project nearly a decade ago when it started acquiring and land-banking key parcels of land in that neighbourhood. But the project’s future as a master-planned new town centre was first chartered in 2015.
City planners gave British Land in-principle approval at the time to design a master-planned new town centre, and the developer successfully broke ground on the buildings in the first phase last October after receiving planning permissions in 2020.
In March this year, British Land sold 50% of its stake in Canada Water to AustralianSuper, Australia’s biggest profit-to-member pension fund with more than GBP140 billion in member assets under management. The entre transaction was worth GBP290 million.
This resulted in the formation of a 50:50 joint venture to support the delivery of the master-planned development. The transaction increases returns and releases capital to British Land for future development projects, and the developer also earns fees from the joint venture as the development and asset manager of the master-planned project.
Cariaga: Canada Water is an ambitious project given its scale, proportion of mixed-use components, and high sustainability targets. (Picture: British Land)
“What differentiates British Land from some UK-based residential developers is our commitment to own our property over the long term. In the case of Canada Water, while we will sell the apartment units, we will continue to hold on to the offices, retail, and leisure units, as well as maintain the public spaces and streets,” says Cariaga.
She adds that this level of control enables the developer to retain the premium environment it aspires to create in Canada Water.
The area covering Canada Water began more than two centuries ago as the Surrey Docks, which were once the centre of London’s timber trade and received shipments of lumber from Canada. The area is named after the Canada Dock that was constructed there in 1876.
Thus, many of the historic buildings in the area feature Canadian and American design references that hark back to the area’s heritage as an active dock. Over time, many of the waterways and canals were filled and turned into parks and green spaces.
“The area has over 130 acres of green space and parks at the doorstep of our Canada Water master plan. It is increasingly difficult to find comparable redevelopment sites in London today that feature this extent of green space,” says Cariaga.
Canada Water started as a timber dockyard receiving lumber from Canada and America. (Picture: British Land)
While some of the existing buildings in the area will make way for new residential and commercial developments as part of the master plan, British Land intends to retain and repurpose a few of the major historic buildings, such as the Printworks building which used to house the print production for the Daily Mail.
The building has been temporarily repurposed into a music venue since 2017, and the plan is to turn the property into a commercial development focused on aspects of the circular economy, such as a 35-stall market selling sustainably sourced fresh produce.
Showcase of Phase 1 developments
The first development phase of Canada Water is already underway and will comprise three plots at the northern end of the master-planned site.
The first plot will make way for an as-yet-unnamed 35-storey residential tower with 186 homes. An attached ground-floor podium will contain 10,000 sq ft of F&B and shopping amenities, as well as 118,000 sq ft of workspaces. The residential component will offer a mix of studios, and one- to three-bedroom apartment units.
The next plot will be turned into a commercial development that will contain 182,000 sq ft of office space, 10,000 sq ft of F&B and shopping areas, and a new 55,000 sq ft fitness centre.
The even mix of residential and commercial mixed-use spaces throughout the project will ensure footfall throughout the day. (Picture: British Land)
Both developments are targeted to be completed by 3Q2024. They will also be beside the interchange station for Canada Water London Underground and London Overground. The station is on the Jubilee Line between Bermondsey and Canary Wharf stations, and on the East London line between Rotherhithe and Surrey Quay stations.
According to Simon Capp, representing residential sales & build to rent at British Land, there is no equivalent project in the London residential market that offers these adjacencies of public transport within Zone 2.
“Purchasers these days are no longer just looking for an apartment. They want to buy into a place or an area where they can live, play and work, that also fosters a sense of community. This is something we very much aim to deliver,” says Capp.
Phase 1 will also include the development of some public spaces. “We’re very conscious of the need to set the right tone for the rest of our development. So, some of the new features we are adding include a 174m bridge that will cross the former dock, and it will be one a focal-point public space for the community to enjoy the rejuvenated landscape and green spaces,” he says.
The first phase of development will see a rejuvenation of public spaces such as boardwalks along the former dock. (Picture: British Land)
At the moment, British Land has not released any of the residential units in Phase 1 for sale. The developer says that it is monitoring sales interest as it previews and showcases this project to international and local buyers. The developer plans to unveil starting prices for the units in Phase 1 later this year.
Singapore is the only country in Asia Pacific that the developer is showcasing this project to at this time. But it plans to introduce Canada Water to other Asian markets over the coming year.
Investment interest in London properties rebounds
British Land is showcasing its mega project at a time when the appetite for London properties is on a rebound, says Anthony Jurenko, international residential sales director, Apac, at JLL.
“There is a level of familiarity with many Asian investors towards the London residential market compared to other major cities in Europe. And London has a proven track record as a popular investment destination despite the Covid-19 pandemic and uncertainties surrounding Brexit,” says Jurenko.
According to research by JLL, residential property prices in Central London have gone up 198% over the past two years, and capital value has grown by about 6.8% per year over the past 30 years.
Jurenko: Investment activity from the Asia Pacific region in UK real estate is bouncing back. This has been led by buyers from South Korea and Singapore as travel corridors opened late last year. (Picture: JLL)
Another factor supporting the future price growth of residential London properties is a persistent housing shortage that has plagued London for the past few years. “There is a long-term housing undersupply that is key to supporting the upward price trajectories of Central London properties,” says Jurenko.
The population of London was about nine million as of end-2021 but is projected to grow to 9.7 million by 2031, according to JLL research. However, the city is not building enough homes to accommodate this level of population growth. JLL estimates that London needs to inject about 66,000 new homes to meet demand, but the pipeline supply is only projected to deliver 40,000. The consultancy expects an under-supply of 178,000 homes in London over the next five years.
In 1Q2022, there was GBP16.3 billion in capital investments going into UK real estate, of which 20%, or GBP3.3 billion, came from investors based in Asia Pacific. “Investment activity from the Asia Pacific region into UK real estate is bouncing back from 2020/2021 lows so far in 2022. This has been led by buyers from South Korea and Singapore as travel corridors opened late last year,” says Jurenko.
Close to a third of the public spaces in Canada Water will be devoted to landscaped or green spaces for the public. (Picture: British Land)
He expects inward investment from Hong Kong and mainland China will pick up this year as their travel restrictions ease as well.
JLL notes that investment in London residential real estate from the Asia Pacific region predominantly goes into rental investments. About 37% of Asia Pacific-based buyers who purchased new homes in London through JLL since the start of 2021 have been purchasing for their own use or have intended for a family member to live in the property.
Jurenko says that new projects such as Canada Water are a timely injection of new housing supply into London, and presents an opening opportunity for investors and homeowners to secure a foothold in London real estate.