Yahoo Finance Investors flee nightmare on Nine Elms street
Lining the River Thames’ south bank is what some have pegged as London's most exciting real estate developments in recent years.
At one end sits Battersea Power Station, set to house Apple’s six-floor UK base as well as swaths of luxury flats. At the other, a state of the art US embassy. In between, a glass-bottomed pool stretches between two residential towers, 35 metres above ground.
Named after its home in Vauxhall, Nine Elms and Battersea (VNEB), the development promises a luxurious "residential, cultural and business" district.
Despite visible appeal, and two local Tube stations opening in just over a week, the project has been plagued with scepticism within the real estate industry. Scattered among the finished tokens are construction sites and rows of hoarding. Some question if it will ever be finished.
“We haven’t bought in Nine Elms for a reason – we advised one client to offload all of it and reinvest elsewhere … the regeneration is one hell of a leap of faith, that said there’s numerous developers down there, a lot without a track record in the UK,” said a locally based investment adviser.
One developer, R&F Properties, has been the target of criticism by other involved organisations as the project stalls, with questions over its commitment to completing the work. Much of the regeneration is dependent on R&F, a Chinese developer that faces increasing pressure over its debt level from the Chinese government, from whom some of the loans stem.
A source on a neighbouring site said: “There’s a massive centre of gravity on R&F within Nine Elms, success or failure may come down to how they handle the situation. Currently, I don’t think 100pc of the developments will be built and that could pose a huge issue.”
A spokesman for R&F said the developer "is fully committed to London and has a major programme of developments on site at Nine Elms".
Nick Whitten, an agent for real estate firm JLL, buys into the vision, despite worries over the pace and quality of construction.
Criticism of the Nine Elms site has often been portrayed as a failure of market economics – “sky pools” for some and hefty service charges for others. Its draw, however, is the promise of a small district full of amenities and entertainment one might want, which Whitten says has drawn many clients’ interest.
“One of the strong points of Nine Elms is it’s the ultimate 15 minute city. It’s an idea from Paris Mayor Anne Hidalgo about how you can rejuvenate major metro areas and have suburbs work. The idea is that a suburb contains everything people want and need within a 15 minute walk – and within London there are no areas as good as Nine Elms for that”, he said.
Concerns remain, however, over the reality of making disparate new tower blocks into a coherent community. The district still offers little in the way of cafes, restaurants and entertainment.
A rival developer highlighted that since the successful redevelopment of north London’s Kings Cross – where the architectural design was at the forefront of plans – there has been concern that those in charge of Nine Elms are overly focused on spectacle and luxuries as opposed to the realities of building an entirely new hub. “London has now got a lot of these big schemes. When you start off you’ve got to make a decision about what the big view is,” the developer said.
Meanwhile, one estate agent estimated that many of the buildings only have occupancy rates of around 25-30pc, as the sites are unattractive to full-time residents.
“Of the limited number of current residents, many of them are students,” he said, questioning the shelf life of the project’s profitability.
“There are questions about the sustainability of the architecture, and if only a quarter is occupied, you’re going to have issues where the demand for Nine Elms properties will go elsewhere once the buildings aren’t as new.
“If you step foot into the marketing suite of any of these places they’re all the same, Southbank developments are the same, Earls Court is the same, White City Living too. It’s a matter of time before there’s a newer, shinier version”.
With the success of the project still uncertain, views on the development have become increasingly, and fashionably polemical.
It is likely to set the tone for future developments in London and decide the fate of dozens of firms investing in or contracted to work on Vauxhall, Nine Elms and Battersea.
