LONDON (Reuters) - British Land placed a 130 million pound ($202 million) bet on the resilience of London’s luxury flat market on Wednesday, though it could sacrifice some flats for offices if signs of a slowdown among wealthy homebuyers increases.
Britain’s No.2 listed developer has bought a site known as the Clarges Estate in London’s exclusive Mayfair district that has planning consent for 63,000 square feet of flats and 91,000 square feet of offices, it said in a trading update.
“We thought very carefully before going ahead and there is a lot of flexibility in the mix between offices and apartments,” said Chris Grigg, chief executive of a company more used to developing office blocks and shopping malls.
“In the Green Park area of London there is a shortage of new build apartments and offices,” he said, adding the view over Green Park would also be a selling point. Homes will sell for 3,000 pounds per square foot and above in an overall scheme worth about 500 million pounds when finished.
Prices for luxury London homes have surged in recent years as economic turmoil in Europe and political uprisings across North Africa and the Middle East have driven investors to London in search of a safe haven.
However, there are signs of a slowdown after the British government said in March it would clamp down on tax avoidance by overseas buyers of homes costing more than two million pounds.
Prices for the best homes rose by their slowest rate in nine months in May, though values have increased 48.4 percent over the past three years, data from property consultant Knight Frank shows.
Elsewhere, Grigg did not rule out a possible future role in London’s landmark Battersea Power Station despite the fact a Malaysian consortium paid 400 million pounds for the derelict riverside site this month.
A British Land director recently visited Kuala Lumpur to hold talks with the Malaysians amid calls by property experts for British involvement to ensure the success of a lengthy and technically complicated development by providing expertise on the country’s arcane planning system among other subjects.
“Never say never though it’s not at the heart of what we’re doing,” Grigg said.
($1 = 0.6441 British pounds)
Reporting by Tom Bill; Editing by Mark Potter