EXCLUSIVE: Chinese Giant Pivots To Increase Office Space Across 4.4M SF Nine Elms Developments
One of China’s biggest developers is significantly upping the amount of office space it is building across three enormous developments in Vauxhall and Nine Elms to capture changing demand for property in the area.
R&F now plans to build 650K SF of offices as part of the 4.4M SF it is developing on the southern bank of the Thames. That amounts to 30% more than when the schemes were originally conceived.
Cushman & Wakefield is advising R&F on its office strategy. Discussions with tenants and even potential buyers of the office buildings have already begun.
While many Chinese real estate firms are pulling back from overseas projects amidst the liquidity concerns that have emerged in mainland China following Evergrande’s woes, R&F is pushing on with its London schemes.
As revealed by Bisnow in September, R&F and joint venture partner CC Land secured £430M of capital to progress the first phase of their One Thames City scheme, a 12-building project that includes 1,400 homes plus commercial space. The project was previously called Nine Elms Square.
The company is developing two other schemes — One Nine Elms, a residential and hotel tower, and Vauxhall Square, which will also be a mixed-use scheme incorporating residential units and a significant amount of office space.
“Nine Elms Square was originally envisaged as a mainly residential scheme, but we’ve altered that, particularly in the second phase,” R&F Development Director Stephen O’Driscoll said at Bisnow’s London State of the Market event, held at the Oval cricket ground in Vauxhall.
R&F said it had decided to scale up its office offering after seeing strong demand from occupiers in the media, tech and creative sectors. Nine Elms and Vauxhall are areas that have seen huge amounts of apartment development, but two big occupational deals mean companies are increasingly looking at the area as an office location. Apple is opening a 450K SF UK HQ at the redeveloped Battersea Power Station, and Penguin has opened an 83K SF HQ at Ballymore’s One Embassy Gardens.
O’Driscoll said occupiers want to locate near companies like these. They are also being drawn by amenities such as the public park opening along the Thames path and the retail and leisure facilities at schemes like Battersea Power Station. The opening of an extension to the northern line now means the area is on the tube network as well.
Indeed, the consortium redeveloping the power station is also looking to increase the number of offices it builds in that scheme. O’Driscoll said there had even been interest from investors that would potentially forward fund office buildings or buy them once they were leased and completed.
“When you’ve got institutional investors coming to you and saying, 'Will you build me an office building,' then why wouldn’t you?”
While other Chinese developers were pulling out of overseas deals on the orders of the Chinese government, R&F built up one of the biggest development pipelines in London. In less than a year, between March 2017 and January 2018, it bought four schemes with a potential total development cost of £4.5B.
The company said the liquidity issues spreading through Chinese developers, which has seen several default on debt payments, had not hindered it.
“We cannot comment on other developers, but R&F is progressing well at Nine Elms, and our active developments are well-funded,” a spokesman told Bisnow. “Construction activity has been strong and we are well on schedule to complete our first residential buildings in mid-2022 and welcome our first residents to the development.”
In September, R&F said that two of its major shareholders had agreed to provide the company with £750M of interest-free loans and that it had enough liquidity to meet its obligations in the near future.
