It was a proud moment for Malaysian Prime Minister Najib Razak to stand next to his British counterpart David Cameron to announce the redevelopment of the iconic Battersea Power Station in London.
The lights have been out at Battersea for 30 years but a Malaysian consortium has promised to light it up again by 2016, at least in the first phase.
David Cameron is happy to see Malaysian money flowing into Britain to revive a London landmark, but can the Malaysians succeed where three others have failed?
The coal-fired power station opened in 1933 on the south bank of the River Thames in Battersea, in South West London. It stopped producing electricity in 1983 and was decommissioned in 1989. It has become a celebrated landmark, appearing in The Beatles’ 1965 movie Help!, and on the cover of the 1977 album Animals by Pink Floyd.
The four chimneys and the brick structure remain untouched, and the Malaysian consortium believes it can restore them.
Attempts to redevelop Battersea date back nearly 30 years, when Alton Towers creator John Broome proposed to turn the site into a massive theme park. Londoners opposed the plan and it was shelved in March 1989 as it proved too expensive.
The incomplete construction work left the station without a roof and west wall, exposed to the elements of wind, rain and sun. All the turbines were sold.
Then in 1993, Hong Kong-based Parkview International proposed a residential project at the site. It secured full possession in 2003 but then claimed that a listed company should handle the redevelopment for the sake of transparency.
The third in line for the asset was an Irish company, Real Estate Opportunities, which bought the site for 400 million pounds. Its plans were similar to what the Malaysian consortium has in mind.
The Irish company submitted its plans and received a permit, but then had to call in creditors because of excessive debts.
Once again Battersea was on the market. Liew Kee Sin, the founder of the Malaysian developer SP Setia, decided last year that if he wanted to make his name in the international arena, this was it. He did the legwork in London to put in a bid.
But he knew SP Setia could not go it alone. He invited the Employees Provident Fund (EPF) and the plantations giant Sime Darby to be his partners. They formed Battersea Power Station Holding Company (BPS) in which SP Setia and Sime Darby each hold 40% and the EPF 20%.
It was a major coup for the Malaysians to win the bid, paying 400 million pounds and beating out the Malaysian Pilgrim Fund as well as the Russian billionaire and Chelsea football club owner Roman Abramovich.
Liew did not waste any time getting started on the work. The good news is that the development permit is still valid — getting a new permit in London can take five to 10 years.
To avoid wasting time, BPS Holding decided to use hire the Irish company’s team and implement the master plan by architect Rafael Vinoly. With that they just needed to organise the funds and get the project moving.
Inviting the leaders of Malaysia and Britain to the official launch on July 4 was the new developers’ way of showing the sceptics that they were ready to go.
“When will the shovel hit the ground?’’ what was what Cameron asked London Mayor Boris Johnson at the ceremony.
Both are excited that finally there is a company brave enough to restart the project.
As a large-scale plantation developer, Sime has also built townships in Malaysia, while SP Setia has a reputation for quality homes. In terms of funding, Malaysian banks are willing to back them. And the British government has guaranteed there will be a rail link to Battersea, so convenient travel will be another selling point.
The redevelopment involves the building of 3,500 homes, as well as offices, commercial centres, parks and even a theatre. There will be a total of 15 blocks built over eight phases ending in 2024.
The total development is worth 8 billion pounds. The shareholders will commit only 900 million ringgit (185 million pounds). The rest will be borrowed from banks and as sales are made, the proceeds will be ploughed into future phases.
The project will create 15,000 jobs for the UK economy so there are reasons for Londoners to be happy about it. And London is one of the most sought-after cities for foreigners in terms of property purchases.
In fact, there was a stampede for the 866 units of phase 1, which sold out in three days. Some of the foreign buyers are from Malaysia, Singapore and Hong Kong. Twelve penthouses will be offered soon.
Liew and his marketing team have studied property prices in every square inch of London so that they can tell prospective purchasers what a great deal it is to buy into Battersea now.
The EPF is not a new investor in London. It is said to own 11 buildings in Britain as part of its diversification plan. But it won’t see any returns from Battersea until at least 2016.
The Battersea story is not just about flying the Malaysian flag, but more importantly it signals the warming of ties between two countries, which had not always been cordial.
Both are now working to double bilateral trade to 39 billion ringgit in three years.
The challenge for BPS now is to deliver on its promises and light up the power station by 2016.