Apple and Battersea Power Station – What happens when an iconic brand moves into an iconic building?
Apple has announced that it will place its London headquarters in the boiler room at the infamous Battersea Power Station which has been undergoing a £9 billion redevelopment for mixed use on its 42 acre site. This move will bring 1,400 employees to its new 500,000 square foot office campus with six floors and an occupy date of 2021. The London operation will become one of Apples largest non-US offices along with its European headquarters in Cork, Ireland with 6,000 staff. Apples largest office is located at Hanover Street and has seven retail outlets around metro London.
Chancellor of the Exchequer Philip Hammond was quoted by the Evening Standard stating:”It’s another vote of confidence in the UK economy, sending a clear signal that companies are continuing to invest in Britain’s future and that we are one of the most attractive investment destinations for the global technology industry.”
Is this move of Apple’s an indication that the decades embattled Battersea Power Station will have more of an appeal to property buyers and investors post Brexit and new tax rules?
The initial offering of flats and retail space from the power station regeneration project brought all matter of interest from buyers. With its location close to Chelsea and the additional property developments along with the new US Embassy, the Battersea/Nine Elms area has seen continued growth to a point where the area has become almost unrecognizable. However concerns this year have risen regarding the possible saturation of the luxury housing units.
Propcision analysts reported earlier this year that their algorithm showed 89 price cuts to homes being offered at Battersea Power Station since January this year. They report that a four bedroom unit first listed as a re-sale in July 2015 for £6.5million was reduced by 38% on 12 February of this year to £4million. Another flat was listed in April 2015 for £800,000 and after four price reductions was being offered for £600,000 in February also.
Michelle Ricci, co-founder of Propcision, told IBTimes UK.”Does it mean that these are now under market value? No, it doesn’t mean that just yet.”
A second group was created by the developers, Battersea Power Station Estates, to assist original purchasers to re-sell their property. In two years the Battersea developers sold 1,500 units and as of March this year there had been only 10% percent of these properties being offered for re-sale with a price growth of 30%.
One problem for property sales for Battersea Power Station has been the slowdown of purchasers from China whose economy has weakened thus lowering demand for London property. Chinese investors were only required to make a nominal deposit with the full amount paid when construction is finished. With Brexit, new taxes and fears of a property slowdown, some foreign investors have decided to leave the market completely. Other investors from the Arab Gulf states have also been affected by falling global oil and gas prices.
Consultancy firm Property Vision, reports that their estimates for London property are ’…54,000 homes worth over £1m planned or under construction in London. There are around 20,000 new units in the Nine Elms area alone.’
In the past decade leading up to 2015 London prices had risen 89% with the average cost of a property at £536,000.
The effect on the overall London property market also reached the Battersea/Nine Elms area but as Propcision reports:
‘In Battersea/Nine Elms, the steepest cuts mostly affected properties that were ambitiously priced. Reductions simply brought prices down nearer to the average. Yet discounts of 25-38 percent across many luxury apartments certainly drew attention.’
In May the largest price reductions had taken place and with the June Brexit vote on the horizon the property market for the Battersea/Nine Elms area became quiet but after the vote the Propcision reports states: ‘It could be said that Battersea quietly passed through the Brexit result without any notable differences. Most of the reductions occurred well-before the vote.’
More Apples on the Way?
So could Apples move have others following? The Financial Times quoted Neil Prime, of the property consultancy JLL, regarding the Apple move to Battersea offices would “be a pull for other creative companies, people who want to be associated with the Apple brand. The area will certainly benefit.” Additionally: ‘…in recent years technology groups have taken over when it comes to office expansion; their moves to new areas of the capital have often helped to spur regeneration.’
The developers of Battersea Power Station must not only be pleased but relieved to see Apple become a prime tenant.
By Kevin Murphy: www.kevinmurphy.london