A second deal for the sale of St Modwen and Vinci’s £395m New Covent Garden Market, SW8, is faltering after prospective purchaser Dalian Wanda did not reach an agreement during a period of exclusivity.
The Chinese developer became the preferred party for the 10.2-acre site at Nine Elms Square after a deal with Beijing-based conglomerate Macrolink fell through in March.
Discussions with Wanda are continuing, but St Modwen is now understood to be considering selecting another party.
Prospective buyers have questioned the amount and price of developments on the site. JLL research shows new-build pricing in south central London, which includes Vauxhall, declined by 6.8% in 2016, and the nearby Battersea Power Station Development Company recently revised the developments IRR from 20% to 8.2%.
Alongside this, there is growing difficulty for Chinese investors taking their money offshore, as capital controls increase both at individual and corporate level.
Nine Elms Square has outline consent for 1,821 flats across three towers of between 32 and 54 storeys. St Modwen valued New Covent Garden Market at £395m in its November results, though the Nine Elms Square site makes up the vast majority of that value.
Dalian Wanda owns the site next door – One Nine Elms – through its subsidiary Wanda One, on which it is building 437 homes across two towers rising to 42 and 58 storeys. It bought the site for £88.8m in 2013 from Irish developer Green Property.
The sites are at very different stages in terms of planning and construction. Nine Elms Square has outline consent, while One Nine Elms is under construction.
JLL is advising St Modwen and Vinci.
How does the phasing of New Covent Garden work?
In total, 18.7 acres of land, out of a holding of 57 acres owned by St Modwen and Vinci at New Covent Garden Market, is being made available for development by moving the market from the waterfront.
The 10.2-acre Nine Elms Square site up for sale is now vacant following the market traders’ move last month to an interim site. It will include 1,821 flats, 94 or 5% of which will be affordable.
A further 8.5 acres – made up of two areas known as Nine Elms Garden and Nine Elms Grove – will be released for redevelopment in 2022 when a new, permanent 500,000 sq ft market covering 37 acres is completed. The developments will include close to 1,050 homes, of which around 46% will be affordable.
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