Qatari Diar is reviewing its high-profile redevelopment of Chelsea Barracks in London after pausing construction on the latest phase of the scheme.
Main contractor Multiplex and specialist contractor Keltbray had been carrying out enabling works on the fourth phase of the luxury residential project.
Keltbray is also understood to have been appointed on a £42m contract for the construction of the basement and concrete frames for the three apartment blocks that make up phase four.
“Ground works and piling have been completed on our next phase of construction and we are considering how best to procure the subsequent building works in an increasingly difficult construction market,” Qatari Diar said.
“We are continuing to work together with all stakeholders towards an efficient and pragmatic outcome for the benefit of future residents.”
‘Committed to delivering’ scheme
Qatari Diar added that it was still “committed to delivering Chelsea Barracks” and expected the first residents to move in during the first half of next year.
Since preparation work on the Chelsea Barracks site began in 2014, UK construction costs have risen by 14.6%, according to data from consultant Arcadis.
Qatari Diar, the real estate arm of Qatar’s sovereign wealth fund, acquired the Chelsea Barracks site from the Ministry of Defence in 2008 for £959m in partnership with the Candy brothers CPC Group.
Quite a few of the prime residential schemes being presented to the market today were conceived and designed in earlier, more heady market conditions”
Following a high court battle between the joint partners, which began over a decision by the Qataris to withdraw the parties’ joint planning application for the 12.5-acre site designed by Lord Rogers, Qatari Diar took full control of the site and submitted a new masterplan. That masterplan gained outline planning approval from Westminster Council in 2011.
Construction began on the first phase in 2015, with Mace as the main contractor for the first three phases. The first phase included 68 flats; phase two comprises 13 townhouses and phase three consists of a mews house, a restaurant, a delicatessen and an area given over to a temporary marketing suite.
Detailed planning approval for the Eric Parry-designed phase four was originally received in 2016, but at the end of January this year Qatari Diar won approval for amendments to the plans, which included increasing the number of flats from 88 to 91 across the three buildings.
Sources involved with Qatari Diar and its investment strategy said that they had seen a tangibly more restrained attitude since the country’s political isolation and that there had also been consultation over whether to divest their non-core assets.
Prime London resi prices down
Meanwhile prime London residential sales prices have fallen by 7.3% in south-west London and by 15.9% in central London, according to Savills. Prices across prime London are 3.5% below where they were a year ago.
In a 2016 report on the prime residential market Arcadis said that the number of “prime” homes due for construction in London over the next ten years was expected to be more than 35,000 with a total sales value of more than £77bn. Chelsea & Fulham accounts for almost 11,000 of planned luxury homes.
Mark Cleverly, head of commercial development at Arcadis, said: “Quite a few of the prime residential schemes being presented to the market today were conceived and designed in earlier, more heady market conditions where sales values were predicted against a market where the rates being achieved far outstripped construction price inflation, allowing developers to forecast greater levels of return.
“The reality of the prime market today is very different and, coupled with the diminished values of the secondhand market in key prime locations, it has resulted in many developers having to rethink their product and pricing strategy in order to compete in a tougher and more competitive environment – there is a lot of choice in terms of products on the market. This climate may last for the next couple of years.”
Chelsea Barracks Overview
The masterplan for the 13-acre former military barracks site details plans for up to 448 residential units. The scheme also includes a sports centre, retail and a health centre. Planning approval was achieved in December 2011.
Phases 1,2 and 3 are in the process of being fitted out and construction works are ongoing, according to a Chelsea Barracks Partnership project update for Phase 6b released in February this year.
Some 65% of homes for phases 1,2 and 3 have been sold and Mace is due to complete those phases by February 2019, the partnership stated in the update.
Phase 1
Planning approval for 74 residential units across three buildings, reduced to 68 units in 2015.
Phase 2
13 townhouses in two blocks
Phase 3A
A mews house, restaurant and delicatessen
Phase 3B
Temporary marketing suite. A planning application for a change of use to residential, with an additional level, is expected to be submitted later this year.
Phase 4 and 5a
Planning consent originally achieved for 88 flats and a gym across three buildings, but in January this year Qatari Diar was given approval to increase the number of flats to 91. The partnership said in February that construction was underway and the main contractor would start work in March 2018 “after a long tender process”.
Phase 5b and 6a
A planning application for Phase 5b and 6a was submitted to Westminster City Council in August 2017. Determination is anticipated soon.
Phase 5b consists of three townhouses and four mews houses.
Proposals for Phase 6a include three buildings.
Phase 6b
Phase 6b includes extra care units (senior living), affordable housing units consisting of intermediate and social rent, a swimming pool, sports centre, primary care trust, and the retail offer.
The partnership said in February that the reserved matters planning application is expected to be submitted in Spring 2018.
To send feedback, e-mail Louise.Dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette
