Residents at the heart of Capital & Counties’ (CapCo) £12bn redevelopment of Earls Court have alleged the property group is in talks with a Saudi Arabia-based investor to sell the site of their homes for £500m, Property Week can reveal.
Keith Drew, chairman of the West Ken Gibbs Green Community Homes action group, which has been fighting CapCo’s plan to redevelop the existing 760 homes on the scheme for eight years, believes The Olayan Group is in talks with CapCo to buy the two estates and has attempted to warn off the multi-billion-dollar investment and property firm from getting involved in the scheme.
CapCo declined to comment on any talks, but a source close to the group insisted there were no negotiations taking place for the sale of the estates. Despite the denial the protesters insisted they were confident the Olayan Group is being advised by Chelsfield on a deal.
Neither Olayan or Chelsfield responded to this magazine’s requests for comment on any bid for the estates.
Global real estate firm
If Olayan is working with Chelsfied on a bid, it would not be the first time the two groups have worked together. In June 2010, the firms formed a joint venture to pay £600m for the Knightsbridge Estate, a mix of 40 retail and office assets between Harvey Nichols and Harrods on Brompton Road.
The pair worked together again in April 2016, when they paid $1.4bn (£1.05bn) for the former Sony building at 550 Madison Avenue in New York. In October, the pair unveiled $300m redevelopment plans for the asset.
Olayan’s other property holdings include the 167-room Hotel Ritz in Madrid, and, in the US, it owns around 3,000 residential units across Maryland
In a letter to Robert Leary, chief executive of Olayan, and the group’s chairman Aziz Syriani, seen by Property Week, Drew said: “We don’t know whether CapCo, or indeed any third parties who might be involved in brokering a deal, have told you this, but since 2009, we have been fighting a high-profile campaign against the inclusion of our homes in CapCo’s controversial Earl’s Court redevelopment.
“Our campaign to defend our homes and preserve our community has become ever more deeply entrenched as CapCo’s undeliverable project has faltered against a backdrop of deteriorating political, market and tax conditions, while a leading member of one of its development partners has been convicted of corruption.”
Drew went on to claim: “CapCo has found it immensely difficult to maintain sales at Lillie Square of even one apartment per week, a rate at which it would take well over a century to complete the wider scheme. Across the UK development sector, the scheme is widely regarded as a lame duck. Since Easter 2017, CapCo has been cleaning up the site in preparation for exiting the development.”
He added a clear warning that any buyer of the estates would face continued opposition to development plans that involved removing the 2,000 residents of the estates from their homes.
“The scheme is widely regarded as a lame duck”
“Our campaign is highly staffed and well-resourced, financed by several major UK charities,” wrote Drew. “It is supported by senior professionals across the UK development and legal sectors. Over the past nine years we have established a committed following far beyond the estates, in the specialist and wider media, among politicians, opinion-formers and decision-makers locally and nationally.
“Our battle is widely perceived as a cause célèbre, held up as a David and Goliath struggle where the poor and dispossessed are pitted against the rich and powerful. This has attracted photographers, filmmakers and even a playwright, all keen to document our iconic fight in the cultural and moral context where right must triumph over might
“Given caveat emptor, we appreciate you may wish to inspect the estates and meet some of the residents the scheme envisages would be forcibly removed from their homes, should the estates be redeveloped. That way you can gauge for yourself the advisability of taking on this project so long as it incorporates the estates.”
Jonathan Rosenberg, a spokesman for the protesters, added it was his understanding CapCo had, in recent months, been in talks with an unidentified Chinese billionaire to sell the estates, but that these had collapsed. CapCo also declined to comment on the existence or not of these talks.
Olayan is a Saudi conglomerate founded in 1947. It invests internationally in both public and private equities including real estate, as well as in fixed income securities. Its multibillion-dollar portfolio is concentrated in North America, Europe, Asia and the Middle East.
Last month Property Week revealed CapCo was launching an enhanced masterplan for the scheme to deliver an increased number of homes across all tenures throughout the wider Earls Court Opportunity Area, that could involve the London Borough of Hammersmith & Fulham (LBHF) re-taking control for the West Kensington and Gibbs Green Estates.
That announcement followed a letter from Steve Cowan, the leader of the LBHF, in which he slammed CapCo’s current plans as “a poor deal for residents”.
The Labour leader who took the helm of the council in June 2014 after the previous Conservative administration had approved CapCo’s plans for the 77-acre site and the demolitions of the two housing estates, added: “CapCo’s latest proposal is to develop a new masterplan for the Earls Court scheme. If that gets planning permission, we would see the two estates return to council control.”
In February, CapCo revealed the scheme had shed a fifth of its value in a year thanks to “adverse conditions in the London residential market”. The scheme was valued at £1.1bn at the end of 2016, down 20% from its £1.4bn valuation a year earlier.
The land value decline pushed the group, which also owns large areas of Covent Garden, to a £119m loss in 2016, down from profits of £431m a year earlier.