Development roundup – Staines, Digbeth, London and Worthing

18 December 2020 | Investment

In this bumper development roundup – the final one of the year – we explore the planned creation of new developments and exciting, rare investment opportunities from across the UK, including the largest agreed contract of 2020 and a tie-up between a developer and National Express in an up-and-coming part of Birmingham. 

Staines set for a development boost

First up, we head to London’s commuter belt, where a seven-acre commercial site located in Staines-upon-Thames is set to be transformed into 270 residential dwellings, following the acquisition of the land by investment group, Vector Capital Group AG, and property development firms, Stonegate Homes Ltd and JFH Homes Ltd.

Positioned on the Thames and within the M25 corridor, the 6.89-acre site is made up of 74,021 sq ft of existing office accommodation, complete with a decked car park for approximately 150 cars and a man-made lake. 

With an expected GDV (gross development value) of £100 million following the build-out process, the site is expected to offer both social and private housing and be finished to ‘the high standard’ consistent with both Stonegate Homes and JFH Homes developments.

Sezer Sherif, founder and chief executive of Vector Capital Group AG, said: “The Staines commercial site showcases our ability to diversify, whilst presenting an incredibly exciting opportunity to fund the development of 270 new homes in an enviable location. This whole project has been led by the strength and highly regarded reputations of both Stonegate Homes and JFH Homes, whom we are delighted to work in partnership with.”

The ‘attractive proposition’ and ‘potential to develop-out a vast estate’ has resulted in early discussions with interested investment parties, providing the opportunity for Vector to plan its exit and re-risk.

With completion on the site acquisition now confirmed, Vector Capital Group AG, Stonegate Homes and JFH Homes, owned by ex-Chelsea FC player Jimmy Floyd Hasselbaink, plan to release additional information on the site in the coming weeks.

“Stonegate Homes boast a very strong reputation for identifying and acquiring both brownfield sites and commercial units that can be converted into residential developments,” Sherif added. 

“We at Vector Capital were fortunate enough to be introduced to the firm and quickly established a partnership where the Stonegate team scoped out an acquisition opportunity with the potential for great returns, which we could then present to our clients as an alternative investment opportunity.”

Sherif believes we will witness more of these types of transformations – from commercial to residential – as a result of Covid-19.

“I definitely think we will see an increase in the conversion of commercial to residential sites for multiple reasons,” he explained.

“The first is that as increasing numbers of businesses fail or change how they work, there will be more commercial units available for property developers to acquire and convert. In addition, the government have made it a lot easier for developers to develop-out commercial sites, with the introduction of its new ‘infrastructure revolution’ strategy, combined with key changes to Permitted Development Rights.”

But what of Covid-19’s impact more generally on Vector?

“The initial shock of the pandemic was certainly concerning, particularly as it was something new and unprecedented,” Sherif said.

“However, as a smaller, agile and entrepreneurial operator the Vector Capital team were able to react quicker than larger corporate entities and rather than tightening our belts and burying our heads in the sand, we proactively looked for new investment opportunities”

He added: “As a result, we were able to form new partnerships with reputable organisations, like Stonegate Homes, enabling us to secure new clients. A lot of competitors have used the pandemic as an excuse for bad trading performance, whereas we have used it as an opportunity to disrupt, dominate and increase market share.”

Planning approval for major canal-side scheme in Digbeth

Developer HUB, in a joint application with coach operator National Express, has secured planning permission for a major mixed-use regeneration scheme in Digbeth, Birmingham, which is aiming to create a new live/work destination for the city.

The masterplan, designed by architects shedkm, is set to bring up to 2,000 new homes to the area, including homes for sale, homes for rent and student accommodation.

The new homes, creative workspace and a diverse mix of leisure and retail amenities will be linked by over two acres of public realm, while the scheme will open up 200 metres of previously inaccessible canal frontage.

Bordering the Grand Union Canal, the six-acre site – currently home to a bus garage – sits at the heart of the Digbeth regeneration area, fast-emerging as Birmingham’s ‘leading creative and cultural quarter’. HUB’s proposals are the first in a series of large planning applications that are seeking permission within Digbeth.

The site sits less than 15-minutes’ walk from Birmingham city centre and offers ‘excellent connectivity’ via the Midland Metro Alliance tram east extension and the new HS2 station at Curzon Street, which is currently under construction.

Damien Sharkey, managing director at HUB, said: “Digbeth is a historic neighbourhood with a long industrial heritage that is now fast emerging as one of the UK’s most creative and lively places. We have worked very closely with the local authority, local community and other stakeholders over the past two years to ensure that our plans fully support the area’s long-term evolution, and we are excited to be moving forward with our first project in Birmingham.”

Adam Cook, UK property director at National Express, added: “We’re pleased to see the approval of this joint application, which represents a fantastic opportunity to support the regeneration of Digbeth in alignment with the National Express environment and property strategy to move to a zero-emission bus fleet by 2030. This new development provides Digbeth with an exciting and vibrant destination and will allow our relocation to new efficient purpose-built facilities outside of the city centre.”

Student accommodation on offer in PCL

Euroterra Capital, one of London’s premier garden developers, recently brought to market Metrogate House on Queen’s Gate Terrace in South Kensington, for offers in excess of £25 million.

This ‘impressive student accommodation townhouse’ is situated within short walking distance of two of the capital’s best universities, namely Imperial College London and the University of London.

Formed of three properties, the historic Victorian stucco-fronted building has 51 bedrooms spread over five floors, including a mixture of two, three and four-bedroom flats which are ideal for student living.

The property is located streets away from Hyde Park, the Royal Albert Hall and the Natural History Museum, and offers various strong Tube links into the West End and beyond.

Pantazis Therianos, chief executive of Euroterra Capital, says, “This property is unique for its close proximity to Hyde Park and two of London’s best-regarded universities and has successfully operated as student accommodations with healthy return. The access residents have to green space and London’s finest parks, especially in the current climate, makes this a special heritage investment.”

Contract for super-prime scheme agreed

Fenton Whelan and Ant Yapi have signed a £100 million construction contract for the £500 million Park Modern super-prime scheme.  

Fenton Whelan’s agreement with the international contractor is the largest agreed in 2020 for a Prime Central London resi-scheme.

The start of the rollout of the Covid-19 vaccine has given the company the confidence to agree the contract and prepare to launch the project.

Park Modern, a mixed-use development, is fully funded to completion through a newly arranged senior construction funding facility and the continued support of Cheyne Capital, the project’s long-term sponsor.

Fenton Whelan managed the construction site during demolition and groundworks, while Ant Yapi will now complete the development.

Set in a prime location overlooking Kensington Palace Gardens, Park Modern is a 190,000 sq ft development providing 57 one to six-bedroom luxury residences, as well as 30,000 sq ft of premium commercial space

Residents in the development will have access to valet parking, a resident’s lounge, a 25 metre pool, gym, spa, cinema, and treatment salon.

Fenton Whelan has already achieved forward sales for all of the first phase release of residences in the development at values of up to £4,600 per sq ft, with the second phase release of residences set to be announced in the new year.

The development will form part of the major regeneration of the Queensway area, and is also making more than £18 million in public contributions, including a commitment of £11 million to affordable housing.

Rarely available residential investment opportunity for sale

The commercial team at Michael Jones Estate Agents have been instructed on behalf of MCR Property Group to dispose of a recently converted residential investment in Worthing, West Sussex.

Completed in March 2020 and fully occupied in just eight months, with the assistance of the agency’s lettings department, it ‘now provides a fantastic opportunity for an investor looking to secure a long-term income’.

The building includes 78 units (made up of four studios, 44 one-bedroom apartments and 30 two-bedroom apartments), occupying over 46,000 sq ft overall. Externally, there is allocated parking, cycle storage and a landscaped courtyard.

The flats are all let on separate AST agreements with the building producing an annual income of £815,460.

Several pubs, restaurants and leisure facilities are close by, with strong connectivity along the South Coast and heading north to London. Its railway station also provides easy access to Chichester, Brighton and Gatwick. 

Jon Justice, Associate Director at Michael Jones, commented: “We have experienced a strong demand following our initial pre-sales marketing and enquiries are coming in regularly. We expect the competition to be high for such a rare investment opportunity. The apartments have been predominately let to working professionals, this coupled with all the amenities of Worthing make this an attractive opportunity which should always produce a strong income for any investor.”

This post has originally been featured in Property Investor Today.