Songbird Estates, the company that controls east
London’s Canary Wharf, plans to build more homes in the financial district to
take advantage of a “widely anticipated shortage” in the UK capital.
Canary Wharf Group, in which Songbird has a 69 percent
stake, has an 11 million square foot (1m sqm) development
pipeline that may result in
GBP£200m (US$267 million) of profits for
Canary Wharf, Harm Meijer, an analyst at JPMorgan Chase & Co, said in a
note.
Canary Wharf’s plans may be changed to allow more
housing at its Wood Wharf, Heron Quays West and Newfoundland sites, Songbird
said. Canary Wharf’s joint venture to redevelop most of Royal Dutch Shell’s
London headquarters near Waterloo station will also include homes. The average
value of a London home rose 1.3 percent to 455,159 pounds this month, Rightmove
said in a report released March 19.
Canary Wharf may retain and lease the apartments
rather than putting them on the market, John Garwood, London-based Songbird’s
company secretary, told Bloomberg by telephone. “We’re looking at the options
we have – that may well be one of them actually, but it’s too early to say,”
he said.
The number of new property listings in London fell 9
percent in January from a year earlier, an “early indication that shortage of
sellers and upwards price pressure will again feature in 2012,” Rightmove said
last month. Asking prices for London homes rose to near a record in February,
helping push national values up the most in almost a decade, Britain’s biggest
property website operator said.
Canary Wharf paid
GBP£90.4m to acquire
control of Wood Wharf, a 16.8-acre (6.8-hectare) site close to its existing
office district, the company said in January. The land has planning approval
for a 4.8m sq ft (445,935 sqm) development, a third of
which is to be homes.
“The best use of this site is being reviewed,
potentially altering the mix of uses in favor of residential,” Songbird said in
the statement.
Heron Quays West, a 1.3m square foot office
project, has planning consent, but a residential and business development is
now being considered, Songbird said. Apartments may be developed at its
Newfoundland site where a hotel and serviced apartments had been planned.
The developer said it would also try to attract more
businesses involved in technology, media and telecommunications to east London.
“There appears to be a natural synergy between the
finance and tech sector,” Garwood said. “We’ll be looking to try and extend
that.”
Songbird and Canary Wharf Group are unlikely to be
turned into real estate investments trusts, Pritchard said on the call, despite
amendments to the UK legislation published yesterday that allows institutional
investors such as sovereign-wealth funds to own majority stakes in REITs.
“The structural requirements for REITs really don’t
suit our construct,” David Pritchard, Songbird’s chairman, said in a telephone
call.
Funds managed by Morgan Stanley (MS) increased their
stake in Songbird by about 12.5 percent on March 19 and they now own about 8.8
percent, subject the funds exercising stock options. Other major shareholders
include a unit of China Investment Corp., Qatar Holding and investor Simon
Glick of New York.
In April 2011, Qatar Holding, a subsidiary of the
country’s sovereign wealth fund, acquired 28.5m ordinary shares in
Songbird, raising its stake by 3.7 percent to 27.7 percent, according to a
statement to the London bourse.
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