There are a surprising number of things missing from next week’s launch of Europe’s tallest residential tower. For starters, there’s no price list. There’s no brochure for the £60m triplex penthouse that crowns the 180-metre-high London landmark. And developer St George is not expecting many British buyers.
Known simply as The Tower, it will be the capital’s tallest purely residential building when the first inhabitants arrive in 2013 and will signal the completion of the regeneration of St George Wharf, a seven-and-a-half acre slice of Vauxhall on the southern bank of the River Thames.
Some of the prospective buyers might struggle to pronounce Vauxhall, let alone know where it is. Its developer, a subsidiary of the UK stock market-listed housebuilder Berkeley Group, expects Asian and Middle Eastern buyers to account for the lion’s share of purchases, thanks to the weak pound and their seemingly insatiable appetite for London real estate.
Buyers of homes in The Tower, between Battersea Power Station and the MI6 headquarters, will pay handsomely for riverside views of the Houses of Parliament, the London Eye and the City of London skyline. But will they really pay up to £6,000 per square foot to live in London’s otherwise unglamorous district of SW8?
“The world is our market,” says Mark Griffiths, St George’s managing director, as we take the lift to the top floor of the three-storey show suite. When it opens for the first viewings (by appointment only) it is obvious that only extremely wealthy purchasers are expected. The show apartments have their own underground car park, complete with valet, and oversized handbag lockers in case female prospective buyers want to venture out on site.
“Whoever buys the penthouse will probably instruct their own architect, who will probably have built palaces for them,” says Griffiths. “They will want to put their own stamp on it. I’m not sure we’ll ever produce a formal brochure.” In fact, two such investors have already hired a helicopter to see for themselves what the views are like from 180 metres up.
The annual service charge of £9 per square foot means the eventual buyer of the penthouse will receive a £90,000 annual bill. “We are dealing with people who come from a service culture. They don’t have a problem paying for service so long as they get it,” Griffiths says.
Designed to have the specification of top hotels such as the Mandarin Oriental, the building’s “hotel-style service” for residents will be provided by Harrods Asset Management. As seen at One Hyde Park, security is a selling point – the gated entrance, CCTV and numberplate recognition software are designed to reassure.
Inside, the show apartments have a distinct Asian flavour. Tons of Chinese granite have been imported for the interiors and the Bulthaup kitchens, designed as a single piece of cabinetry, take minimalism to the extreme. Domestic clutter disappears on sliding trays and there is even a secret compartment by the sink to hide the washing-up brush. Everything can be controlled remotely by smartphone, including the lighting, cooling, solar blinds and flatscreen TVs in the bathroom. “You can be in Hong Kong airport and use your phone to open the windows or adjust the heating,” Griffiths says.
One thing the Tower’s glossily boxed brochure does not contain is a price list. “This is all about exclusivity,” he says. Nevertheless, prices climb steeply above the 20th floor and buyers will pay extra for east-facing apartments with the “prime views” of central London. But wouldn’t owners rather live in the heart of London, than gaze across at it?
“They are really selling to those who are naive, who don’t know the difference between Vauxhall and Belgravia,” says Naomi Heaton, chief executive of London Central Portfolio, which runs residential investment funds for predominantly Asian and Middle Eastern investors. “They are seduced by shots of Big Ben and think they are buying in the vicinity of central London.”
Heaton agrees that Asian investors are the most active in London’s prime residential markets. As most buy through off-shore companies, there are no firm statistics. “Without question, the biggest proportion of private clients briefing us to buy on their behalf is Asian,” she says. She will not, however, be advising them to buy off plan.
“What could happen is this: 230 foreign investors are going to be buying-in all at the same time; many will be buying to rent out. So they will almost certainly suffer voids or a nasty disappointment in rents. These premium prices are not sustainable.”
Griffiths insists purchasers are not buying to trade but to hold for the long term. He says St George has turned down several offers for the whole building, designed by architecture practice Broadway Malyan, from Middle Eastern investors. “We’re not traders and that’s not what we do,” he says. Instead, St George plans to extract the maximum “marriage value” from matching buyers to apartments over the scheme’s three-year development window, aiming to sell no more than 100 units a year.
“Asian investors often buy for their kids to live in when they’re at university in London,” he says. One Middle Eastern family has reserved an entire floorplate to be developed into one 6,600 sq ft apartment with four bedrooms and a gigantic living room. Above the 30th floor, St George is reluctant to sell single apartments in case this prevents similar sales. “We want to retain some flexibility,” Griffiths says.
Certainly, early buyers at St George Wharf – including Chelsea Clinton, daughter of US secretary of state Hillary and former US president Bill, former prime minister John Major and several premier league footballers – are sitting on a huge profit. Since the first apartment block was built in 1999 house-price inflation has surpassed 600 per cent.
The Tower site is the gateway to the Nine Elms regeneration corridor and the new US Embassy will be built nearby. Griffiths will not comment on speculation that a single floor of The Tower is being sought to house US government officials.
The hype surrounding the launch has marked out Berkeley Group’s enviable market position – it is the only major UK housebuilder to concentrate on London developments and has so far escaped the short-selling spree that has forced share prices in the sector down by as much as 20 per cent in recent weeks. “I’ve been asked to build this tower in Mumbai and Malaysia but we’ll stick to what we know,” Griffiths says, in a nod to the fact that Asia’s domestic property markets are overheating. Let’s hope the capital isn’t building up an Asian property bubble of its own making.