Sime expects 30pc gross margins from Battersea (4197)

LONDON’S LURE: Earnings to get boost from improving global economy, govt initiative



SIME Darby Bhd stands to generate significant earnings from the
Battersea Power Station (BPS) redevelopment in London from 2014, a
senior executive said.

Sime Darby group chief operating officer Datuk Abdul Wahab Maskan also
suggested that the project, arguably the last significant piece of
prime central London land remaining for redevelopment, could turn in 25
per cent to 30 per cent gross margins.

"When the group invests
in real estate, the minimal margin expected is 25 per cent to 30 per
cent, Abdul Wahab said during a visit to the Battersea site last week.

The project on a 15.78ha plot is being jointly undertaken with the Employees Provident Fund (EPF) and SP Setia Bhd.


The Malaysian consortium took ownership of the iconic
site after paying STG400 million (RM1.98 billion) to BPS liquidators
last week.

Sime Darby and SP Setia each own a 40 per cent stake in the joint
venture, Battersea Power Station Developmet Co (BPSDC), while the
balance is held by EPF.

Abdul Wahab said a higher margin from
the project is possible when the global economy improves. Additionally,
it will get a further boost from initiatives by the UK government to
drive investments in London and infrastructure projects surrounding the
Battersea site.

"Interests from global investors for London
properties are still there, especially those who are looking at London
as a major investment destination," he said.

The project had
attracted interest from investors in Malaysia and other countries,
Abdul Wahab said. They included large property development investment
companies and institutional funds.

"There are interest shown by those who had suggested sub-joint ventures and possible booking of retail blocks," he added.

Abdul Wahab, who is also managing director of Sime Darby property
division, said residential and commercial sales launches for Phase One
of the project are due in April 2013 with construction work starting in
the second half.

The project's master plan over 10 to 15 years
comprises 3,500 private and affordable homes, 160,000 square metres of
new office space, 56,000 sq m of retail space and nine hectares of
public realm.

There will also be a hotel and two new London underground train stations, which will extend from the Northern Line.

Abdul Wahab believes the project is attractive given its strategic
location. It is sited on the south bank of River Thames, near the
upmarket boutique shopping district of Sloane Square and the Battersea
Park, the green space in the London Borough of Wandsworth.