Lend Lease cashes in as Olympic land development begins
Lend Lease and its joint venture partner, London & Continental Railways, have sold the first tranche of land at its £2 billion ($3.3 billion) Stratford, East London site, which is part of the 2012 Olympics district.
Lend Lease/LCR will sell the land, known as the International Quarter, to Starboard Atlantic Hotels LLP - a joint venture between Starboard Hotels and Union Hanover Securities - but will be the developer of a 25,584-square-metre hotel of up to 500 bedrooms.
Analysts said the deal was positive for Lend Lease's global construction pipeline and would help offset the weakness in the overall Australian construction industry.
The International Quarter is one of Britain's largest mixed-use developments. Once completed, it would include a four-star hotel, an extended-stay hotel which can also be apartments, a residential complex and offices.
Kristy Lansdown, Lend Lease's project director, said an application would be submitted later this year, with the complex scheduled to open in 2016. The 18-storey hotel complex would overlook the former athletes' village, now known as East Village.
Ms Lansdown said the hotel deals would build on the momentum which the International Quarter was generating as the first anniversary of the start of the London Olympics approaches.
As part of the regeneration of the area, Lend Lease expects to submit a planning application later this year for the first 350 residential units on the site of the former Olympic Park. If the application is successful, the new homes will go on sale in early 2014.
Lend Lease has also begun the construction of the first 500 new homes as part of the £1.5 billion regeneration of Elephant & Castle, which is being delivered in conjunction with the Southwark Council.
The new developments come as cashed-up Australian funds look to invest overseas, driven in part by the change to compulsory contribution schemes.
According to CBRE research, the flow of capital into the London real estate market has been powered by a range of investment criteria in predominantly Asian and Australian superannuation funds.
Simon Barrowcliff, the executive director of central London capital markets at CBRE, said by 2020, Australian superannuation funds would capture an additional $US9.7 billion ($10.6 billion) each year, and these funds were already looking at new destinations in which to invest.
"Central London property will capture a large share of this capital. These examples show the continuing weight of expected flows into the London real estate market, which will further support current prime pricing in the capital," Mr Barrowcliff said.
He said central London attracted 21 per cent of all European real estate investment in 2012, while Japan's Government Pension Investment Fund - the world's largest - was also looking more at international investment, including real estate.