Lend Lease starts sale of Olympics land

Lend Lease and its joint venture partner, London and Continental Railways (LCR), have sold the first tranche of land at its £2 billion ($3.32 billion) Stratford site in East London, which is part of the 2012 Olympics district.

Known as The International Quarter, the Lend Lease/LCR joint venture will sell the land to Starboard Atlantic Hotels, a joint venture between Starboard Hotels and Union Hanover Securities, which will develop a 25,584 square metre hotel of up to 500 bedrooms.

Once completed, the site will comprise a four-star hotel, an extended stay hotel/apartments, a new residential complex and state-of-the-art commercial 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 London 2012 athletes' village, now known as East Village.

Ms Lansdown said the hotel deals would build on the momentum The International Quarter was generating as the first anniversary of the start of the London 2012 Olympics approaches.

Lend Lease expected to submit a planning application this year for the first 350 residential units. If it is successful, the new homes will go on sale in early 2014.

Analysts said the deal was positive for Lend Lease's global construction pipeline and would help offset the weakness in the Australian construction industry.

Lend Lease has also begun construction of the first 500 new homes as part of the £1.5 billion regeneration of London's Elephant and 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," Mr Barrowcliff said. "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.

"Central London attracted 21 per cent of all European real estate investment in 2012, and is likely to be the favoured market for initial investment, owing in part to its transparency, liquidity and availability of large quality assets.

"The world's largest pension fund, Japan's Government Pension Investment Fund, has until now invested the majority of its capital domestically, but has now sought advice on whether to diversify into alternative international investment, including real estate."