Perth developers can learn from the massive repurposing of London’s Battersea Power Station.
Standing at the entrance to Battersea Power Station’s town centre, it is difficult to imagine what it was like a decade ago.
The bustling community, just outside of central London, consists of dozens of shops, offices, cafes, restaurants, apartment towers and public spaces, across 17 hectares.
In the third stage of an eight-phase build, once the project is completed it will accommodate up to 25,000 residents and workers.
The £9 billion ($17.5 billion) development has been far from smooth sailing, characterised by multiple failed attempts to transform the site since the 1980s.
Like a lot of disused utility sites, the asset came with complexities around access, heritage, contamination, transport connectivity and design.
Developers worldwide can learn from its successful transformation.
In many ways, Battersea bears similarities to two ailing properties in Perth – East Perth and South Fremantle power stations.
To date, neither asset has been developed, despite appetite from billionaire investors.
Battersea Power Station is set to be home to 25,000 residents and workers. Photo: High Level Photography
History
Battersea Power Station was built across two stages, between 1929 and 1935 and between 1937 and 1941.
The power station was not completed until 1955, due to World War II.
One of the world’s largest brick buildings, it took six million bricks to construct the station.
About 10,000 tonnes of coal was burned in the station each week, to supply one fifth of London’s electricity.
The site was heritage listed in 1980 and decommissioned in 1983.
Its heritage status meant the government-owned General Electricity Generating Board’s initial intentions to demolish the site and sell the land for housing could not proceed.
The goal soon became to repurpose the power station, which sat less than five kilometres outside London’s centre, alongside the River Thames.
Described as the “Everest of real estate”, Battersea Power Station attracted millions of pounds of investment from multiple developers, who could not get the project to stack up.
In 1987, British property developer John Broome bought Battersea Power Station from the government for £1.5 million, with intentions of turning it into one of the largest theme parks in the world.
His plans, which included a waterfall, an oceanarium, several roller coasters and an ice rink, never came to fruition.
The businessman also owned Alton Towers theme park in the UK, which he sold to fund the Battersea development.
Mr Broome’s Battersea Leisure worked to remediate the power station by removing a significant proportion of asbestos, which would pave the way for the theme park.
However, in 1993 when cost blowouts combined with a crash in property prices, he sold the site to Hong Kong developer Parkview International.
Parkview International, headed by Victor Hwang, wanted to convert the station into a residential and retail precinct, but its plans did not proceed.
Irish developers Real Estate Opportunities, a subsidiary of Treasury Holdings, purchased the site in 2006 for £400 million.
The company received planning approval for a £5.5 billion redevelopment of the power station, which consisted of homes, offices and a green energy plant, fuelled by biomass.
Real Estate Opportunities fell into financial difficulty during the global financial crisis and collapsed into administration in 2011.
The station and surrounding land were listed for sale for the first time, with Knight Frank running a campaign for the site.
Chelsea Football Club indicated intentions to build a 60,000-capacity stadium at the site, with architects Kohn Pedersen Fox drawing plans.
The football club submitted a formal offer to buy the site, but its bid was rejected. In September 2012, Malaysian consortium consisting of Sime Darby Property, SP Setia and the Employees Provident Fund, bought the asset for £400 million.
The consortium, dubbed Battersea Power Station Development Company, was led by Malaysian businessman Tan Sri Liew Kee Sin, as then chief executive of SP Setia.
The former power station has been transformed into a retail and residential centre. Photo: Charlie Round Turner
As BPSDC head of planning and public affairs Gordon Adams explained, the purchaser recognised a project of Battersea’s scale would need input from multiple parties to stack up.
“Tan Sri Liew recognised he couldn’t do it on his own, it’s a big project [and] needed a lot of financial firepower,” Mr Adams told Business News.
The Malaysian businessman then approached Sime Darby Property, which is a 40 per cent shareholder, as is SP Sentia.
The Employees Provident Fund, a Malaysian pension fund, owns the remaining 20 per cent.
The consortium brought in Mr Adams, who has had vast experience advising on large-scale projects across the UK, to make the project a reality.
The head of planning, who moved to London in 2006 from Australia having worked as a planning officer in regional NSW, recalled the challenging nature of the project.
“It was a complex project, given the previous failures,” Mr Adams said.
“My first CEO (Rob Tincknell) used to say it didn’t sit there for 30 years because it was easy.
“It is a project where you have to come up with solutions, because there are problems, and a problem on this project is always bigger.”
BPSDC added a hectare to the site with the purchase of the Nine Elms milk depot for £17.6m in 2014.
The power station acquisition preceded an agreement between the UK government and the Greater London Authority to fund an extension of the London Underground train network, in late 2012.
The government provided a guarantee for a £1 billion loan to extend the tube, which is to be repaid via £400 million in developer contributions and £600 million from business rates over 25 years.
The tube extension was vital to the project, so much so that Transport for London and the developer entered into a dual-key agreement. In other words, each development relied on the other proceeding to stack up.
BPSDC’s plan became a reality in January 2013, when 75 per cent of the 865 homes sold as part of its first stage, Circus West Village, sold off the plan.
The 650 apartments sold in the first four days of being on the market, with queues around the block and people given just 15 minutes to decide on their purchase.
Considered one of the fastest-selling residential developments in history, the presales provided the capital for the project to start construction.
Building began on the Circus West Village in July 2013, with residents getting access in 2017.
The transformation of the power station itself, which includes hundreds of shops, a 2,222- square metre food hall, more than 50,000sqm of office space and 254 apartments, began in 2014.
A £45,000 falcon nest within the brickwork of the power station is one of the quirks of the development, installed after the developers discovered the rare birds frequented the site.
Apple signed on to shift its headquarters into Battersea Power Station in 2016, with the tech giant moving in last year.
Mr Adams explained that while this was a major coup for the development, the project was under way regardless.
“We were two years into the works by that stage,” he said. Throughout the life of the project, BPSDC has adjusted its plans in response to market conditions.
For example, one of the office buildings was converted into a residential tower during the design phase following Apple’s decision.
“A project of this size is going to go through cycles, and that building really epitomises that,” Mr Adams said.
“We learned from that, and we went back and made a change to our master plan that means our land use is flexible to be able to respond to the market because we know it’s going to change again.”
Mr Adams, who recently announced he was leaving BPSDC at the end of this year, said persistence and collaboration were key to making the project work.
“One of the challenges was doubt, because there had been so many failed attempts that no-one believed it would happen,” he said.
“On something as big and as complex as this, it only worked because everyone worked together; there was a shared objective.”
The project is due for completion in the 2030s, when it will have more than 250 shops, cafes, restaurants, a theatre, hotel, 7.7ha of public open space, close to 280,000sqm of commercial space and more than 4,000 dwellings.
East Perth Power Station sits undeveloped despite its proximity to the CBD. Photo: Michael O’Brien
Parallels
East Perth and South Fremantle power stations have both been earmarked for redevelopment, with the former arguably closer to reality due to its proximity to the CBD.
Both were decommissioned in the 1980s and have attracted interest from developers, but to date nothing has come to fruition.
Kerry Stokes’ Australian Capital Equity emerged as the mystery bidder on the South Fremantle Power Station in 2022 but pulled out of the deal later that year due to the high costs associated with the redevelopment.
ACE and Andrew Forrest’s Fiveight were selected as the preferred proponents to develop East Perth Power Station in 2020, but both parties walked away from the project last year.
The site remains derelict, but the state government has spent more than $90 million on remediation works to date.
Golden Sedayu’s nearby Belmont Park development is under way after more than a decade of planning.
This has sparked confidence among industry players that it could make redevelopment at East Perth more viable.
Element Advisory director Andrew Howe observed in a recent blog post that there were opportunities starting to emerge for the site.
“The development of Golden Sedayu’s land at Belmont Point just across the river, the intensification of the East Perth Train Station precinct or potentially an expanded ferry system, not forgetting the global tourism content and vibrancy of Optus Stadium,” Mr Howe said.
“As these and other opportunities come to fruition, the East Perth site has the potential to be seen in a new economic and social context.”
South Fremantle Power Station was decommissioned in 1985. Photo: Michael O’Brien
