(Bloomberg) --
It was a real estate deal that broke U.K. price records, while sparking controversy that led to a royal objection, a costly redesign and a hostile split with the co-developer. But almost 14 years and a market slump later, there are signs of progress for Qatari Diar Real Estate Investment Co.’s Chelsea Barracks.
Properties worth about 200 million pounds ($265 million) have been sold in the west London project this year, taking the total to about 683 million pounds, according to a spokesperson for Chelsea Barracks. With construction complete on roughly 80 luxury homes, 92% of the finished properties have found owners, the spokesperson said.
“2021 has been a highly successful year for Chelsea Barracks in a challenging global environment,” said Richard Oakes, chief sales and marketing officer for Qatari Diar.
After splashing more than $1 billion on the former army barracks in 2008, the site’s owners are now signing deals with the world’s wealthiest home owners from Turkey to Hong Kong.
So far, properties have sold for an average of around 4,200 pounds per square foot, according to a spokeswoman -- that’s almost three times the average for the surrounding neighborhood of Belgravia, which is already one of the most expensive districts in London, according to LonRes data.
Chelsea Barracks offers prospective buyers every luxury from a new species of rose to custom-made furniture and a 13,000 square-foot private spa -- the kind of expensive touches that have been trickier to sell in London since the market peaked around 2014.258359508
Qatari Diar, the real estate arm of Qatar’s sovereign wealth fund, has sold apartments for at least three million pounds in the complex, with prices spiraling up to twenty times that sum for the plushest of the properties. As a pandemic still rages across the globe and new property hotspots emerge, it will take years before Qatar sees if its bet that London will continue to be a haven for the world’s super-rich pays off.
Prime Purchases
One buyer accounts for a significant chunk of the sales: Christian Candy, a London property stalwart who signed up to develop the site before he sold his stake to Qatari Diar in 2010. Candy has bought six properties for 75.4 million pounds through a company called Whistler Square, public filings show. The Times reported his purchases earlier.
The growing sales are a sign of gradual progress for Qatari Diar. The firm’s original plans with Candy for apartment towers wrought in copper and concrete were branded “insane” by heir to the throne Prince Charles, who wrote a letter objecting to the proposals.
The plans were subsequently pulled, in a move that prompted Candy’s CPC Group to sue Qatari Diar. Construction work on the revamped development of 190 homes started at the end of 2013 -- just as prime property in London started a slump it has struggled to recover from, after a tax hike on property purchases was introduced.
“2014 was, I suppose, the zenith of the market and what changed of course was the stamp duty,” followed by the political turmoil of the Brexit vote, said Rupert des Forges, head of prime central London developments for property broker Knight Frank. “There were moments three or four years ago where we thought: ‘Are we going to lose this crown as a global city?’”
Pockets of London have plummeted in from that peak, with the average home in Belgravia down 23% in the past seven years according to LonRes.
New Money
That kind of decline was hard to predict more than a decade ago, when Qatar went on a spending spree for some of the world’s toniest real estate. That included splashing 959 million pounds on the Chelsea Barracks site in 2007 -- more than triple the amount the U.K. government was expecting to raise, making it the priciest residential land sale in British history at the time.
The deal was part of a splurge on building homes for the world’s super rich in central London. Christian and his brother Nick Candy were pivotal in that transformation, starting with their creation of One Hyde Park, where a five-bedroom penthouse with a dedicated champagne room went on sale for 175 million pounds this year. A firm controlled by former Qatar Prime Minister Sheikh Hamad Bin Jasim Bin Jaber Al Thani was also involved in this development.
The Chelsea acquisition seemed to burst with potential. By 2007, prime properties in London were the most expensive in the world and rising rapidly. After a brief slump sparked by the global financial crisis a year later, the world’s wealthiest were once again on the hunt for a secure place to store money, said Yolande Barnes, a real estate researcher at University College London. “It was a real boom period,” she said, with “six years of extraordinarily high growth.”
Recovering Sales
The legacy of that boom can still be seen around London, with more than 23 developments classed as “super-prime” in the works, with asking prices reaching 3,000 pounds a square foot or more, according to Knight Frank. “There are so many super-prime sites under construction or coming to completion or completed -- and they’re selling well,” said Jo Eccles, the founder of buying agent Eccord. “There’s this race to buy into the best development and the best unit, and get that trophy asset.”
The pandemic was a particularly trying time for the luxury property market, as the proportion of international buyers tumbled to the lowest level in more than a decade according to Knight Frank. But the limited number of luxury homes available has pushed up prices, which are rising at the fastest pace since 2015, figures from Knight Frank show.
“Mayfair and Belgravia have a long, long history of housing the wealthiest in U.K. society” and are likely to hold their , said Barnes. “The question will be for Chelsea Barracks: is it enough of a new part of Belgravia on its own where it can continue riding on its resilient coat-tails?”
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