SPEAKING to The Star executive editor ERROL OH on the sidelines of the Ernst & Young World Entrepreneur Of The Year award ceremony in Monte Carlo, Monaco, Tan Sri Liew Kee Sin, president and chief executive officer of SP Setia, said that it will take 10 to 15 years to develop the project and that he expects the gross development value to reach around £8bil (RM40bil). Here are excerpts from that interview.
STARBIZ: Could you please comment on the deal?
Liew: We have signed an exclusive agreement for 28 days to go into detailed negotiation on Battersea. The price is confirmed £400mil (RM1.97bil). Most of the heads of agreement have been agreed upon.
We are committed to maintaining the existing approvals given by City of London, principally the local council where the project is. We are also committed to maintaining the iconic structure of the Battersea Power Station.
That is crucial because as in many developed countries, the local sentiments are very, very important. The structure has been there for a long time. I think it's good that it becomes a symbol of the project.
So, as far as branding of the location is concerned, it's already there. You don't have to tell the whole world where the project is. Just need to say Battersea Power Station and the whole world knows where the project is.
We also support the council's proposal to extend the Northern Line (of the London Underground Tube). The Northern Line is key. If the project was smaller, we wouldn't need the extension. But a project of the scale of Battersea needs the extension. We're talking about almost eight million square feet of gross space in that area.
There would be about 3.5 million sq ft of apartments and 500,000 sq ft of social housing. The balance is retail, offices, car park space and so on. We are committed to contributing a proportionate sum for the Northern Line extension. The indicative figure we have been informed is about £200mil.
This is a major redevelopment project for London. The local council wants the Battersea Power Station project to regenerate the whole area.
The key for us is to relook the planning approvals already secured for the project by the previous owner, tweak it based on the experience we have while maintaining the good elements. The idea is to use Battersea Power Station as a symbol of regeneration.
We have to be very innovative so as to take advantage of an existing icon. We don't have to reinvent the wheel but we want the project to be unique and incorporate a bit of Asian influence. We expect a major portion of our customers to come from Asia. We want to promote both the East and West.
As for SP Setia, the project is part of our ambition to be a real multinational corporation.
We're happy to work with a like-minded company like Sime Darby, which had gone overseas well ahead of us. With the combination of us and Sime Darby, we have a good chance of succeeding with this project.
Why choose to partner Sime Darby?
This project will have almost £8bil in gross development value. Not many Malaysian companies can take a project of such scope, complexity and size, including SP Setia, on its own.
Sime Darby has the international exposure and global branding and has done massive townships in Malaysia. We think it is a good partner, with the combination of the two companies' resources. It has changed tremendously in the last two years, after Datuk Mohd Bakke Salleh became the chief executive officer.
For now, it's a 50:50 joint venture. A joint-venture company will be formed. With the support of the SP Setia customer base and Sime Darby's customer base, hopefully we will be able to succeed with the project.
What will be the items that will be important factors during the 28-day period?
We have been looking at this deal for many months. We have actually done most of the technical due diligence. Over the next 28 days, the key factor is that the joint administrators and receivers (two partners of Ernst & Young LLP) need the time to resolve any possible issues with the previous owner. For us, if they agree tomorrow, we can sign the agreement straight away.
On our part, we're almost there. We support the council's proposal for the Northern Line extension. We accept the planning approvals that have been given. We've also done a detailed study on how to maintain the iconic structure.
It's now more about finetuning the masterplanning and what we can do in giving our input. We'll tweak it a bit to make it really different.
People always question our ability to undertake the project because we've never done something like this. But with our track record in Malaysia how careful we have planned and executed our projects and have done about implementing the eco theme in the projects this gives us enough confidence in ourselves.
Our success with the projects in Singapore and Melbourne also gives us a lot of confidence that the Malaysians who want to invest in property in London will come along with us, and hopefully the Chinese, Singaporeans and other South-East Asians. Malaysians are quite affluent and buy property all over the world, what more from people they already know.
Given the scale of the project, aren't you also looking to draw in the local buyers (in the United Kingdom)?
Yes, we're aiming to have 50% local buyers. But as you know, there's a downturn in the United Kingdom, so the locals may not invest heavily in the UK property market right now. There's the risk that the local demand over the next two years will be marginal.
So we need to drive the demand for the project in Asia first. Hopefully, that will give us enough momentum and volume to take care of the land and infrastructure costs.
Because of the downturn in Europe, most of the banks are reluctant to lend to developers. So we will get our funding from Malaysia for now. The key issue is the funding. We are fortunate that the names of SP Setia and Sime Darby are able to secure funding.
Just to clarify, the property is more than just the power station, right?
The power station takes up 15 acres of the total 40 acres of the site. So we will build around the power station. It will be the magnet that attracts people. The initial idea is to convert the station into space for conventions, offices and food and beverage.
It will take 10 to 15 years to develop the project, depending on the strength of the market.
The reason we are willing to pay for the land is because the approvals are already there. We don't have to spend another five years getting the approvals.
My job is to understand the market. I'm confident that London has the talent the planners and architects. So the main task for us is to figure out where to go to find our market, how do we get market share.
By The Star
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