INTERVIEW: Battersea Power Station chief Simon Murphy seeks Gulf investment for famous central London site

INTERVIEW: Battersea Power Station chief Simon Murphy seeks Gulf investment for famous central London site
Battersea Power Station chief Simon Murphy. (Illustration by Luis Grañena)
Updated 10 March 2019

INTERVIEW: Battersea Power Station chief Simon Murphy seeks Gulf investment for famous central London site

INTERVIEW: Battersea Power Station chief Simon Murphy seeks Gulf investment for famous central London site

LONDON: Simon Murphy has a mountain to climb. He is in charge of one of the most ambitious urban regeneration projects on the planet — the £9 billion ($12 billion) rebuilding of the Battersea Power Station in London and the area around it — in the middle of unprecedented political turmoil and uncertainty in Britain, against the background of an unpredictable property market and fragile international investor sentiment.
The project has been called “the Everest of real estate”, not only because of its grand scale and high ambitions, but also because it has defeated a number of attempts to conquer it. But in a couple of years time, when American giant Apple sets up its UK campus in the old power station, Murphy will be able to claim victory.
“Essentially, we are creating an entirely new town center for London on the banks of the River Thames, across from Chelsea with the former power station, one of the greatest and most iconic buildings in the city, sitting at the heart of it. We are complementing this with new “icons” — wonderful buildings designed by Gehry & Partners and Foster & Partners along our new High Street. It’s a very mixed use scheme of which about half is residential and half commercial,” he said.
Murphy, a former banker and accountant, took over as chief executive officer of Battersea Power Station (BPS) Development Corporation last year, having been the deputy chief and chief financial officer since 2012.
The power station and its surroundings had been derelict for more than 30 years after new power facilities were located further out from the UK capital, but the station itself — classed as a “listed” building because of its architectural heritage and historic status — could not simply be demolished.
The financial crisis left the project in disarray when one set of investors pulled out, but BPS found new backers in the form of a consortium of investors linked to the Malaysian government. “We are very fortunate to have shareholders with both vision and a long-term approach to development. It means we are able to do justice to this building and site. They bring financial strength but equally importantly huge experience of completing large mixed-use developments which is clearly very relevant,” Murphy said.
The Malaysians — including the trading conglomerate Sime Darby and property developer SP Setia — are “good citizens of London,” Murphy added, and have donated significant amounts to local charities through the BPS Foundation.
He is looking for other “good citizens” too, in the shape of foreign investors willing to buy property on the 42-acre site, including potential Arabian Gulf clients. “While over 50 percent of sales have gone to British buyers, we continue to see strong levels of interest from the Gulf, including Saudi Arabia, the UAE and Kuwait. Purchasers from the region have typically bought as an investment, either with a view to letting the property, or for their families and children to live in whilst studying, for example. They like the central location and the great mix of uses and amenities, as well as the fact that it is secure.”
Persuading Middle East investors to go south of the river has not been an easy task in the past. They prefer the “golden triangle” around Mayfair, Belgravia and Knightsbridge, with a few occasionally heading out into the wilds of Kensington and Chelsea. But Murphy thinks that will change.

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BIO

BORN

Essex, UK, 1964

EDUCATION

University of Southampton BSc Economics 

CAREER

•Coopers & Lybrand, Accountant 

•HSBC, Investment banker 

•Chief Financial Officer, BPS

•Chief Executive Officer, BPS

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“We have already seen significant interest from purchasers who might traditionally have opted for property in the so called ‘golden postcodes’ which are incidentally less than a mile away. First, they like the fact that this is a growth zone – they can see the potential for value uplift because it is being regenerated – the new tube line, the restoration of the Power Station, new shops – all of this brings value to the area so it makes for a compelling investment case. They love the fact that it’s on the river, within walking distance of the boutiques on Sloane Square and just a short stroll from Battersea Park’s 200 acres of green space.”
But how do potential investors see the future for London as the UK grapples with the challenge of accomplishing Brexit — the process of leaving the EU after the 2016 referendum? Some property experts predict leaving the EU will affect UK property prices for decades.
“While no business is totally immune, we are not concerned. We have sold in excess of £125 million of residential property in the past year alone and continue to command a premium compared to other neighboring schemes. Despite the ongoing uncertainly surrounding Brexit, we believe that London will continue to thrive as a global financial hub.
“It has such strong fundamentals that are not going to change, whatever happens with Brexit; a robust regulatory framework, a favorable time zone, high security levels, excellent schools and universities, a highly skilled workforce and fantastic cultural attractions – all of these will remain in place.
“So London will continue to be a top choice for global investors looking for a place to live, work and invest. The commitment to London of many of the major technology companies since the Brexit vote supports this view,” he said.

London will continue to be a top choice for global investors as a place to live and work.

Simon Murphy


The economics of the project are daunting. The gross development value is £9 billion, and so far the Malaysians have put in £1 billion. BPS spends £2 million per day on the restoration of the power station alone, with 2,800 workers on site.
How does Murphy rate his chances of delivering on time and on budget?
“We have a great momentum on site now and are making excellent progress,” he said, admitting they have faced challenges along the way. “With the first phase now complete and alive with residents, shops, cafes and restaurants, we are focused on completing the Power Station by the end of 2020, which will be a the most significant milestone yet. The countdown is on and we can’t wait to open the doors to the public in 2021, when they’ll be able to come in and experience this magnificent building, as well as enjoy all the shops, restaurants, the cinema, events and of course the wonderful park in front of it all. The High Street, Phase 3, will be open from mid-2021,” he added.
The power station has been a familiar landmark for Londoners for generations, and was famously featured on an album cover by the rock bank Pink Floyd, so it has obvious cachet for any would-be investor or tenant who would like to join Apple.
Murphy explained: “We recently let the remaining 40,000 square feet of office space in the Power Station to No.18, a business members club, so we will have lots of small businesses and entrepreneurs working alongside Apple, which is great. We are having some really good conversations with lots of exciting retail brands, both in the UK and around the world, who are keen to take space in the Power Station and have signed our first leases. We will announce the first wave of retailers in the next few months. We are looking at working with brands that are going to offer something really different and unique, giving visitors an unrivaled experience when they come here.”
Whoever does eventually sign up will join more than 1,000 residents already living there in Circus West, the first phase of the project, in a neighborhood of independent restaurants, cafes, bars, cinemas and shops.
“It’s really exciting to see it all taking shape and to see the sense of community that is emerging here. One resident tells me she has made more friends living here in the past year than she had in the last decade in her previous home,” Murphy said.


Saudi shoppers helping high-end sector rebound to new peaks

Saudi shoppers helping high-end sector rebound to new peaks
Updated 6 min 12 sec ago

Saudi shoppers helping high-end sector rebound to new peaks

Saudi shoppers helping high-end sector rebound to new peaks
  • GCC retail giant aiming to double revenues in the Kingdom, become dominant player by 2022

DUBAI: The Gulf Cooperation Council (GCC) luxury retail sector has recovered to pre-pandemic levels, with high-end brands performing particularly well, as shoppers splash the cash they saved by not spending on entertainment or travel during the last year, according to one of the region’s biggest retailers.

Consultancy firm Bains & Company in April reported that the GCC luxury goods market declined 16.6 percent year on year to $7.4 billion in 2020, with Saudi Arabia down 8 percent and the tourist-dependent UAE declining 25 percent.

However, Michael Chalhoub, president of strategy, growth, innovation and investment and vice-president joint ventures at the Chalhoub Group, which has 559 stores across the GCC and manages brands such as Diro, Swarovski, Fendi and Louis Vuitton, told Arab News that the market has bounced back.

“I think the luxury market, and fashion in particular, has recovered in 2021, at levels even higher than in 2019,” he said.

“Local consumers are traveling less. And so, consumption has been repatriated. And we estimate that, in normal time, between one-third to 50 percent of the luxury consumption of GCC nationals happens abroad in London, Paris and Geneva. But now, because of the pandemic, they’ve had to stay, in particular in Saudi Arabia, where the borders were blocked for most of the first half of the year,” he added.

With gyms, restaurants, entertainment venues and travel off limits for a long period, Chalhoub said that shoppers now had more disposable income and were feeling free to spend their savings.

“I would say that average income has gone higher because of a lack of entertainment expenses. What people aren’t spending in restaurants and travel, they are probably spending it on taking care of themselves,” he said.

Michael Chalhoub

However, Chalhoub said that the rebound differed across retail segments. Very high-end luxury brands are performing much better than premium or affordable brands. Jewelry, fragrances and beauty brands are seeing strong growth, but he observed that makeup was still down, mainly due to consumers wearing masks and not leaving the house as often.

“With fashion, I think that we’re up by 5 to 7 percent in the region versus 2019, mainly with luxury fashion and even more so with high-end luxury,” he said, looking at the industry as a whole.

Many retailers have seen triple-digit growth in their online sales during 2020, and the Chalhoub Group accelerated its digitalization strategy in line with the wider industry. “If we were to compare 2021 numbers to 2019, we’re probably talking about 100 percent growth for the industry. And this is incredible. I think the numbers I had were plus 96 percent in the GCC as a whole and even 138 percent just in the UAE,” he said.

However, while online sales might be popular for grocery or food outlets, high-end fashion consumers still like to feel, touch and try on clothing before buying.

For this reason, Chalhoub said that the company expects a higher percentage of returns when it comes to online high-end fashion. “We’re inviting our customer to say try it on and then send it back if you need to,” he said.

With Saudi Arabia less dependent on international tourists for retail sales, the Kingdom largely avoided the slump in sales last year. Chalhoub Group has operated in the Kingdom since 1975, where it has six offices, 215 stores and about 3,600 employees.

It now controls 38 percent of the Saudi market, 48 percent of fashion and 55 percent of beauty, but it is aiming to become the largest player in the sector by the end of next year.

“We’ve made Saudi Arabia a main focus for ourselves; we want to make sure that we cater for the new Saudi customers as much as possible. We have a population there that is young and really enthusiastic about some of the transformation that is happening there,” Chalhoub said.

“We’re investing a lot into Saudi Arabia. The objective that we had set ourselves about six months ago was to double our revenues there in eighteen months. And that means investing more and catering to those customers spending more locally rather than internationally,” he added.

One of the ways the group is aiming to capture more of the Saudi market is by tapping into the Kingdom’s local fashion talent. In early July, the company launched Fashion Lab, a first-of-its-kind initiative in the Kingdom, offering local entrepreneurs the chance to win $15,000 in funding to help establish their fashion brands.

Successful participants will get to take part in a two-week “boot camp,” which will help them navigate through the different elements of developing their brand, including marketing, supply chain management, content creation and media exposure.

Looking forward, the Bain & Company report said: “With about 40 percent of the population aged under 25, Saudi Arabia will likely remain the biggest engine of growth for the regional luxury industry in coming years.”


Saudi Arabia sets new rules for fruit, vegetable imports

Saudi Arabia sets new rules for fruit, vegetable imports
Updated 18 min 42 sec ago

Saudi Arabia sets new rules for fruit, vegetable imports

Saudi Arabia sets new rules for fruit, vegetable imports
  • The ministry has launched a new system for vegetables and fruit imports to support local production

RIYADH: Saudi Arabia’s Ministry of Environment, Water, and Agriculture on Saturday called on fruit and vegetable suppliers to complete all formalities to obtain import licenses before the Aug. 9 deadline.

After Aug. 9, no unlicensed supplier will be allowed to import fruit and vegetables. Those interested can visit the following link to apply for a license: https://eservices.mewa.gov.sa/request/111111.

An import license will be valid for three to 10 years depending on the license category, the ministry said.

Saudi authorities have also issued health guidelines for imports like all shipments should be free of pesticide residues or within the limit allowed by the Kingdom’s laws. 

The ministry has launched a new system for vegetables and fruit imports to support local production, enforce quality control and ensure food security in the Kingdom.


Millions of Americans at risk of losing homes as virus cases spike

Millions of Americans at risk of losing homes as virus cases spike
Updated 24 min 58 sec ago

Millions of Americans at risk of losing homes as virus cases spike

Millions of Americans at risk of losing homes as virus cases spike
  • The wave of evictions would come as the fast-spreading delta variant has taken hold in the country and rental housing is in high demand in the hot real estate market

WASHINGTON: Millions of Americans could find themselves homeless starting Sunday when a nationwide ban on evictions expires, even as billions in government funds meant to help them go untapped.

The wave of evictions would come as the fast-spreading delta variant has taken hold in the country and rental housing is in high demand in the hot real estate market.

US President Joe Biden on Thursday urged Congress to extend the 11-month-old eviction moratorium, after a recent Supreme Court ruling meant the White House could not extend the measure through September as intended.

Democratic leaders in Congress were pushing for an extension, but it was unclear if they had the votes, even among moderates in their own party, to prevent the ban from expiring.

Efforts stalled on Friday in the House after a move to pass the extension was unsuccessful, with House Speaker Nancy Pelosi saying in a statement, that “not a single Republican would support this measure.”

The day before, she had called the extension “a moral imperative.”

She also called on governors and local officials “to take whatever steps are necessary to distribute the rental assistance that Congress already allocated.”

Unlike other pandemic-related aid that was distributed from Washington, such as stimulus checks, it was states, counties and cities that were responsible for building programs from the ground up to dole out assistance earmarked for renters.

The Treasury Department said that as of June, only $3 billion in aid had reached households out of the $25 billion sent to states and localities in early February, less than three weeks after Biden took office.

The Centers for Disease Control and Prevention (CDC) ordered the eviction moratorium in September 2020, as the world’s largest economy lost over 20 million jobs amid the pandemic shutdowns. The CDC feared increasing homelessness would boost coronavirus infections.

Although more than half of those lost jobs were recovered as businesses were able to reopen, many families still have not caught up on missed rent payments.

The Census Bureau’s latest Household Pulse survey through the first week of July showed that of 51 million renters surveyed, 7.4 million were behind on their rent and nearly half of those said they were at risk of being evicted in the next two months.


Gulf stocks buoyed by oil prices as emerging markets hammered on China

Gulf stocks buoyed by oil prices as emerging markets hammered on China
Updated 31 July 2021

Gulf stocks buoyed by oil prices as emerging markets hammered on China

Gulf stocks buoyed by oil prices as emerging markets hammered on China
  • Tadawul All Share Index rose 7.5 percent in July
  • MSCI Emerging Market Index dropped 7 percent in the month

RIYADH: Gulf stocks were a relative oasis for emerging market investors this week as the broader complex posted its worst month since March 2020 amid concern over the breadth of a Chinese regulatory crackdown.

The Tadawul All Share Index climbed 0.7 percent on July 29 to end the week 1.9 percent higher for a 7.5 percent monthly gain. The Abu Dhabi Securities Market General Index climbed 1 percent on Thursday, taking it to a record high on the back of a 2 percent advance for First Abu Dhabi Bank.

By contrast, the MSCI Emerging Market Index dropped 1.4 percent on Friday, for a 7 percent monthly loss, the most since the fallout from the pandemic hit global markets early last year. Stocks in mainland China and Hong Kong fell to their lowest this year, on investor worries over government regulations dented the education, property and tech sectors.

Brent crude climbed 2.5 percent in the week after a rollercoaster month that saw it swoon from a two-year high of $77.16 on July 5 to $68.62 on July 19 before recovering to end the month at $76.33.

Concerns over the effect a resurgence in coronavirus cases might have on demand for crude were allayed on Wednesday when a report showed a bigger-than-expected drawdown of crude stockpiles the previous week.

“The reduced stockpile has propped crude prices up which gave a boost to the region’s stock markets,” Daniel Takieddine, senior market analyst at FXPrimus, told Reuters.

The Tadawul’s IPO pipeline will advance this month after Saudi burger chain Burgerizzr said it will begin offering shares to the public on Aug. 15 with the intention to list on the parallel stock market Nomu in September.

The company plans to offer 725,000 shares, representing 29 percent of its SR25 million capital, it said in its prospectus on Thursday.

Further signs of the Kingdom’s ambitious investment program were revealed this week as
The Ministry of Communications and Information Technology announced a $15 billion technology fund to advance digital infrastructure in the Kingdom during the Saudi 4th Industrial Revolution conference held in Riyadh this week.

The public-private partnership will develop advanced technology from the Fourth Industrial Revolution (4IR), which is expected to generate around $1 trillion for the Saudi economy in new revenue streams, a senior Saudi official said on Wednesday.

The Kingdom will enjoy economic boosts from robotics, artificial intelligence, and wireless production models as it pushes for more smarter cities and infrastructure.


Gulf capitals dominate world’s fastest 5G cities in 2021

Gulf capitals dominate world’s fastest 5G cities in 2021
Updated 31 July 2021

Gulf capitals dominate world’s fastest 5G cities in 2021

Gulf capitals dominate world’s fastest 5G cities in 2021
  • Oslo has the fastest media 5G download speed globally
  • Riyadh has the sixth fastest 5G speed in the world

RIYADH: Capital cities in the Gulf made up five of the top 10 fastest globally for 5G connectivity in the first half of 2021, according to a new report.

Oslo had the fastest commercially available 5G speeds with a median download speed of 526.74 Mbps, while Seoul was second at 467.84 Mbps, Internet metrics provider Ookla said in a report.

Abu Dhabi was the fastest Gulf capital and the third globally at 421.26 Mbps, followed by Doha at 413.40 Mbps. Riyadh was sixth fastest globally at 384.66 Mbps, Kuwait City was seventh and Muscat eighth. Manama was 15th with a speed of 249.71 Mbps.

The slowest global capital for 5G speeds was Capetown at 53.33 Mbps. Other notable capitals include London at 167.50 Mbps, Tokyo at 167.02 Mbps and Jerusalem at 145.17 Mbps.

A report from Ookla in April showed Saudi Arabia had the highest adoption of 5G in the Gulf as measured by the ratio of samples from devices connected to 5G to the number of samples from all 5G-capable devices, which the firm said is an indicator of the maturity of a country’s 5G market.

Qatar came second, followed by the UAE. Oman, which only launched 5G early this year, was at the bottom of the list.

The Saudi Telecom Company emerged as the fastest operator in the Kingdom, but Mobily recorded the highest rating from customers.