Songbird Estates Plc (SBD), the company that controls east London’s Canary Wharf, plans to build more homes in the financial district to take advantage of a “widely anticipated shortage” in the U.K. capital.
Canary Wharf Group Plc (CWG), in which Songbird has a 69 percent stake, has an 11 million square foot (1 million square meter) development pipeline that may result in 200 million pounds ($267 million) of profits for Canary Wharf, Harm Meijer, an analyst at JPMorgan Chase & Co., said in a note. Songbird’s shares closed up 4.6 percent at 114 pence.
Canary Wharf’s plans may be changed to allow more housing at its Wood Wharf, Heron Quays West and Newfoundland sites, Songbird said. Canary Wharf’s joint venture to redevelop most of Royal Dutch Shell Plc’s London headquarters near Waterloo station will also include homes. The average value of a London home rose 1.3 percent to 455,159 pounds this month, Rightmove Plc said in a report released March 19.
Canary Wharf may retain and lease the apartments rather than putting them on the market, John Garwood, London-based Songbird’s company secretary, said by telephone. “We’re looking at the options we have -- that may well be one of them actually, but it’s too early to say,” he said.
The number of new property listings in London fell 9 percent in January from a year earlier, an “early indication that shortage of sellers and upwards price pressure will again feature in 2012,” Rightmove said last month. Asking prices for London homes rose to near a record in February, helping push national values up the most in almost a decade, Britain’s biggest property website operator said.
Canary Wharf paid 90.4 million pounds to acquire control of Wood Wharf, a 16.8-acre (6.8-hectare) site close to its existing office district, the company said in January. The land has planning approval for a 4.8 million square foot (445,935 square meter) development, a third of which is to be homes.
“The best use of this site is being reviewed, potentially altering the mix of uses in favor of residential,” Songbird said in the statement.
Heron Quays West, a 1.3 million square foot office project, has planning consent, but a residential and business development is now being considered, Songbird said. Apartments may be developed at its Newfoundland site where a hotel and serviced apartments had been planned.
The developer said it would also try to attract more businesses involved in technology, media and telecommunications to east London.
“There appears to be a natural synergy between the finance and tech sector,” Garwood said. “We’ll be looking to try and extend that.”
Songbird and Canary Wharf Group are unlikely to be turned into real estate investments trusts, Pritchard said on the call, despite amendments to the U.K. legislation published yesterday that allows institutional investors such as sovereign-wealth funds to own majority stakes in REITs.
“The structural requirements for REITs really don’t suit our construct,” David Pritchard, Songbird’s chairman, said in a telephone call.
Funds managed by Morgan Stanley (MS:US) increased their stake in Songbird by about 12.5 percent on March 19 and they now own about 8.8 percent, subject the funds exercising stock options. Other major shareholders include a unit of China Investment Corp., Qatar Holding LLC and investor Simon Glick of New York.
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