Lendlease wins contract to partner on $14bn London housing project

Lendlease has won a contract to work with a UK charity to develop a $14bn housing precinct in southeast London.

LendLease CEO Steve McCann. Picture: John Feder

Global developer Lendlease has shrugged off fears about Britain’s economy stumbling in the wake of Brexit, winning a huge tender that will see it work with London’s oldest housing charity, Peabody to develop an £8 billion ($14.41bn) precinct at Thamesmead Waterfront in southeast London.

The move signals that Lendlease (LLC) will stick to its global expansion strategy in the face of local problems, including the sluggish Australian residential property market and its loss-making engineering business whose problems saw more than $2bn carved off the company’s market capitalisation last November.

The company will joint venture on the project over the next three decades in keeping with its other long-dated schemes including Euston station, another project on the Thames and a new job in Birmingham, with Brexit not slowing its pace.

“Britain, and in particular London, remain amongst the world’s most resilient investment destinations,” Lendlease chief executive Steve McCann said.

The country’s long-term viability remained “highly attractive”, he said, with Lendlease securing or winning preferred status on major urbanisation projects with an end value of more than $33bn over the last 18 months.

He dubbed the 11,500 home project win “a timely reminder that Britain is very much open for business”.

Lendlease is also navigating the changing political environment and this month settled a case against a Momentum-led council in London that terminated a contract with the company to set up a £4bn development venture in the borough of Haringey.

Lendlease beat British company Morgan Sindall to the latest job after the pair were short-listed last March to develop the Waterfront phase of the regeneration project.

The overall Thamesmead precinct will deliver more than 20,000 homes and is ranked as London’s largest regeneration project, with the Waterfront component also including a new town centre, and leisure and commercial facilities.

The project, spanning 100ha on the southern bank of the River Thames, will see 2.5km of previously undeveloped land redeveloped by the Australian company and the charity in a 50/50 venture.

Lendlease is making a big bet on the British capital at a time when local property funds are nervous about redemptions and commercial values have dipped.

The developer was last year announced as preferred bidder on the £4.7bn urban redevelopment project around Euston station. It this year won a £1.5bn project in Birmingham and is also undertaking the £3.5bn Silvertown venture in London as well as completing its £2.4bn International Quarter.

Lendlease Europe chief executive Dan Labbad said the site “one of London’s largest areas of opportunity” to develop new housing and to support business and employment growth.

The town spans the same distance as central London — from Kings Cross to Charing Cross and Bond Street to Liverpool Street, making the regeneration one of the largest projects in Europe.