The majority of bidders for Battersea power station in London would need to flatten the landmark chimneys to create a financially viable scheme, experts have said.
About 15 bidders including Chelsea Football Club submitted plans this month to buy the protected 15 hectare site in southwest London, the subject of repeated failed redevelopment attempts in the three decades since it shut.
The site came onto the market after a £5.5bn (€6.9bn) plan by Irish developers Treasury Holdings for homes, shops and offices collapsed in December. The site was placed into administration by Lloyds Banking Group and Nama, which are reportedly owed about £400m between them.
The price tag is in the region of £300m-£400m.
“Many of the bidders will want to explore a more flexible planning consent that reduces the amount of capital lock-up in the project,” said Clive Pane, head of planning and development at Drivers Jonas Deloitte.
A very small number of wealthy overseas buyers have the ability and appetite to inject the required upfront capital, another source said.
“The majority would like to knock the thing down as it’s the only way to make the site work,” he said.
One option to lower the upfront costs would be for Lloyds and Nama to swap debt for equity in a new joint vehicle with the successful bidder, though it was unlikely as the lenders’ overriding priority was to recover their debt, he said.
In addition to Chelsea, bidders linked to the site include Malaysian developer SP Setia, the state of Qatar, Chinese firm Gingko Capital, Hong Kong-based Hutchison Whampoa, and British developers Berkeley and Argent.
The site would be worth an extra £470m to a developer that could demolish the building and replace it with 1,200 apartments, calculations done for Reuters by EC Harris showed.
There would be a strong public backlash to demolishing the site, however. Its architect, Giles Gilbert Scott, also designed London’s red telephone boxes. Europe’s biggest brick structure featured in the Beatles’ film, Help! and on the cover of Pink Floyd album, Animals.
A spokeswoman for English Heritage said the problem with the scheme’s viability was not the power station but the inflated value of the land due to its purchase at the top of the last property cycle in 2007.
The grade two-star listed structure should be preserved as “a masterpiece of industrial design” it said.
A spokesman for Wandsworth council said any new owner would need to create “thousands of new jobs, thousands of new homes and two new Northern Line stations… while securing the future of this iconic building.”
A spokesman for the London mayor’s office said there would be a “strong presumption against demolition” based on the planning vision for the wider Nine Elms district.