King set to back Euston redevelopment despite HS2 struggles
The Crown Estate is drawing up a deal with Australian development giant Lendlease for a 50pc stake in six major British projects – worth a combined £22bn in end value. The partnership would aim to attract more investment to the projects.
The deal includes the redevelopment of the area around Euston station, where developers want to build more than 6m sq ft of science and innovation space, offices and homes.
The King's seal of approval would be good news for Rachel Reeves, who has pledged to 'turbocharge' investment into projects in Britain.
Ministers have been on a drive to attract overseas money to the long-stalled Euston scheme, with the Chancellor announcing in October's Budget that the Government would take the High Speed 2 rail route through to London Euston station.
The plan was stalled two years ago when the previous Conservative government claimed HS2 would end in west London unless private investors rode to the rescue with cash to regenerate the area.
Construction of the redevelopment's accompanying HS2 station and tunnels has been long beset by delays, with costs soaring to more than £7.5bn, which has been putting investors off.
Locals have complained that the Euston area has been blighted since the first clearance work for HS2 kicked off in 2018, while it emerged this week that the troubled London-Birmingham route has been pushed back by up to six years and may now not be completed before 2039.
Meanwhile, Mark Wild, the rail project's chief executive, said in a report to ministers that the cost of completing HS2 has soared to £81bn in 2019 prices, according to Rail magazine – which would be more like £102bn after adjusting for inflation.
Property tycoon Michael Gross also warned last month that the taxpayer risked footing a multibillion-pound bill to turn Euston station into a HS2 terminus, warning there is 'no chance whatsoever of raising that money privately'.
The Euston redevelopment has also been mired in uncertainty since Lendlease set out plans to exit the UK last year.
The company, which is listed in Australia, is partway through a restructuring. It faced considerable pressure from shareholders last year to improve its trading performance by overhauling its operations, including its activities in the UK.
The company said in a trading update that talks with the Crown Estate to establish a 50-50 joint venture, first reported by property news website Green Street News, are in the 'late stages'.
The deal would herald The Crown Estate's first foray into construction projects focusing on regeneration on brownfield sites.
One of Britain's biggest landowners, the estate manages the seabed and much of the coastline around England, Wales and Northern Ireland. In recent years, it has made huge profits from renting out the seabed to wind farms.
It also owns Ascot racecourse, 200,000 acres of prime farmland and swathes of central London, including Regent Street and St James's.
The development portfolio also includes the £1.9bn, 42-acre Smithfield Market redevelopment in Birmingham, slated to turn the city's former markets into more than 3,000 homes, as well as shops and offices, and the £4.9bn Silvertown Quays development within London's Royal Docks.
The estate, which manages King Charles's landholdings on behalf of taxpayers, would also have a stake in the £8bn Thamesmead Waterside development, a 250-acre site in south-east London slated for 11,500 homes; a £1bn, 2,500-home scheme called High Road West, opposite Tottenham Hotspurs's stadium; and the Stratford Cross redevelopment in East London's 2012 Olympic and Paralympic Games district.
The projects will collectively create more than 25,000 homes and over 9m sq ft of commercial space.
Dan Labbad, the chief executive of the King's £16bn property portfolio, will be familiar with the projects in question, having previously worked at Lendlease as chief executive of its European business.
A spokesman for The Crown Estate said: 'We do not comment on market speculation.'
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