Malaysian investors pour $2.2bn into Battersea Power Station as costs rise

Malaysia's sovereign wealth fund Permodalan Nasional Berhad (PNB) has agreed to buy a stake in London's Battersea Power Station building as costs continued to rise for the project development.

PNB announced on Thursday that it was prepared to put $2.2bn towards the purchase of Battersea Power Station, which is earmarked to house Apple's new UK headquarters, to co-own the building with Employees Provident Fund (EPF), the Malaysian state pension fund.

The project, which is currently owned by a Malaysian consortium of SP Setia Berhad, Sime Darby Berhad and EPF, is to develop more than 4,300 homes and several office properties on the 42-acre site surrounding Battersea Power Station, which was bought for £400m in 2012. The old generator building itself due to contain 250 luxury apartments, leisure facilities and stores.

Surveys have revealed a "significantly worse" asbestos risk in the building than initially thought, leading to the cost of its removal going "substantially higher than originally envisaged", the development team said in a letter to Wandsworth Council last year. Along with increasing costs to the restoration of the site's chimneys and foundation, led to the search for additional investors.

Construction work on the site was slated for completion in 2020, with about 500,000 square feet to be leased to Apple. The headquarters of Apple's UK operations will be transferred to a new "Apple Campus" in 2021 to replace the eight current sites it has in the capital.

Following Carillion's phase one of the project, construction firm Mace has taken over from Skanska on phase two, which is centred on the power station building itself, with Sir Robert McAlpine last year winning the £1bn contract win for phase 3 of the development, the wider regeneration.

Last year, Transport for London confirmed that the Northern Line will be extended from Kennington to Battersea via Nine Elms, with tunnelling work completed last November and two new stations are expected to be completed by 2020. One station will be at the heart of the Battersea Power Station redevelopment and another at Nine Elms to the east, while the extension is due to cut journey times to the West End and the City to under 15 minutes.

The full cost of the extension is expected to be about £1bn and will be entirely funded through contributions from the developments in the area that will benefit from the extension, TfL said.

AIM-listed Michelmersh Brick also last year won a contract to supply the Battersea Power Station project with 440,000 purpose-made bricks

The Nine Elms Square development is being developed by two of Hong Kong's largest property developers, Guangzhou R&F Properties and CC Land Holdings, after they bought the site from China's Dalian Wanda for £470m not long after it had been snapped up from FTSE 250-listed St Modwen. Interserve, which was put under watch by the government this week after the collapse of fellow contractor Carillion, is the lead contractor on the site.