The doubts about whether the Westfield redevelopment of Croydon’s Whitgift Centre will ever begin grew even greater this week, as one of the country’s biggest property funds began blocking investors from making withdrawals, blaming both Brexit and the retail downturn for its problems.
The M&G Property Portfolio has several significant investments in shopping centres, and is worth £2.5billion, though it is not thought to have any direct financial interests in the Croydon scheme.
But just as in any financial crisis, when one part of a sector sneezes, the rest catch cold feet.
Westfield – now part of the French-run Unibail-Rodamco-Westfield – has been sniffing around Croydon since 2011, making all sorts of grand promises about delivering a shopping centre to match their existing malls in West London and at Stratford. So far, the only thing Westfield have delivered for Croydon is a development blight.
In a local joint venture with Centrale owners Hammerson, they were supposed to have opened a shiny new supermall by 2017. Having halted their latest plans in February this year, no new date has been made public for when they might start demolition work on the tired and increasingly decrepit Whitgift Centre.
The news this week from the M&G Property Portfolio will not accelerate that process at all.
The fund was suspended after “unusually high and sustained outflows” – demand from investors for their money back – prompted by “Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector”, according to reports in the business press.
Nearly £1billion has been withdrawn by investors from the fund over the last year. M&G admitted it had been unable to sell commercial property fast enough to fund the rush for the door by investors, leaving it with no choice but to block further withdrawals.
Inside Croydon has reported before on the difficulties being encountered by the wider businesses of Westfield and, particularly Hammerson, who as owners of shopping centres such as Brent Cross and Birmingham’s Bull Ring, depend on rents from department stores, and so have been hard-hit by shop closures and retailers folding.
The announcement from the M&G fund is the latest sign of the struggles of the country’s high streets.
Last month, property valuers Knight Frank knocked £76million off the value of the fund’s retail assets, after what Knight Frank described as a marked deterioration in the retail sector since the summer.
It warned of falling rents even in highly sought after locations.
M&G investors may now have to wait months to see their cash again. In the aftermath of the Brexit referendum in 2016, M&G’s fund was shut from July to November, as panicked investors fearing a collapse in values were prevented from withdrawing their cash. Following the EU referendum, and the marginal majority in favour of Brexit, funds worth a total of £35billion were forced to close their doors.
That the state of the Whitgift Centre has not been front and centre in the current General Election campaign is at least in part because both Labour and the Conservatives in Croydon are culpable for allowing Westfield to preside over the decline of the town centre, and undoubtedly because – despite their empty boasts – politicians of every stripe are virtually powerless to implement real change over what has always been a private enterprise.
Westfield were introduced to Croydon nearly eight years ago by the then Tory MP, Gavin Barwell, and Mayor of London, Boris Johnson. But when Labour took control of Croydon Town Hall in 2014, and Sadiq Khan took over as Mayor of London two years later, both embraced the £1.4billion Westfield project with greedy enthusiasm.
There remain political sensitivities, and Tony Newman, the Labour council leader who failed to distance the Town Hall from the Tory-inspired project, carries a large portion of the blame for allowing Westfield to walk roughshod over the borough.
Westfield have now twice been granted planning permission for their scheme, while huge resources have been expended by the local authority on planning public enquiries and preparations to implement a Compulsory Purchase Order, and all to no end.
Dozens of businesses inhabiting the shell of what was once the proud Croydon institution of Allders were also pushed to the brink in the summer when the council sent in bailiffs to close down the building as part of their CPO operation, even though there was no date set for the start of redevelopment work.
And Newman and his sidekick, council planning chief Paul Scott, broke election purdah rules last month when they announced – through the council press office – that they were having “top-level” meetings with the Croydon Partnership over the state of the town centre, just a week before the Fairfield by-election was due to take place.
Of course, there has been no real resolution or information about progress arising from Newman and Scott’s meeting, which was transparently a publicity stunt to favour the unselected Labour candidate in the by-election.
There was some suggestion, though no hard detail, that if the Croydon Partnership does decide to go ahead next year, they will do so with such a significantly altered scheme that they will require a third planning approval from the council. And the council has boxed themselves into such a corner over this that they are almost certain to accede to whatever scheme Westfield and Hammerson come up with.
This seems likely to feature much less of a retail offering, but more offices and more residential. “Loads of expensive, ‘luxury executive apartments’, with a few shops and bars tacked on,” was the view of one source familiar with the project.
“What was supposed to be a massive retail project will now be a residential scheme, with only a modest amount of retail space.” A key area to look out for if Westfield do bring forward any revised plans will be the percentage of affordable housing provided by the developers in the revised scheme.
Significantly, Newman continues to block Freedom of Information requests seeking correspondence between our council and the developers, which suggests that the letters of “reassurance” he has been sent by Westfield actually contain little by way of good news for Croydon.
Certainly, much of the bullish bull-shit that has been offered by various council officials and councillors over the near-decade of inertia in the town centre is now being abandoned.
Ahead of the meeting last month, Scott said: “We will be pushing them very hard to make public announcements about where they want to get to and how much time that will take.” Four weeks later, and all that “hard pushing” has delivered not a peep from Westfield.
Even Scott was forced to admit that he and Newman have presided over a long, slow decline of the Whitgift Centre. “Our shopping facilities are looking rather tired there is confusion about what is actually happening,” Scott said.
“Some stores aren’t investing because they don’t know how much time they’ve got.
“It may not be in its heyday but it still attracts shoppers. It is not quite the destination it was and it is not the destination it will be,” Scott said.
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