CROYDON IN CRISIS: More problems for stalled £500m development of town centre landmark
Stuck in time: there’s been no work carried out on the Nestle Tower since early 2020
Guangzhou R&F Properties Co Ltd, the Chinese development company which owns the Nestlé Tower, the adjacent St George’s Walk and other buildings in the town centre, is in discussions with creditors over a winding-up petition, according to Chinese media reports over the weekend.
The collapse of what was once among China’s biggest development companies looks likely to spell the end for any prospect of the £500million Nestlé Tower project ever being completed, in another massive set-back for hopes to regenerate Croydon town centre.
The Croydon landmark building – as seen on national television every evening as part of ITV’s idents – has been empty since Nestlé quit Croydon in 2012.
R&F, based near Hong Kong, acquired its Croydon properties – which includes the neighbouring Grade II-listed Segas House – in a £60million deal in March 2017.
R&F’s plans, all approved by officials in Croydon Council’s planning department, proposed three tower blocks across the site, including the repurposing of the 22-storey Nestlé office block into 288 private flats. Work on the Queen’s Square project got underway in 2019.
But the development came to an abrupt halt in 2020 as the Chinese property sector collapsed under the pressures of the covid pandemic. The scaffolding around the block has remained in place ever since.
Extradition: R&F CEO Zhang Li
There had been conflicting reports in the past year emanating from Hong Kong and the office of Croydon Mayor Jason Perry of talks over the resumption of work on the Croydon development. The issuing of a warrant for the arrest in the United States of R&F’s billionaire founder, Zhang Li, only further complicated the situation.
In June this year, Zhang agreed to be extradited to the US to face bribery charges.
But a report in the South China Morning Post says that two of R&F’s creditors are taking legal steps to wind-up the business in order to recover the millions that they are owed. Sources at R&F were quoted as saying that they would “resolutely oppose the application”.
According to the Hong Kong paper, R&F has debts of £32.24billion, although their assets – mostly property and development sites, including Croydon – exceeds that amount.
The SCMP reported, “The developer has not yet received any court documents about the winding-up petition and will keep its shareholders and investors informed of any significant developments, it says.”
In a formal report to the Hong Kong Stock Exchange on Thursday, R&F said that it was in discussions with two creditors – Guangdong Xiangzheng Trade and Commerce and Guangzhou Guangfeng Concrete – that have sought to wind up the developer over debts of £2.14million.
R&F denied being insolvent.
The company “is actively discussing with the applicants and is confident that the matter will be resolved”, R&F said in its filing.
“R&F is among mainland Chinese developers that have had to contend with a credit squeeze following the introduction of Beijing’s ‘three red lines’ policy, which was issued in 2020 to rein in risky borrowings and unfettered expansion,” the newspaper reported.
“With credit lines restricted, many developers have been unable to meet their debt obligations, resulting in defaults.”
Inside Croydon approached Croydon Mayor Jason Perry for a comment on the situation with R&F and the Nestle Tower, but had received no response by the time of publication.
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Does one of those creditors trying to wind up Guangzhou R&F Properties happen to be the company that owns that scaffolding?
No it doesn’t. The scaffold company sold the scaffold (in its current state) to the developer a few months after the project was halted, as they were informed it was going to be a long pause. The real issue is, are there now regular scaffold inspections taking place to ensure the scaffold remains in a safe state/condition?
The two Chinese creditor companies are named in our report.
Neither is known for supplying scaffolding in south London…
A very good question. Such issues are often forgotten until it’s too late.
Sadly yet another blight on our town caused by leaving everything up to a private developer.
The Council is supposed to be there to represent our interests, not just bend over backwards to suit whatever developers want to do. Why do Labour and the Conservatives think that private companies care about Croydon, they only care about profit.
Yes, it’s good to have investment in Croydon and I don’t have a problem with some of that coming from private companies. But there should be a clear benefit to Croydon and the Council should have clear plans about what to do if the private developer fails to deliver.
Croydon Council doesn’t exactly have a stellar track record when it comes to property management and new build construction.
The Mayor could start cultivating buyers for the site, just in case.
Consolidation into one town centre development is a possibility though the council should not really risk non-development by just one partner.
Cultivating a buyer? Like growing a magic money tree?
Property Developers know the values of a site and if they saw value in this site would have offered the Chinese Company a way out. This is simply out of the local authorities power now and there is probably good reason why this particular site is not profitable for redevelopment in an economy suffering from stagflation.
Up to a point, Lord Copper…
Remember how Westfield waited out Hammerson to get a rock-bottom price to buy them out of their town centre development?
If R&F go under in China, there will be bargains to be had in the resulting fire sale.
The council needs to focus on heritage buildings: the landmark tower and the listed SEGAS building which has become so badly vandalised.
Maybe R&F see the value of the site and don’t want to sell? Surely they wouldn’t have started developing in 2020 if they didn’t think it was profitable?
They acquired the site three years earlier, and did not foresee the Chinese property crash and the impact of the covid pandemic on European property markets, falling demand for office space and the decrepit state of the UK economy.
What options does the council have here? Can they force a CPO on R&F and sell to another developer who will actually do something?
Someone at this council needs to learn how to write a decent contract with strict penalties for non-development.
The problem is that the Council have to demonstrate that it has project in the pipeline to deliver something in the “public good” for a CPO. Being it is broke this is not a possibility and to be frank the last thing we need is this lot acting in our public good again. The probabilities are we will not see anything happening for another decade until something like economic stability can be restored and developers can foresee a return on what looks like a complicated development if it is to utilise the current structures. The waste of the segas building is one of Croydon’s great crimes.
Lets hope there is not an event, which leaves this site with any damage that effects the surrounding area. There doesn’t appear to be a solvent owner who will take on the liabilities if this happens and no doubt the Council Tax Payers will be left holding the baby again.
Oh another sh*t show here at Croydon
Another decade of limbo. Oh dear.. will I ever see this sad hole in Croydon’s urban fabric filled, and also, designed well?
It wouldn’t be so bad if St George’s Walk sat undeveloped, if the Whitgift were still thriving.
I am re-reading a very interesting book about the development of Croydon, “Croydon, the story of a hundred years” published by the Croydon Natural History and Scientific Society in 1970. This august organisation with its name of Victorian splendour, complexity and length, was founded in …. 1870.
On page 56– a wintertime black and white photo, taken from the forecourt of the Fairfield Hall, of Segas House, and, covered in scaffolding, St George’s House, (the Nestle Tower as many now call it), as it grows towards completion. The photo is dated 12.27pm 26th February 1963.
The last chapter is entited Boom Town of the Sixties–a ten year transformation.
It has an atmospheric, after rain, night-time picture of the front of the Fairfield, with light blazing out from the illuminated interior, the canopy, and more softly, from the floodlit cornice on top of the building.
Then two angled aerial views, taken from quite high up, showing the redeveloping central Croydon. The detail, and the contrast between the two views, is staggering
In one, July 1959, the Croydon College is under construction. The underpass is not yet built : the site of the Whitgift Centre is still occupied by Trinity school and its trees and playing field. There is just one new office block– the one that has in our own recent times been a Travelodge.
The other picture is just 10 years later- July 1969.
The aerial view is completely transformed, with around 20 tall blocks, centred on Taberner House, St George’s House and Walk, also taking in the brand new, empty Flyover, with Leon House on the right, and the big cluster of Office blocks along Wellesley Road on the left. Only the Threepenny Bit tower is not quite finished beyond the as yet Victorian station.
The text, very accurately mentions the strengths and shortcomings of the development processes, mentioning the massive involvement of Insurance companies, major national developers, and the church commissioners.
It has subtitles such as ‘The Challenge of the Motor Car’, and ‘The Result– good or bad?’
It mentions that the ring road in places forces pedestrians to use subways….. the town now has a prominent skyline…. the main office area is a mixture of unrelated designs…. there is little relief to the eye from the harshness of many of the buildings…. routine commercial architecture has been the order of the day….
“Instead of a comprehensive plan from the Corporation, an Architects’ panel was appointed to advise on developers’ proposals”
(thinks… that rings a few more recent bells)
I don’t want to select just the negatives because the chapter lists the huge numbers of positives– the many large companies who had come to fill all the offices and new shops- the numbers of new workers– 20,000, with more capacity- 9 blocks over 200 feet tall– the £8.5 million office and shop development of the Whitgift centre with 400,000 sq feet of office space……… the £1.25 million Fairfield Hall with concert hall with seating for 1,920, theatre for 740 and Arnhem gallery with banquetting capacity for 500. ……. £ 2.5 million Taberner House ….. “7,000 vehicles are parked on and off the highway at any one time, rising to 10,000 at the peak Christmas shopping period”,
not forgetting the £1million additional rate income every year to the council, which enabled “the Corporation to carry out civic development, particularly on the Fairfield site”……and…. “accept the need for subsidy of £100,000 per annum to maintauin the Fairfield Halls”
There is a sense of immense “busy-ness”, newness, transformational change, and confidence, of Croydon Corporation working with the forces of commerce, and of 20th century lifestyles of shopping and work, as well as personal transport, much of which many readers of Inside croydon will have personally experienced from the 1950’s and 60’s onwards, for around half a century until the big employers and the crowds of shoppers gradually ebbed away.
The authors– I quote their last paragraph, sorry, not with permission but with tribute as to the clarity of their perspective:-
” Many people have reservations about what has been acheived and about lost opportunities, but many more (perhaps the vast majority) are indifferent. It is not too late to re-route traffic away from the main shopping streets nor to plant trees and generally make the town a more pleasnt pace in which to work and shop; but next time, the buildings will be more difficult to demolish”.
The authors clearly did not forsee the conversion of offices to residential, nor the additional high-rises of our own time, the new residential towers, but- those last words about demolition are proving so very true now !
A great book to read …… I hope that it is still available.
Let’s also hope that in 2070, someone will write an update for the subsequent 100 years from 1970.
Will St George’s Walk still be a hole in the ground, but re-wilded with oak trees and wild boar ? Watch this space… I won’t be around by then, but maybe younger IC readers will !
NO British politician should ever sell government or council land or property to foreigners. It is disgraceful. It’s been happening too much in the last 20 years.
Thanks for that. But the Nestle site was never public property.