“Despite a more challenging economic environment, we have continued to progress our development pipeline. As conditions in the eurozone improve, we plan to take advantage of new opportunities in ‘high potential’ segments of the market such as London residential.”
Simon Hipperson, Chief Executive Officer, EMEA
The EMEA business produced a solid profit outcome despite the difficult economic backdrop and challenges within the United Kingdom (UK) construction market.
The London property market continues to outperform, particularly in the residential sector. Over the last year, our development business made strong progress delivering its secured backlog, positioning us well for further growth in the region. We secured master planning on the $2.5 billion regeneration of Elephant & Castle, a major urban regeneration in Zone One of the London Underground. We also achieved strong pre-sales, and construction has commenced on the first two phases, One The Elephant and Trafalgar Place.
The first commercial deal was signed at The International Quarter, the $2.4 billion joint venture between Lend Lease and London & Continental Railways. By late 2013 we will submit a planning application for the development of 330 residential units. We have also reached an agreement with the Joint School Trust for the development of 104 residential units and a new school in the London Borough of Wandsworth.
The UK construction market continues to exhibit weak fundamentals and competition remains very strong. Lend Lease, like other contractors, is not immune to this pressure and has taken steps to restructure the business and increase our focus on markets with the most balanced returns and growth potential.
Despite difficult conditions Lend Lease secured a number of projects in the past twelve months including:
- $275 million Kingsgate house in London
- $107 million River Plate house in London
- Preferred bidder on the $282 million Treviso hospital PFI project in Italy
- $116 million Cramlington Hospital
The UK investment management operations had $1.4 billion funds under management on 30 June 2013. The Bluewater retail centre, that Lend Lease manages and holds a 30 per cent equity stake in, continued to perform robustly.
Outlook
Volatility in European property and construction markets is expected to continue. Lend Lease is seeking to identify and capture growth opportunities across our core markets where we can capitalise on our integrated model. Over the next twelve months we will continue to progress the secured development backlog; focus on building a robust pipeline of development opportunities in the London property market; stabilise the project management and construction business; and position Lend Lease for future growth and sustainable earnings in the markets in which we operate.
