The John Lewis Partnership is said to be facing “extreme challenges” as a result of its bid to enter the private rental market.
As recently as July it announced that it had submitted planning applications for two Build To Rent sites at West Ealing and Bromley in London. Initial plans for a vacant warehouse site in Reading were to be brought forward later this year.
This followed its announcement in December last year of a £500m multi-decade joint venture with global investment company Abrdn to deliver around 1,000 new homes across the three locations.
However the Daily Telegraph now reports that plans to construct over 400 flats above a West Ealing Waitrose could cost the company far more than its worth on paper.
Planning documents have revealed the development could result in a negative return of £57m for the business.
Property consultant Quod, which carried out the early analysis, is quoted as claiming the “financial viability of the scheme is extremely challenging”.
Current predictions reveal that John Lewis’ scheme would be worth just £183m based on present-day values, but cost roughly £240m to carry out, the Telegraph reports.
In June this year Chris Harris, seen as the architect of the move by the John Lewis Partnership into rental housing, announced he was stepping down this autumn.
He had been property director of the firm for five years and was instrumental in setting up the partnership’s attempt to become a major Build To Rent player, as part of its bid to diversify.
Also in June the John Lewis Partnership wrote down the value of its head office by some £15.6m, due to the continuation of working from home and a widespread drop in commercial property values.
The company has closed seven floors of the building.
https://www.lettingagenttoday.co.uk/breaking-news/2023/9/john-lewis-private-rental-scheme-faces-extreme-challenges-over-financial-viability
