Risks and rewards: latest goings on with Earl’s Court developer

Capco perceives our community as a risk to its reputation

Capco’s interim results, published on 21 July, show that the valuation of its Earl’s Court properties has decreased again, this time by 2.4%, which is on top of the 20.4% decrease Capco reported in February. However, the company appears to have returned to profit, having made a loss of £223 million for the year ended 31 December 2016.

Capco’s financial position was boosted by the sale of the Olympia exhibition halls. As the company eloquently explained: “Having extracted significant value from the venue since acquisition, Capco took the decision to exit this non-core asset”.

As for Earl’s Court, its results state: “Capco remains focused on maximising the potential of the strategic land holding . . . Accordingly, representations have been made by Capco to the GLA’s London Plan to deliver 10,000 new homes, an additional 2,500 homes above the current consented scheme”.

Reputational risks Linda and David at our Summer Picnic

Meanwhile, Capco still insists that our campaign to save our community is a risk that might damage its reputation or distract its management. Its measures for mitigation are to “review activity and communications of activist groups”.

But it seems the company is looking in the wrong direction. Arguably, one of the biggest risks to Capco’s reputation is not us, but its own formal association with the Kwok family, with whom it is in a 50/50 joint venture for the development of 808 homes in Seagrave Road, otherwise known as Lillie Square.

The Kwok Family Interests (KFI) are major shareholders of Hong Kong property developers Sun Hung Kai (SHK). In 2014, SHK Chairman Thomas Kwok and his right hand man Thomas Chan, at that time a Director of Lillie Square GP, were convicted of bribing the second most senior official in Hong Kong, Rafael Hui, with HK$8.5 million. Thomas Kwok was sent to prison for five years, and Chan for six years in what has been widely described as the highest profile corruption case in the city’s history.

After serving 18 months in gaol, Kwok was released on bail pending the outcome of his appeal. A month ago, five judges of the Court of Final Appeal unanimously dismissed the appeal, confirming that Kwok’s and Chan’s actions were corrupt. Chief justice Geoffrey Ma Tao-li said: “It will now be necessary for [Kwok] to return to prison for him to serve out the remaining sentence.”

Thomas Kwok clutches the Bible as he climbs into the prison van

Despite these facts, on the Lillie Square website Capco and KFI persist in describing Sun Hung Kai as “one of the most highly reputable real estate companies listed on the Hong Kong Stock Exchange”.

But that is not the only misleading information published about Lillie Square. In a full-page advert printed in the Evening Standard on 3 May 2017, Capco and the Kwoks claimed that the latest Lillie Square apartments have “views over the Lost River Park or the landscaped garden square”. The advert trumpeted the so-called Lost River Park as “Central London’s largest new park in 100 years”.

Advert in Evening Standard with misleading claims about the so-called Lost River Park

Well, not only is Burgess Park a mile closer to Charing Cross, it’s 50 times larger. And, as for the view from the new flats over the so-called Lost River Park, given that it is little more than a path only a few metres wide, those views would likely be limited.

Capco’s latest results show that sales at Lillie Square are little more than one per week. At that rate it would take a century to sell the consented scheme, let alone the 2,500 flats it wants to add. Could this explain what’s going on?

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Locals prefer to preserve and extend Empress Place, while Capco keeps it empty in face of Grenfell Tower disaster

WKGGCH Board Members Baghdadi Daoudi and Linda Sanders display the results of the informal poll conducted on 29 April at the Spring Fair

In December 2016, Capco exhibited proposals to demolish the Victorian houses, which it had bought up in Empress Place. It wants to replace them with over 400 flats, including a 24-storey tower block. Despite announcing its intention to submit a planning application to Hammersmith & Fulham Council, so far it has not done so.

Empress Place consists largely of two-storey Victorian cottages, though, as can be seen at the right of the photo, it also includes the purpose-built engineering headquarters (1907) of the Brompton & Piccadilly Railway Company. It was from this building, with its large windows designed to provide as much light as possible for the draughtsmen, that the Piccadilly line was designed.

Well-known architect, Francis Terry, has prepared an alternative proposal that would achieve as many homes without demolition.

Francis Terry’s proposal to preserve and extend the heritage of Empress Place rather than destroy it

At the Spring Fair on 29 April, we asked people who visited our stall whether they preferred Capco’s proposal (A on the left of the board in the photo) or the alternative (B on the right). Just 10 people preferred Capco’s scheme against 462 who preferred Francis Terry’s alternative. Common responses were: “It’s a no-brainer” and, pointing at Capco’s proposal: “Who would want that?”

Francis Terry’s alternative plan for Empress Place would produce the same number of homes as Capco’s demolition plan

WKGGCH Chair, Keith Drew said: “What a beautiful and refreshing change to the characterless concrete and glass blocks proposed by Capco! Why can’t we have this instead of yet more tedious residential warehousing? It would enhance the charm and attractiveness of our neighbourhood as well as provide much needed additional housing.”

Capco ignores plea to house Grenfell families in empty homes

On 16 June, following the terrible fire at Grenfell tower that made so many households homeless, Linda Wade, Councillor for Earl’s Court, said: “26 homes [owned by Capco] in Empress Place stand empty. I am sure that Earl’s Court developers Capco wish to support Grenfell Tower survivors.”

Meanwhile, in response to the Grenfell disaster, our Tenants & Residents Associations, led by Sally Taylor and Diana Belshaw, have mobilised a powerful effort to support those families directly affected, including providing food, clothing and housing support.

Capco’s response to this tragedy on their doorstep? A deafening silence.

Alternative Earl’s Court plans preserve estates and bring back exhibition venue

On 18 May, University College London’s Bartlett School of Planning displayed eight alternative masterplans for the Earl’s Court and West Kensington Opportunity Area.

Each masterplan, prepared by groups of up to four students from the third year and master degree courses, led by tutor Dr Juliana Martins, presented ideas for developing the area very different to the masterplan created by Sir Terry Farrell on behalf of Capco.

Unlike that plan, most of these plans incorporated all or part of the West Kensington and Gibbs Green estates and re-introduced a major cultural and exhibition facility directly accessible from Earl’s Court station.

Far from being solely based on demolition and luxury flats, some of the plans preserved the historic railway sheds and established a centre for transport engineering excellence, building on the legacy of the Lillie Bridge Rail Underground Maintenance Depot and the Transport for London Training facility at Ashfield House.

Both the London Mayor, Sadiq Khan, and developer Capco have said they want to review the masterplan for the wider area, amid common agreement that the consented plan for Earl’s Court is not fit for purpose. These fascinating and imaginative contributions show that masterplanning is not the preserve of celebrity architects or self-interested developers. There is an alternative, and there is a better way.

Course Tutor Dr Juliana Martins explains the masterplanning exercises to Robin Hawkes, WKGGCH Board Member

Student Sam (right) explains his masterplan to WKGGCH Board Member Dioscore (left)

Professor Michael Edwards (centre) with Anabela Hardwick (right)

London Blogger Dave Hill talks with West Kensington estate TRA Chair Sally Taylor

Hundreds of local people visit People’s Campaign stall

Left to right: Zoe, Elizabeth, Sally, Faisal and Linda

On Saturday 29 April, North End Road was closed all day for the Council’s Spring Market. The West Kensington & Gibbs Green community had a stall displaying the People’s Plan, our alternative for making improvements and building additional homes without demolition.

Throughout the day, hundreds of local people visited us to learn more about our campaign and to support our alternative vision.

Councillor Mercy Umeh, Mayor of Hamersmith & Fulham

Councillor Ben Coleman

After lugging the People’s Plan model to the market, the People’s Pram enjoys a well earned rest!

BACKFIRE! Natives throw trinkets back at Capco

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Colourfully decorated Tote bags adorn Capco’s Project Rooms

A daft marketing gimmick went spectacularly wrong on Saturday when residents used Capco’s own ‘community engagement’ event to expose the harm its plans are causing to local people and their neighbourhood.

As part of Capco’s offensive to con people out of their homes, which has included summonses to decorate “luxury biscuits”, residents were invited to the developer’s Earls Court Project Rooms to “learn more about the Earls Court development”. The developer is keen to show off its plans to destroy the attractive Victorian houses in Empress Place along with the historic Project Rooms themselves.

The enticement on this occasion was nothing less than the opportunity to “create your own personalised organic tote bag”. Faced with such a tantalising prospect, local residents participated enthusiastically. The result? Cotton bags decorated with “Capco has broken my heart and stolen my home”, “Capco KILLED Earls Court: get your bloody hands off the estates” and “Save W14” hung prominently against the developer’s propaganda backdrop in Capco’s very own Project Rooms.

Sally Taylor, Chair of West Kensington Tenants & Residents Association, explained: “I took Capco up on their disconcerting offer to ‘personalise my own Tote bag’ and expressed my emotions via the acrylic paints provided. My work was exhibited until Capco realised I had painted off message. They promptly censored my efforts by removing it from the display. They might believe they can destroy my home, but surely even they realise they can’t dictate what I think and feel.”

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A carefully positioned plate contextualises Capco’s model of destruction

Meanwhile, Capco exposed further how out of touch it is with its latest edition of ‘The View’, though the only view residents have is of the pile of rubble left by Capco’s destruction of the much-loved exhibition centres.

Capco’s Managing Director, Gary Yardley, claimed that its portakabin show homes space “sets the gold standard for engaging with residents”. But gold is not enough. As Capco went on to proclaim: “The New Homes Space not only sets the new gold standard for resident engagement but also uses the latest gaming technologies to create realistic walk-throughs of the new homes.” Who’d have imagined that a developer would try and dupe residents into giving up their homes through a computer game?

Estates resident, Linda Sanders, said: “This is about taking our homes from us against our will. When you visit their exhibitions they dazzle you with fancy technology and shiny kitchens and bathrooms. But they don’t tell you what you really need to know, such as how high the service charge would be or that temporary tenants have no rights at all in the redevelopment. If that’s the gold standard then it’s fools gold. They’re taking us for the fools, and they’re taking the gold for themselves.”

Capco sales halved as K&C lays down the law

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Lillie Square where sluggish sales have prompted a rethink by Capco

In July, we reported that Capco’s sales rate at Lillie Square was slightly less than one per week. This, we calculated, meant it would take Capco 35 years to sell the remaining 357 Lillie Square homes and the 1,314 homes to be built on the site of the former exhibition centres. And that was before any homes are built on the estates land or the rail depot. In September, in an article that appeared in the Financial Times, a property analyst suggested it could take a century to achieve all the sales that are planned across the whole site.

Back in July, with sales at the rate of one per week, we asked: “Can even this rate of disposal be maintained in the current market?” Well, now we have the answer and, not surprisingly, it is a big ‘No! Not on you nelly!’

According to Capco’s Trading Update for the period 1 July 2016 to 28 November 2016, the total number of apartments reserved or exchanged in Phase 2 of Lillie Square has reached 50. This is an increase over a 21-week period of just nine flats from the 41 that were reported as reserved or exchanged in the Interim Results for the six months ended 30 June 2016.

This means Capco’s sales rate has halved to less than one per fortnight, doubling our estimate for how long it would take to sell the part of the development with detailed planning consent to 70 years and across the whole site to 200 years, assuming this rate remains constant.

So, it was not surprising when Capco suggested in another Financial Times article, which appeared in October, that it intends to switch between 20 and 25 per cent of the homes for sale to homes for rent. Capco Director, Gary Yardley, said: “We want to create something people can be proud of in 100 years”.

But, at the rate Capco is going, even with converting a quarter of the homes from sale to rent, in 100 years time the job won’t be half done. That’s because, as the developer admitted in the FT article, and in an article published in the Daily Telegraph in July, it wants to up the total number of homes to be built across the whole site from 7,500 to 10,000.

Never was the adage “when you are in a hole, stop digging’ more apt. A 10,000 home scheme would mean a development that increases the total number of homes currently in the Opportunity Area by 13 times rather than 10 times, ramping up both the density of the scheme and the heights of the buildings, well beyond the monstrous development that is already consented. Surely, if the current scheme is too big to implement, how can an even bigger one succeed? “If the public and private sector works together”, suggests Gary Yardley, “we can find answers.”

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The Council Chamber of the Royal Borough of Kensington & Chelsea, where Councillors called on Capco to come clean about its intentions

Kensington and Chelsea Council, for one, is not impressed. On 19 October, meeting in Full Council, the Councillors passed the following resolution unanimously:

“This Council notes the announcement that CapCo is considering a significant change of housing mix and a significant increase in the density of its Earl’s Court redevelopment, which would impact on the wider masterplan for the area as reflected in the Earl’s Court and West Kensington Opportunity Area Joint Supplementary Planning Document adopted by this Council in March 2012. The Council also notes the very high level of public interest in the Earl’s Court development, as one of London’s major regeneration areas. 

Such a change would require a new planning application to be considered in the normal way including:

  • a reassessment of the community and transport infrastructure effects and mitigation;
  • delivery of other requirements in the Local Plan strategic site allocation; 
  • a policy compliant level of affordable housing and, where necessary, publication of a financial viability assessment consistent with previous decisions of the Information Commissioner on the balance between the need for commercial confidentiality as against public interest in disclosure; and 
  • public consultation. 

In the interests of sound, open and transparent planning, the Council calls on CapCo to fully engage with the Council and local resident and business communities over any proposal to change the scale of development on the site from that already approved.” 

Hey Capco! What do you say to that?

Big turnout reaffirms campaign

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94 people, of whom 78 were residents, attended the Annual General Meetings for the West Kensington estate TRA, the Gibbs Green & Dieppe Close TRA and West Ken Gibbs Green Community Homes (WKGGCH). The meetings were held on 4 October 2016 in the Gibbs Green Hall.

The TRA AGMs received reports from their respective Chairs, Sally Taylor and Diana Belshaw, approved the accounts and elected committee members.

The WKGGCH meeting followed straight on, when residents of both estates came together under the chairmanship of Keith Drew.

161004_037Julia Lawlor is hugged by a neighbour following her speech

Resident Julia Lawlor opened the meeting with an emotional address to her neighbours, explaining that four generations of her family have lived in her home. Her closing remarks provoked a rousing response: “To them, the people who want to knock down our homes, we’re down there. They just think we’re rough people. And all they want to do is make money. They’re not bothered what happens to us, where we go. And they think they can tempt us with show flats you can’t swing a cat in? Yeah: Thanks, but NO thanks. If I wanted to move, I would have done so a long time ago. This is a special place, and we’re not going without a fight.”

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Left to right: Keith Drew, Chair; Charlie Treloggan, Treasurer; Linda Sanders, Secretary

Treasurer Charlie Treloggan took the meeting through the accounts, highlighting the expenditure on producing and publicising the People’s Plan.

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WKGGCH Company Secretary, Linda Sanders, gave the annual report on the activities of the organisation. Firstly, she displayed a slide showing the Land Registry title proving that despite the contract between the Council and developer Capco, the estates land is still owned by the Council. Linda went on to remind the meeting about the participation of over 100 residents in the production of the People’s Plan and its positive reception on the estates.

She further reported that following the collection of over 7,600 signatures for an online petition, the then candidate, now Mayor Sadiq Khan, had agreed to review the Earl’s Court masterplan as he had serious reservations about the overall direction the scheme is taking. Finally she reported on the submissions we have made to the Government in support of our Right to Transfer proposal, the lack of any significant progress made with the demolition scheme, and the one third reduction in Capco’s share price along with its difficulties selling the new homes it is building in Lillie Square.

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Board Member and Chair of West Kensington TRA, Sally Taylor, summarised the People’s Plan, pointing to the model on display in the hall. The Plan is proving to be a popular alternative for delivering improvements and additional homes without demolition.

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Donna Isaac, one of the six candidates for five places on the WKGGCH Board explained that she had been living on the estates as a temporary licensee for over a year and that she was determined to contribute to the campaign to save the estates.

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Faisal Roble, another candidate, said that he had helped a lot with the People’s Plan and wanted to help stop the demolition because this is his home and he is a passionate believer in social housing.

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Co-opted Board Member Kevin Veness counted the votes to elect the Board Members.

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Local MP Andy Slaughter, who has steadfastly supported residents throughout our campaign, said it was thanks to the community’s efforts that the estates were still standing. In his view, the masterplan is dead and the plans will have to be redrawn.

The Chair thanked residents for attending. The meeting closed and was followed by refreshments.

Residents and politicians welcome People’s Plan for improvements and additional homes without demolition

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WKGGCH Secretary Linda Sanders (left) explains the People’s Plan to London Assembly Member, Sian Berry (right)

London Assembly Member Sian Berry visited the estates on 24 August to learn more about our People’s Plan. She said: “The People’s Plan clearly demonstrates that residents, with support, are capable of creating good regeneration alternatives to demolition. The plan not only proposes 250 additional homes but they improve existing estates without destroying perfectly good family homes. It is important that demolition is not the only option when regenerating an area. Residents and communities should not have to be needlessly displaced when there are other options.”

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Residents welcome Assembly Member Sian Berry to the estates

Local MP Andy Slaughter has also backed a community-led rather than developer-led approach: “The worst aspect of Capco’s demolition plan is the refusal to give residents a say in their own future. I would like to see the mayor, the council and the residents’ organisations working together to produce an alternative to Capco’s masterplan.”

Meanwhile, individual residents are stepping forward with their own reasons for supporting the People’s Plan:

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Residents launch People’s Plan for improvements and new homes without demolition

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We are proud to present the People’s Plan for improvements and new homes without demolition. These are still early proposals but they demonstrate that demolition of the West Kensington and Gibbs Green estates (which a majority of residents have consistently  opposed) is simply not necessary.

So far over one hundred of us have come together to identify how we want to develop our estates and improve our homes in the future. We have enlisted professionally accredited architects, valuers and quantity surveyors to show that what we want is possible. The project has been funded by the Nationwide Foundation as part of its support for initiatives to develop alternative models for creating new affordable housing.

Here is a summary of the People’s Plan. And here is the architects report.

What are we proposing?

Brochre bird's eye view

Diagram above based on designs by ASH

There are currently 760 homes on the estates. We are proposing to build 250 new homes where we have identified space. By selling 180 of these, we could generate £50 million to help pay for the improvements and 70 new homes for social rent.

Most of the new homes for social rent would be family size houses, but some would be bungalows for elderly and disabled residents. These new homes would help address overcrowding on the estates and suit tenants looking to down-size. Most of the homes for sale would be built in new storeys above, and extensions to, existing blocks of housing.

Proposed improvements include: better insulation and ventilation; upgraded bins and refuse systems; glazed balconies to add space to the one bedroom flats in the tower blocks; upgraded communal areas; better control of green space; better security; enhanced landscaping with a new community garden and allotments.

In addition, we are proposing an estate-based housing office and a new community centre for both estates. And, we would re-instate the concierge scheme for Fairburn and Churchward Houses.

The Chairs of the two Tenants and Residents Associations, Sally Taylor and Diana Belshaw, and the Chair of West Ken Gibbs Green Community Homes, Keith Drew, said: “As the residents, we think it should be for us to choose what sort of future we have for our community. The People’s Plan is far better than the scheme the developer wants to impose on us. It shows that the vision we have been campaigning for since 2009 can be achieved. ”

How long would it take?

We have been advised that our proposals could be completed within five years of obtaining the necessary permissions – far less time than it would take for the developer to demolish and redevelop the estates. The People’s Plan could be implemented either by the residents through West Ken Gibbs Green Community Homes, if we succeed in taking ownership of the estates through the Right to Transfer, or by working with Hammersmith & Fulham Council and the Mayor for London should the developer-led scheme fail.

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Tell us what you think!

These are still early proposals: please get in touch and tell us what you think! You can find us on Twitter @WestKenGibbsGr #ThePeoplesPlan or on Facebook at www.facebook.com/westkengibbsgreen or by joining the Facebook group ‘Save our Homes: West Kensington and Gibbs Green’.

If you live on or near the estates, please get in touch to find out about drop-in sessions in July and August (when the model of the proposals will be on display) or to arrange a visit to explain the plans. Alternatively, a copy of the feedback form can be downloaded by clicking here. You can contact our Housing Organiser Zoe on 07754 701 636 or email zoe.wkggch@gmail.com.

Earl’s Court developer enters stormy waters following ‘market shock’ prediction

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Capco’s share price over the past year: Source FT markets .com

In June, Deutsche Bank’s Market Research department published a report on Capco that recommended shares should be sold in light of the Bank’s prediction their price would drop by 23% to 260 pence. This was based on a forecast that residential property prices face a 20% decline driven largely by a collapse in the buy-to-let market especially affecting prime central London new-build homes. Deutsche Bank singles out Capco from all the other developers since the nature of its development pipeline makes it particularly vulnerable to the “impending shock to the residential market”.

The report predicts that the fall in house prices will drive down the valuation of Capco’s Earl’s Court land by 65%. Deutsche Bank attaches no value at all to the West Kensington & Gibbs Green estates because it says their redevelopment is unlikely to be profitable for Capco given the amount of replacement and affordable housing involved. And because Capco does not have enough money to build the new homes, the bank expects the company will be bought out within a couple of years. Although the Bank anticipates that Capco will obtain a fresh planning permission to build even more homes, it does not think that will help much to improve the developer’s position.

Ironically, Deutsche Bank felt that Capco’s ownership of Covent Garden was a stabilising factor for the company, albeit this part of the business was unlikely to deliver growth. In fact, this week several commercial property funds have had to suspend dealings in the face huge withdrawals. This has put even more pressure on Capco’s share price, which, following the referendum vote to leave the European Union, was already on a downward trend. On the day of the referendum, Capco’s share price closed at 362.50 pence. By 8 July their price closed at 274.40 having reached a low that day of 258.40.

In March and April this year, homes in the Company’s Lillie Square development were being reserved or exchanged at the rate of slightly less than one per week. At that rate, it would take Capco 35 years to dispose of the remaining 357 Lillie Square homes and the 1,314 homes to be built on the site of the former exhibition centres. And that is before any homes are built on the estates land or the rail depot. Can even this rate of disposal be maintained in the current market?

The imminent decline in property prices coupled with the Brexit vote spell a long period of uncertainty that is likely to delay, if not put an end to, Capco’s redevelopment plans for the West Kensington and Gibbs Green estates. Under these circumstances, it seems most unlikely the redevelopment of the estates could happen. Capco has not even begun to build the first phase of replacement homes for estates’ residents and has said they would not be ready before 2019.

By contrast, our People’s Plan to make improvements and build additional homes without demolition is far more realistic, could be delivered within five years of obtaining the necessary permissions, and is supported by many residents who have directly engaged with its creation. Watch this space for details of our plan, which we shall publish soon.

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