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The Westfield shopping centre in London’s Shepherds Bush area has only been in operation for five years, but is now getting ready for a major expansion to the north of its existing site. Last week London’s Hammersmith and Fulham council approved final plans for the expansion, which now also includes a substantial residential component.
The planned new development will include 680, 000 square feet of retail space, restaurants, cafes and leisure areas, as well as more than 1, 500 residences. Westfields are also seeking a development partner to build the housing component.
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Construction is expected to start early in 2015 with the expanded centre to open by the end of 2017, and the housing units to follow thereafter. The cost of the new expansion will total about US$1.6 billion (£1 billion).
The Australian Westfield Group, led by its chairman Frank Lowy, likes to finance a portion of its very active development programmes by, from time to time, selling some of its mature properties. Accordingly just a few weeks ago the company sold three existing retail properties in the UK; one in Derby, one in Sprucefield Northern Ireland and a half share of a property near Birmingham. The proceeds of the sales yielded Westfield US$960 million (£597 million).
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Speaking for Westfield, Duncan Bower the company’s director of development said the approval was an important part of the group’s US$5.6 billion (£3.5billion) ongoing development pipeline in Britain and Europe.
He also said, “This investment in Westfield London after just five years since opening is a testament to the strength of this centre and its market which attracts the best UK and international retailers and generates current annual sales of close to US$1.6 billion (£1billion) from nearly 28m customer visits.”
Westfield is expanding just outside London as well, and has entered into a joint venture withlocal developer the Hammerson group to redevelop and enlarge an existing shopping centre in Croyden which will have nearly 2 million square feet of space when it is finished.
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Then in Italy, Westfield has entered into a joint venture to develop a new, also nearly 2 million square foot, shopping centre in Milan, close to the Linate airport, but is still dealing with some difficult planning negotiations with the local authorities there before it can commence construction.
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With an aggressive programme of development also going on in the United States, and particularly at the new World Trade Center, these plans all demonstrate the overriding rationale for Westfield taking the decision to split itself corporately into two, which will coming up for approval soon at shareholders meeting.
Westfield has proposed to split out all of its its existing mature properties in Australia and New Zealand and to merge these with an existing listed retail trust. Then its international development programme will stand as a separate company offering a pure play development company.
While Westfield has been criticized recently by a number of institutional investors in Australia over some of the terms of that corporate restructuring, it is likely to go ahead with perhaps a few modifications to its terms.
With some of these expansions they have underway just in Europe you can certainly see why they would want to concentrate on flagship developments of this kind in the future.
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