The government’s recent spate of property asset disposals – which included landmark Prime Central London development opportunities Admiralty Arch and the Old War Office – has brought in around £1bn to the Treasury’s coffers, and cut overall running costs by about £176m per year.
Whether offloading over 300,000 square metres – the equivalent of seven Wembley stadiums – of bricks-and-mortar assets is a wise move in the long run remains to be seen, but several developers have bagged themselves properly once-in-a-few-lifetime projects, and some really exciting luxury schemes are now in the pipeline.
The Cabinet Office’s State of the Estate report reveals that rationalisation of the government’s estate since 2010 has reduced its size by a quarter, and saved a total of £1bn in running costs, as well as raising £973m in capital receipts in just the 2015-16 year, from the sale of 468 properties. As a result, vacant space within the central government estate now only represents 1.4% – well below the average in the private sector of 8.9%.
Management of the remaining, shrunken estate is due to be fully transferred to a new central body – the Government Property Agency – by the end of this year.
2015-16’s most notable offloads were Admiralty Arch and the Old War Office, both of which are being turned into luxury hotels and super-prime apartments.
- The sale of the Admiralty Arch building, which straddles the entrance to the Mall and Trafalgar Square, on a 99-year lease to Rafael Serrano’s Prime Investors Capital, brought in £66m. Apartments came up for sale in July; read all about it on PrimeResi here.
- The Hinduja brothers bought the Old War Office for a reported £350m, and submitted plans in October to convert the Whitehall landmark into 88 deeply high-end apartments and a 125-room luxury hotel, with a GDV estimated to be £1bn. Read all about that here.
Chris Skidmore, Minister for the Constitution: “The progress that we have made over the past year in rationalising the government estate is something that I am very proud of. Not only are the sales and savings that we have made substantial, but the way in which we are managing our buildings will bring about positive, and lasting change.
“Whether releasing land for housing, or revolutionising the way in which civil servants work, we can be confident that we are using the government estate in the most productive way possible.”
Ben Gummer, Minister for the Cabinet Office and Paymaster General: “In 2015–16, our disposals programme saw us deliver receipts totalling almost £1bn pounds from the disposal of 468 properties, marking a significant step towards our commitment to collect £5bn receipts over five years. We sold a number of notable buildings, including Admiralty Arch and the Old War Office, which will be sensitively developed to deliver world-class residential property and hotels.”