City of London to defy Brexit slump with tallest tower
Published 01/12/2016 | 02:30
The City of London has approved plans for what will be the tallest tower in the financial district.
The 73-storey building, which will include a public viewing gallery and restaurant at the top, as well as enough workspace for 10,000 people, was approved at a vote on Monday. The tower will be constructed by Aroland Holdings Ltd, a closely-held company based in Singapore.
The new building at 1 Undershaft, a plot of land between the skyscrapers known as the Cheesegrater and the Gherkin, will have about 90,000 sq m (970,000 sq ft) of mostly office space. It will replace a tower in which insurer Aviva Plc is the biggest tenant.
Britain's vote to leave the European Union has discouraged companies from building new office space in the capital because of concerns about a potential drop in demand. New London office construction starts fell 42pc in the six months through September compared with a year earlier, Deloitte LLP said in a November 15 report.
Berlin Hyp AG, for its part, has delayed plans to open an office in London after the Brexit vote, providing evidence how the uncertainty created by the June referendum is impacting banks' investment plans.
"We have postponed the creation of an office in London until the modalities of the UK's exit from the European Union have become clear and can be assessed," the Pfandbrief bank said by e-mail. Berlin Hyp had €27.8bn of assets at the end of September compared with €28.5bn at the end of last year.
Some German lenders which have used their nation's Pfandbrief legislation to offer cheap credit for British commercial mortgages, may see activity derailed by Brexit as the law limits loans to properties in the EU and European Economic Area. About 17pc of UK commercial property loans in the first half of the year were advanced by German lenders, according to a survey by Leicester-based De Montfort University.
Many banks with European operations in London are reviewing their presence because they stand to lose their EU passporting rights, according to UBS Group AG's head Stefan Winter, who also leads the country's association of foreign banks.
International businesses may shift as many as 100,000 jobs away from London within two years of the UK officially starting a process to leave the EU because businesses risk losing their passporting rights, according to Jefferies Group LLC analyst Mike Prew. Rents could fall 8-10 pc over the next 24 months, he said.