Luxury London Property Sold at Steep Discount: South African Developer’s Loss in Kensington

The South African developer Zenprop Property Holdings’ £110 million (R2.6 billion) investment in a luxury plot of land in Kensington, London has taken a turn for the worse. The property was sold for about £80 million to hotel operator Arora Group at the end of 2023, marking one of the steepest discounts in the city last year.

Originally, Zenprop had planned to build a luxury retirement village on the site but faced challenges due to high inflation and a broader sales slump. Arora Group managed to secure a discount of £30 million from the original purchase price in 2017, signaling the struggles faced by developers in London’s upscale neighborhoods.

Real estate prices in London’s high-end districts have been on the decline, and Zenprop is feeling the impact with this latest sale. The property was part of a stalled development on the site of the former Heythrop College, with a gross development value of over £750 million according to Knight Frank.

The deal reflects the challenges faced by developers in a market where higher interest rates and surging costs have weakened sentiment. Zenprop had also previously sold a mansion overlooking Regent’s Park for a significant discount on its asking price.

The sale of the Kensington site may have implications for the wider luxury property market in London, as affordability concerns and tightening financing options continue to impact developers and potential buyers. With residential land values in top London districts experiencing a decline, the future of high-end real estate in the city remains uncertain.

Arora Group, led by billionaire Surinder Arora, is known for its hotel operations in airports and city centers. The group’s acquisition of the Kensington site adds to its portfolio, which includes the Fairmont Windsor Park Hotel in Surrey where UK Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen signed a post-Brexit deal last year.