LONDON: Half a mile across the River Thames from where bankers tally job losses in London's financial district, builders sink girders to lay the foundations of what will be western Europe's tallest skyscraper.

"The Shard", funded by four Qatar-based companies, is due to be completed in 2012. The 310-m, 430 million-pound ($712 million) tower also will be the most prominent symbol yet of how money from the Middle East is filling the void left by Western banks and financiers.

"In the same way as when the Japanese came to London in the 1980s, those who have the biggest pockets and are the best capitalized will get the best locations," said Savvas Savouri, head of strategy at London property broker Bh2.

Banks and insurers are firing more than 58,000 workers in London because of the global financial crisis, prompting developers including Land Securities Group Plc and British Land Co to delay or axe projects. Companies shelved a total of 534,000 sq m of office space due for completion by 2011, almost three times the size of Green Park in central London, according to real estate brokers CB Richard Ellis Group Inc.

The biggest structure still going ahead in the City of London financial district will be the 288-m Pinnacle office tower due to be built by 2013. That also is being funded by investors from the Middle East, Arab Investments Ltd.

The Shard, with offices, a five-star hotel, restaurants and apartments, got the name from its wedge-like glass structure designed by Pritzker Prize-winning architect Renzo Piano.

"There is very little being built because of the credit crisis, so I think there is an opportunity to attract high-quality tenants," Irvine Sellar, the developer, said in an interview last week. "As the building starts to emerge on the skyline, it will become a marketing tool in itself to attract potential occupiers."

Transport for London, which runs the city's subway system and bus network, agreed in August 2006 to lease 17,600 sq m for 30 years in the 80-story Shard for an annual rent of 7.3 million pounds. That represents 33 percent of the total 53,800 square feet of office space.

Hong Kong-based Shangri-La Asia Ltd, the largest Asian luxury-hotel group, signed a 30-year lease in 2005 to take 18,580 sq m of space on 19 stories in the new building. The hotel will have 197 rooms and suites.

'Nick of time'

"The credit crisis happened arguably in the nick of time," said Savouri. "If it had happened a few months later, a lot of buildings that have been delayed would have gone ahead."

The development still will have to compete with the City of London and Canary Wharf down the river in the Docklands financial district to attract tenants.

Canary Wharf currently boasts the UK's tallest tower, One Canada Square, built by Canadian developer Paul Reichmann in 1991 and financed by loans from banks including Citigroup Inc, Canadian Imperial Bank of Commerce and Royal Bank of Canada. Companies including State Street Corp and Bank of New York Mellon Corp rent offices in the 244-m building.

The Shard's location, adjacent to the London Bridge transportation hub, may be an advantage, said Ben Thomson, who is in charge of leasing space in the City of London for broker Drivers Jonas.

"The Shard will cater to a much wider tenant audience," said Thomson, who expects demand to increase by 2012. "Corporations might consider going there that wouldn't go into the City. That will be one of the attractions."

The Shard sits on the south edge of the Thames, tucked between London Bridge and the 18th century Guy's Hospital in an area called Bermondsey, known more for its housing projects than as the headquarters of companies.

"I've lived here 20 years and I hope it brings improvement to the area," said Martin Breen, a 45-year-old electrician who lives in the neighborhood. "People want change."

Five months after construction started, some of the foundation pilings are as thick as two mature oak trees and, at 54 m long, are taller than the statue in Trafalgar Square of Lord Nelson, Britain's most famous sailor. Laid end-to-end, the pilings are 4.7 km in length, said Sellar, 70.

When complete in May 2012, two months before the opening of the London Olympics, the tower will be the European Union's first building to pierce the 305-m barrier, rising more than 61 m above Canary Wharf Tower. In all of Europe, only two Moscow skyscrapers will be taller.

Selling jeans

Sellar, who made his first fortune selling flared jeans in London's Carnaby Street in the 1960s, first unveiled plans for the Shard in October 2000 and won planning approval in 2003.

Construction was delayed by a dispute between Sellar Property Group, CLS Holdings Plc and Syrian-born real estate entrepreneur Simon Halabi over the financing arrangements as borrowing costs rose.

A group of four Qatari investors bought 80 percent of the project in January 2008, cutting Sellar's stake to 20 percent.

Qatar National Bank, Qatar Islamic Bank, QInvest and Barwa International each took a 20 percent stake. Qatari Diar Real Estate Investment Co, a unit of the Qatar Investment Authority, agreed in December to fund the Shard's construction. Qatari Diar didn't respond to requests for comment.

As well as the funding, the tenants also will come from "east of Suez", according to Savouri, the broker. "They have hit a sweet spot coming to the market in 2012," he said.

Bloomberg News

(China Daily 08/10/2009 page11)