British Land shelves next phase of £3.6bn Canada Water scheme

British Land has reportedly shelved the next construction phase of its £3.6bn Canada Water regeneration in south-east London until market conditions improve. The pause threatens to delay a substantial programme of housing, commercial buildings and infrastructure across the 53-acre development.

The developer has completed the first phase. But sales of apartments at its 35-storey Founding tower have been slow, with only around 30% of the first 186 apartments sold.

Rising construction costs, higher regulatory expenses and weak demand have hit the next phase's viability. British Land and AustralianSuper (the Australian pension fund that co-owns the scheme) have declined to comment publicly on the reported pause.

What did the planning reset change?

The pause comes despite a major planning reset approved in March. British Land and AustralianSuper won permission to:

• increase the height and massing of residential buildings
• introduce alternative living uses
• gain more flexibility over future development plots

The changes responded to regulatory changes and worsening viability. At the time, British Land said they would allow the next phase to start from 2027.

The revised scheme also cut the affordable housing commitment. It requires 20% affordable housing in the next phase, with a minimum of 9% across the full masterplan (the binding document governing the whole development).

The consented scheme allows around 4,200 homes, 2.5 million sq ft of workspace and around 1 million sq ft of retail, leisure and cultural space.

A second London scheme pulled in a week

Canada Water is the second major London development put on hold in the last week. Landsec has pulled the plug on its £1.5bn Lewisham Shopping Centre redevelopment after rising build costs collided with demands from the council's new administration for more affordable housing.

The consented Lewisham masterplan covered over 1,700 homes, including 98 social rent and 231 discounted rental homes, alongside 660 student beds, 445 co-living units, retail and a 500-capacity music venue.

Landsec said the push for a materially higher affordable housing offer, combined with difficult economic conditions, left it without a sufficiently certain route to delivery.

What does this change for London's pipeline?

The two pauses remove more than £5bn of committed development from the capital's near-term pipeline. Both decisions point to the same pressure point: build cost inflation plus affordable housing requirements that developers say no longer pencil out under current sales conditions.

With British Land holding Canada Water's next phase until the market improves, the 2027 start date now looks optimistic.