Westfield Group (ASX: WDC) and its partner Hammerson have received the final approval to build the $1.8 billion mega mall in Croydon, located in London's south, which will include up to 600 new homes as well as a leisure centre in what will prove to be one of the world's largest developments.
It has been reported that although there was some opposition to the project based on its sheer size, it was unanimously approved by both Croydon Council's Strategic Planning Committee, as well as by London Mayor Boris Johnson. Both companies have been praised by Johnson, who has already begun seeing rejuvenation in other parts of London as a result of their efforts, believing that Croydon can once again become a "major driver of (the local) economy".
Whilst the area has faced tough times in recent years due to the downturn in the economy, the project is an exciting prospect in that it is expected to result in the creation of up to 5,000 new jobs. Although the mall is not expected to be open for business until 2017, it is anticipated that construction could begin as soon as 2015, once all the freeholds space can be purchased.
Westfield's Croydon location should prove successful for the shopping centre giant as it continues to strengthen its balance sheet by investing in its centres possessing high potential and selling other assets which it considers to be non-core.
Whilst the group, along with its affiliate Westfield Retail Trust (ASX: WRT), is utilising this strategy across the globe, its long-term potential is particularly evident in the UK. Sales continue to strengthen throughout its UK centres, where it is also planning to expand its Westfield London centre. The company's plans received a significant boost following the decision of John Lewis to open a full line, multi-level department store at the mall, which should help attract a greater number of customers.
Foolish takeaway
With Westfield's shares currently sitting at just $10.40, they are actually sitting 1c lower than where they were at this time last year and have underperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) by 19.7% in that time. Whilst earnings will be affected in the short-term due to their numerous sales and acquisitions, it seems that investors are not taking into full consideration the company's long-term potential. At today's price, Westfield could be an excellent addition to your portfolio.
