The Carlyle Group has entered the UK residential market with a £40 mln (EUR 48 mln) acquisition of a prime development site in the heart of Chelsea, in a 50:50 joint venture with the Athos Group.

The acquisition, on behalf of Carlyle's third European fund, Carlyle European Real Estate Partners III (CEREPIII), will look to capitalise on a prime central London market which has proven exceptionally resilient during the economic downturn. The site is expected to benefit from continued strong demand due to a shortage of new build luxury apartments in the area.

The site, the former Chelsea College of Arts, which fronts on to both Manresa Road and Dovehouse Street, is located in of one of London's most exclusive residential areas, close to the King's Road.

Planning consent has been granted by The Royal Borough of Kensington and Chelsea on freehold site for 5,400 m2 of residential accommodation, consisting of 15 luxury apartments, two villa houses, and 38 secure parking spaces. As part of the development Carlyle and Athos will undertake a number of infrastructure improvements to the local park, educational facilities and public art in the nearby vicinity.

Construction is set to start in Q4 2010 and finish in the Summer of 2012. Carlyle will work with its joint venture partner, Athos Group and their development advisers who have extensive experience in developing high-end residential projects in London, with recent developments including Albert Bridge House in Battersea and 268 luxury properties in Richmond.