THE cause of protests when it was built in 1929, developers are now trying to save the Art Deco Battersea Power Station in London which has become a decrepit relic. Lorraine Turner and Sinead Cruise report.

A gust of wind howls around Battersea Power Station, an industrial wasteland by the Thames whose coal-fired furnaces were once used by the Bank of England to burn millions of pounds worth of banknotes.

A couple of tourists who have ventured off the beaten track around Buckingham Palace stand on tiptoe as they strain to photograph the gargantuan structure over a high screen.

As debt-laden developers face the ruins of recent extravagance, the Power Station - Europe's largest brick building - is a decrepit symbol of the past profligacy and present pain in Britain's real estate market.

In World War II, the central bank turned to Battersea to burn 120 million pounds (US$193 million) of notes it had not had time to cancel as it introduced a new design against feared enemy forgeries.

Now Battersea must consume much larger sums if it is to remain standing.

The Art Deco icon, which won global recognition through appearances in movies such as Stanley Kubrick's "Full Metal Jacket" and on the cover of Pink Floyd's 1977 album "Animals," has been derelict for over a quarter of a century.

It has already passed through numerous developers' hands since stopping power production in 1983 as Britain shifted to oil, gas and nuclear.

Developers now are courting investors for a 5.5-billion-pound redevelopment just as banks remain focused on unscrambling exposure to commercial real estate. The market has shown signs of recovery recently but is still treacherous.

"The building is likely to suffer major structural damage in five years if full repairs don't start before then," says Jeremy Castle, chief planning director at Treasury Holdings UK, the power station's current developers, referring to damage sustained after the roof was removed 20 years ago.

Deteriorating quickly

"We need to move fast to redevelop the site because the building is deteriorating quickly," Castle says.

The two-year downturn in Britain sliced almost 45 percent off average commercial property values.

The Power Station's owners, who bought it for 400 million pounds in 2006, say its value fell by 15 percent in the six months to end-June 2009, causing the company to breach terms on some of its loans.

Battersea's imposing white brick chimneys have been a popular feature of London's skyline for almost 80 years, but its brickwork is held together by metal straps. Many bankers and financiers say plans to redevelop it are a commercial anachronism in a city obsessed with skyscrapers.

For Nick Collins, English Heritage's team leader for the east and south London, the listed Power Station is "one of the most important buildings at risk in the country. "It stands in splendid isolation, it's seen and known and recognized so easily," he says.

Castle's employer Treasury Holdings is an Irish property firm that controls the Battersea site through a 67-percent share in debt-laden Real Estate Opportunities (REO).

REO says the debt taken out to buy the station is still performing, but part of it, along with the majority of its loan book, will be transferred to Ireland's bad bank, or the National Asset Management Agency (NAMA) next year.

The Irish government is paying 54 billion euros (US$78 billion) to buy risky commercial property loans with a combined book value of 77 billion euros from banks to clean up excessive lending legacies.

Of an estimated 280 billion pounds worth of unpaid commercial property loans in the United Kingdom, more than a quarter are tied to poorer-quality assets, a problem also faced by other European countries, according to CB Richard Ellis, the world's largest real estate consultancy.

Sector experts say until banks have unwound their exposure to commercial real estate - particularly smaller loans taken out by amateur investors which may have gone unnoticed in 2009 - their ability to resume anything close to pre-crisis lending to property investors will be limited.

The process may take five years or longer, they add.

The power station is no stranger to controversy.

When construction began in 1929 it sparked protest from people who thought it would be an eyesore and damage local buildings, parks and even paintings in the nearby Tate Gallery.

Sir Giles Gilbert Scott, the architect behind the red telephone box and the Bankside power station - now the Tate Modern - was drafted in to boost its appeal.

The "upside-down table" of four white chimneys, each a third of the height of the Eiffel Tower, was built over a 20-year period to form two separate power stations in one building.

The site passed into the hands of private developer John Broome for 1.5 million pounds in 1987 but costs escalated and it was later sold to Hong Kong-based development company Parkview International.

A one-table restaurant atop a 100-meter-high chimney was just one idea put forward by previous developers: An indoor theme park and high-class shopping mall have been others that generated little more than critical headlines.

REO's plans - central London's largest ever planning application - were submitted in October 2009.

At more than double the cost of a previous developer, they include an emphasis on residential and commercial office space including 3,700 new homes and 149,000 square meters of office space.

Financial crises had put paid to earlier, more extravagant ideas including an "eco dome" and 300-meter tower.

Adventurous schemes have long been derided in Britain.

"Faneuil Hall in Boston city center was an example of how our American cousins can redevelop a historic building and turn it into a great marketplace," says Chris Johnson, managing partner at architects firm Gensler, and the creator of the Gate in Dubai which houses the Dubai stock exchange.