Chinese investors have not lost confidence in new office development in central London, despite fears of oversupply amid the uncertainty generated by the outcome of last month’s referendum and the prospect of the UK leaving the European Union.
One Nine Elms, a stalled £850 mln project in London’s largest regeneration area, is going ahead, the developer announced at the weekend. Wanda One, the UK subsidiary of China’s largest property company, the Dalian Wanda Group, will be able to complete work on the two 200-metre twin residential towers by the Thames thanks to a £500 mln cash loan from China’s Ping An Bank.
The project had run into problems after the original contractor – a joint venture between UK company Interserve and the China State Construction Engineering Corporation – walked away in April, less than a year after being chosen. The loan has now enabled Wanda to bring another contractor on board: Balfour Beatty has been chosen over Brookfield Multiplex and will start work immediately with the goal of completing the project is expected in 2019.
The two towers will have 439 apartments and a five-star Wanda Vista hotel, offering a 24/7 concierge, cleaning and dining service to residents of the apartments, along the lines of One Hyde Park and Knightsbridge’s Mandarin Oriental hotel. Sixty per cent of the apartments, with prices starting at £1.3 mln, have been sold off-plan to international investors.
Vote of confidence
‘We are pleased to announce the arrangement of financing for One Nine Elms, which will support the successful delivery of this important mixed-use development,’ said Tim Gawthorn, director at Wanda One.
Ping An Bank’s decision to grant the loan is being seen as a much-needed vote of confidence in the new-build residential market in London. In Nine Elms in particular, where the new US Embassy is being completed, in the weeks since the referendum there has been a fall in pre-sales and there have been reports of price cuts of 20% to entice buyers.
Nineteen different developers are building 20,000 homes in the area, as well as offices and retail space, and there are fears of a glut in the market at a time of waning international interest. The slide of the pound has encouraged some investors to look for good deals, but many more are worried that London may become a less attractive destination.
Dalian Wanda, which owns 95 shopping centres as well as a large portfolio of commercial and residential properties across China, is seeking to diversify and has embarked on a $30 bln global expansion programme which has taken them from India to Europe to the US.
