As long as China remains a revolving dictatorship, enriched citizens will continue to shove money out the door, just in case the proletariat revolts. A cynical take on why Guangdong soy sauce conglomerate, Lee Kum Kee, last month paid £37 mln (€44 mln) for a 75,000 sq ft (7,000 m2) office block in London Docklands – even though they intend to occupy only one of the 10 floors.
As long as America remains in the hands of what the New Yorker calls a ‘huckster mogul selling magic potions laced with poison’ (you’ve guessed, Donald Trump), then, well, hooray for London. The Chinese view of London Docklands as a safe berth can only be reinforced by the president-elect pin-pricking the Chinese leadership on Twitter.
Chinese buyers poured $1.7 bn (€1.6 bn) into London commercial property in the first six months of 2016, a 75% rise from a year earlier, says Knight Frank. There are few signs of a post-Brexit slowdown. If Trump has not sparked World War Three by Easter 2017, then there is a 50% chance of another huge Docklands project being built with Chinese money.
Two bidders are left in the race to win development rights on Albert Island, a non-too-pleasant 25-acre land mass lodged between the east end of the Royal Docks and the river Thames. I can disclose that one bidder is London & Regional, a UK developer with interests in Panama and Cuba, owned by the Livingstone brothers, Ian and Richard.
Last month I disclosed elsewhere that little-known Sino-Australian listed developer ASF is the other bidder. I met joint founder Geoff Baker in London for tea at the Shangri-La Hotel in The Shard. The 60-year old Australian solicitor is a Chinese expert. He has written a book based on a decade of lawyering in Beijing, called ‘Think Like Chinese.’
The ASF concept centres on a large space in which Chinese manufacturers will be able to show their wares to European buyers. A sort of permanent Expo. The L&R plan? No idea. They’ve not answered my e-mail. The brief from the Greater London Authority, which owns the land, discourages flats. How about a trading post that looks to central America?
Because, right next door to Albert Island work has begun on phase one of a 4.7 million sq ft Chinese trading post: a £1.7 bn project controlled by Chinese builder CITIC. Multiplex has begun a £240 mln contract to build 600,000 sq ft of offices by 2018. Architects Farrells and agent Savills are working on both this and the ASF scheme.
Last year PM David Cameron and President Xi Jinping of China attended a signing ceremony for the CITIC project. During the visit the pair sunk a pint at the Plough, Cameron’s local near his official residence, Chequers. State-backed Chinese company SinoFortone has just paid £2 mln for the pub and plans to replicate the boozer across China. Cheers Donald!
Miss Taiwan comes to London
To lunch in early December in a City of London Livery hall with Miss Taiwan 1989. My excuse? Denise Li now runs private equity fund Prosperous Growth China, an offshoot of Taiwanese shipper Wan Hai Lines, now investing in UK real estate. The president of PGC greeted guests in a black Cheongsam shift emblazoned with gold dragons. Denise has dipped her toe in the UK real estate market, building 77 mid-market homes in Birmingham’s newly-groovy Jewel Quarter. With the help of former P&O Properties man Francis Hilton, she plans to fund the construction of 1,300 more in the £400 sq ft bracket; 300 in the Digbeth suburb of Birmingham and 1,000 in Manchester.
PGC is one of a new wave of Chinese investor funds which is staying determinedly away from London. The residential rationale is that there are around 15 million members of the middle classes in China now who can afford to buy flats in the UK in the £200,000 to £400,000 bracket. About 60 of the Jewel Quarter flats have been sold to Chinese investors.
Commercial property folk keen to meet Denise will be more interested to hear that PGC is setting up a fund with Charles Whittle of Manchester-based McCafferty Asset Management. The same middle-ground approach is being taken. ‘We are looking for second-tier units in the Midlands and north in the £3-15 mln range,’ says Whittle.
