The UK Embassy site in Bangkok may be turned into a mixed-use complex
Thanks to its chummy relations with the UK’s colonial-era governments, developer Hongkong Land owns much of the prime real estate in the former British colony that it calls home. Now that the sun has set on Britain’s empire in the east, the unit of Jardine Matheson group is making one last deal with its mates from back in London, as it teams up with Thailand’s Central Group to purchase the UK embassy site in Bangkok in the Kingdom’s biggest ever land deal.
The UK’s Foreign & Commonwealth Office announced late yesterday that it had sold its 3.5-hectare (9-acre) embassy site in Bangkok to a Hongkong Land-Central Group joint venture for over £420 million ($595 million).
Tos Chirathivat, chief executive of Central Group, said the group “wants to develop a mixed-use project that links to our Central Embassy shopping project,” a hotel and high-end shopping complex which is adjacent to the embassy site, according to a report.
Britain Sells Colonial-Era Site as Property Values Rise
Tos Chirathivat, CEO of Central Group, has big plans for the former embassy site
The colonial-era embassy was built in 1922 in what was then the rural outskirts of Bangkok, but the location at the corner of Phloenchit and Witthayu Roads in the metropolis’ Pathumwan area is now a commercial hub that is home to shopping malls, luxury hotels and some of the city’s most expensive condo developments.
The nearly century-old embassy building requires a significant upgrade and refurbishment to fit a modern working environment, with large parts of the building no longer usable, the Foreign Office said in a statement. “In a tight fiscal environment, it is right that we take tough decisions to ensure that the UK can maintain a global presence while getting the best value for taxpayers,” said Simon McDonald, Permanent Under-Secretary at the Foreign Office.
Central Group already bought one-third of the Embassy’s then 12-acre compound for $95 million in 2006, after the UK foreign office put the site on the market the previous year. The parcel has been transformed into the Central Embassy complex, which now displays Chanel and Gucci and operates the Park Hyatt Bangkok hotel where her majesty’s diplomats used to stroll around the garden.
The latest deal gives Hongkong Land and family owned Thai conglomerate Central Group the chance to redevelop the historical embassy building itself and the remainder of the compound. Diplomats and consular staff at the Embassy will relocate to commercial space in the 29-storey AIA Sathorn Tower on South Sathorn Road close to Bangkok’s Silom Road banking district by 2019, according to the Foreign Office.
The proceeds from the sale will be reinvested in the foreign office’s overseas estate and will fund 30 to 40 embassy modernisation projects worldwide.
Hongkong Land Grows Overseas Portfolio
Hongkong Land chairman Ben Keswick may be making more trips to Bangkok soon
The deal marks the second overseas acquisition in the past two weeks for leading Central landlord Hongkong Land. The developer bought a plot of commercial land in Nanjing, the capital of eastern China’s Jiangsu province, for RMB 4.8 billion ($745 million) in January with plans to invest RMB 13 billion ($1.9 billion) in developing the site.
The developer and its Indonesian affiliate Astra International also announced plans late last month to build a $74.5 million apartment complex in Jakarta.
Central Group is a top five Thai conglomerate, with over 70,000 employees and investments in retail, property development, brand management, hospitality, and food and beverage. The group acquired La Rinascente, an Italian-based luxury department store operator, and Illum, a Danish department store chain, in 2011 and 2013 respectively.
Trade industry reporting does not require the subjective, ‘chip on the shoulder’ overlay comments about Hongkong Land’s supposed colonial era UK govt connections. Clearly written by a journalist with a quite transparent personal agenda. They are cheap, unnecessary & inaccurate. Lest we forget, Hong Kong passed to Chinese rule (aka One Country Two system) 21 years ago. The HK portfolio in Central she is referring to was acquired over a 150 year+ period, dating back to the 19th Century, mostly via the ‘Colonial Governement’s very transparent land auction and tender system (at least one of which – the acquisition of the Exchange Sq site – nearly bankrupted the company). It wasn’t a slight of hand, murky opaque land allocation system of the type practiced in many less developed countries, which typically is of course designed to benefit only those with government connections ……. which is why of course it’s large neighbour to the north, with its own 4,000 year history of these type of practices, decided to adopt the key tenets of the ‘Colonial’ Governemt’s land allocation system in China.
Thank you for your informative comment on Hong Kong’s transparent and open market. It’s indeed an unfortunate coincidence that this open market allowed a small group of companies and individuals to effectively monopolise most major industries, including real estate. If they were indeed able to do this without cosy government relationships, then perhaps they were just the only people who could figure out that buying real estate in Central was a good idea.