Knight Dragon, a UK-based developer owned by New World Development’s chairman, is offering the investing public a chance to get a slice of the earnings from a London residential project through blockchain technology in a deal valued at £140 million ($170.5 million), according to a company announcement on Tuesday.
Owned by Henry Cheng Kar-shun whose ownership in New World and in jewellery retailer Chow Tai Fook makes him the third richest man in Hong Kong, Knight Dragon said its subsidiary is issuing 100,000 digital tokens worth £1,400 ($1,713) each, which give the buyer contractual rights to cash flow from a tower in its Upper Riverside apartment complex in southeast London.
The move – which marks the first property tokenisation project in Central London – entitles token holders to 80 percent of the gross profit generated by the 191-unit Building 4 residential tower in firm’s flagship £8.4 billion Greenwich Peninsula development.
“At an individual level, for a relatively modest investment, individuals can own a piece of Central London real estate profit. In the same way an asset can be securitised by dividing it into shares, tokenisation allows an asset to be divided into individual tokens,” said Sammy Lee, founder and vice chairman of Knight Dragon. “Being the first company to tokenise an entire building in Central London fits exactly with our bold vision for the global property industry.”
Priority Access to Future Projects
Knight Dragon has tokenised its economic interest in the 29-storey apartment block as “KDB4” with company representatives saying the tokens can be purchased from the firm via private placement with the securities later eligible to be freely traded with other investors on a private basis. The token holders will also have the first right to invest in, or purchase future developments in Knight Dragon’s Greenwich Peninsula project or in its other offerings.
“Knight Dragon will be one of just a few global real-estate developers bringing a new source of value to investors by offering fractionalised economic rights, in this case via fractionalised profit share, through tokenisation,” Knight Dragon chief executive Richard Margree said, adding that the scheme could also address concerns on asset liquidity. “Traditionally, multiple parties are involved in legal transfer of property. Tokenisation eliminates the requirement for any third-party involvement, allowing ownership to be transferred directly from investor to investor.”
The tokens were created with the help of Web3 technical consultant Atom 8, a wholly owned subsidiary of New York-based investment manager Tykhe Capital Group, and law firm Baker McKenzie acted as the legal advisor.
“This tokenisation project represents investment democratisation, bridging opportunities that were traditionally out of reach for many investors, such as Central London property,” said Ken Lo, director at Atom 8.
Located along the bank of the Thames near the North Greenwich underground station, Knight Dragon plans to develop more than 17,000 homes in the Greenwich project, which will also include commercial space.
Knight Dragon won the go signal for its 10 million square foot (930,000 square metre) Greenwich project in 2015 after the company took full ownership of what was previously a smaller scheme by a joint venture between Australian builder Lendlease and London redevelopment specialist Quintain in 2013.
While construction of Building 4 was completed in 2020, the entire integrated development hit a snag in mid-2019 when Knight Dragon dropped plans for a £1 billion Santiago Calatrava-designed residential and commercial complex which had originally been designed as the centrepiece of the massive regeneration project.
Chengs Go Digital
With a focus on urban developments and regeneration projects in London, Hong Kong, Malaysia and the United States, Knight Dragon’s other major project is The Knightsbridge housing development in central London. That property, which has 191 luxury apartments, seven penthouse apartments and 7 mews houses across 1.7 acres (0.69 hectares) of land in the West End’s Knightsbridge area, was completed in 2005.
Other members of the Cheng family have also been active in London, with Henry Cheng’s brother-in-law, William Wai-hoi Doo having purchased an 11-storey building at 68 King William Street near the iconic London Bridge last November for £130 million.
Henry Cheng’s son Adrian, who serves as executive vice chairman of New World has been an avid participant in tokenisation and cryptocurrency-related ventures, including investing in blockchain gaming platform the Sandbox late last year.
In March of this year, the younger Cheng’s C Venture fund joined an $88 million funding round for digital asset custodian Hex Trust and also backed decentralised protocol development firm ConsenSys.