Former Anbang Unit Buys Beijing Office Tower From SK Group for $1.4B

Beijing’s investment market is showing further signs of life after a local insurer paid RMB 9.06 billion ($1.4 billion) for the SK Tower in the capital’s central business district, marking the biggest transaction for an office building in China during the COVID-19 era.

Hexie Health Insurance acquired the 35-storey building from SK Group, according to sources familiar with the transaction who spoke with Mingtiandi, with the Korean conglomerate having first purchased the property on busy Chang’an Avenue from Singaporean developer CapitaLand in 2008.

Formerly known as the Capital Tower, the SK Tower has 106,303 square metres (1,144,236 square feet) of built area, meaning Hexie paid RMB 85,228 ($13,326) per square metre for the Grade A structure, whose typical floor area is 3,158 square metres.

Property consultancy Cushman & Wakefield is understood to have represented Hexie in the purchase of the 2006-vintage asset, which is situated just inside Beijing’s third ring road, with the news having first been reported by Hong Kong’s South China Morning Post.

Former Anbang Unit Back in Property

Current listings show that the SK Tower is occupied by tenants including a Bank of China branch, investment bank CICC and multiple Japanese government offices, including the Japan International Exchange Foundation.

The building along what is also known as Jianguomenwai Street in the capital’s Chaoyang district is within a few minutes’ walk of Guomao station on Beijing’s metro lines 1 and 10.

Hexie is perhaps best known internationally for having been part of China’s Anbang Insurance, which made headlines for its $1.95 billion acquisition of New York’s Waldorf Astoria hotel in 2014 before its founder was jailed on corruption charges and the company was nationalised in 2018.

Anbang sold Hexie to a consortium led by privately held Fujia Group for an undisclosed sum in 2019.

Market Stirring

Hexie’s high-rise acquisition is the largest in what appears to be a growing string of Beijing office deals during the first half of 2021.

In March, fund manager GoHigh Capital bought Block D of the Qidi Science and Technology complex at Tsinghua Science and Technology Park in the Zhongguancun area for RMB 2.65 billion through a special purpose fund backed by developers Beijing Capital Development and China Jinmao. The seller was a private company based in the eastern province of Shandong.

The 25-storey property near Wudaokou metro station and Tsinghua University until last year was home to video-sharing app Kuaishou, a competitor to market leader Douyin, and spans a gross floor area of 46,330 square metres, meaning the buyers paid RMB 57,198 ($8,808) per square metre of GFA.

In May, ACR Asset Management announced its acquisition of the Beijing Diamond Plaza building at Zhongguancun Software Park.

Founded by Edward Cheung, the former chief executive for Greater China at Cushman & Wakefield, and backed by Singapore-based developer GLP, ACR bought the R&D building from private equity firm Sino-Ocean Capital for an undisclosed amount.

Diamond Plaza has 22,000 square metres of leasable area and was 100 percent occupied as of 30 June 2020, according to a report released last year by Hong Kong-listed Sino-Ocean Group.

Values Stable

According to Savills’ April update on the Beijing investment market, Grade A office assets in the city had an average capital value of RMB 83,285 per square metre at the end of 2021’s first quarter, holding steady with the previous quarter, while gross reversionary yields stood at 5.1 percent.

Total transaction area in the quarter was 322,000 square metres, down 44.9 percent from the previous quarter but up 9.5 percent year-on-year, Savills said. Total consideration, meanwhile, was RMB 8.9 billion, down 53.4 percent from the previous quarter and 0.2 percent year-on-year.

The average transaction price in the first quarter was RMB 27,600 per square metre, down 15.5 percent from the previous quarter and 8.9 percent year-on-year.

Note: This story has been updated to indicate that Cushman & Wakefield represented the buyer in the transaction. An earlier version indicated that the firm had worked on behalf of SK Group. Mingtiandi regrets the error.