Bank of China may have a new place to call home in Sydney after buying the 140 Sussex Street building from Deutsche Asset Management’s RREEF Real Estate for A$130 million ($100 million), The Australian reported. The bank has yet to comment on the transaction.
The office acquisition by the state-owned lending giant comes just two years after Bank of China pledged to double its mortgage business in Australia and only 19 months after the big four mainland bank acquired its own office building in Manhattan. Bank of China already owns its existing headquarters in Sydney, but was said to be shopping for larger home as its Australian business expands.
The 14-story building at 140 Sussex Street has 12,440 square meters (133,903 square feet) of office and retail space along with views of the nearby Darling Harbour. The building’s current anchor tenant, ING Australia, announced it was moving to a new office tower up the road earlier this year prompting Deutsche Asset Management to cash in.
Before Bank of China step forward, a story in The Australian linked Chinese developers to having an interest in the building, with market players speculating that the A grade office tower could be redeveloped for residential use.
The bank’s current Australian headquarters are situated at 60 York Street, a five-minute walk from their future office, with that building scheduled to undergo renovations once the bank relocates to its newly acquired address.
Second Major Office Move For Bank Of China
China’s fourth largest bank is already preparing for a major move in Manhattan, where it will soon trade in its quaint brick office on Madison Avenue for a new 30-story glass tower near Bryant Park.
The bank will occupy half of the building, which it purchased from Hines and JP Morgan Chase for nearly $600 million in 2014. In May, financial services firm Schroders agreed to lease 74,000 square feet (6,874 square metres) of the tower.
“We’ve grown so much these years,” Xu Chen, general manager of Bank of China’s U.S. branch, told the Wall Street Journal earlier this year. “The small building is not enough to hold all of us now.”
Chinese Banks Make Their Mark Down Under
Several other of China’s largest banks, including Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of Communications, also have a presence in Australia. Reuters noted China Merchants Bank is scheduled to open a branch down under this year.
According to data from Thomson Reuters Loan Pricing Corp, Chinese banks more than doubled their share of Australia’s A$75 billion ($57.9 billion) syndicated-loan market during 2015 taking a 7.1 percent stake. Syndicated loans include commercial property and corporate transactions.
Chinese banks with branches in Australia also saw an increase in business from apartment buyers during May after Australia’s largest banks put tougher lending regulations in place for foreign buyers.
“It is now very clear why ICBC, Bank of China and China Construction Bank all opened retail branches in the best streets in the Melbourne CBD and Sydney CBD,” CBRE agent Mark Wizel explained to the Australian Financial Review. “They foresaw the potential challenges that Australian banks would face in lending to offshore apartment buyers.”