CC Land Boss Sells Off London Office Project as Chinese Investors Continue UK Exodus

A mainland billionaire has walked away from plans to redevelop a London trophy project, selling a West End office block for a fraction less than the 2015 purchase price as Chinese investors continue to dispose of properties in the UK capital.

A private company controlled by Cheung Chung Kiu, chairman of mainland China developer CC Land and a close associate of both former China Evergrande Group boss Xu Jiayin and the heads of Guangzhou R&F Properties, has sold One Chapel Place near Hyde Park End to developer Great Portland Estates based on a valuation of £56 million ($72.5 million) with the purchase price subject to further balance sheet adjustment, according to an announcement last week by the London-listed developer.

Cheung had submitted plans to the Westminster City Council in 2023 to redevelop the 34,230 square foot (3,180 square metre) five storey property into a seven-floor block spanning 73,000 square feet, but is selling the yet-unapproved project at a price which reflects a 15.4 percent markdown in US dollar terms from the £58.5 million he paid to acquire One Chapel Place over a decade ago.

Having made a splash in London with CC Land’s £1.15 billion buy of the “Cheesegrater” office tower in 2017 and his record £210m purchase of late Saudi crown prince Sultan bin Abdulaziz Al Saud’s mansion in 2020 (with that purchase later revealed to have been made on behalf of Evergrande’s Xu) Cheung currently is now among a number of Chinese investors dumping their London prizes amid a market slide.

Redevelopment Opportunity

Cheung had acquired the freehold property from Schroders WELPUT office investment in 2015 through privately held YT Realty Group at a 3.66 percent net initial yield and is now selling at a net initial yield of 4.4 percent, according to agency figures.

The new owner is keen to begin redevelop the property which is home to anchor tenant Carter Jonas with the property agency occupying two floors. Currently let at an annual rent of around £2.5 million the existing office leases are due to expire in mid-2028, according to Great Portland.

“One Chapel Place meets all of our acquisition criteria. This is a freehold asset, in a prime Bond Street location, with significant massing potential, and provides a rare opportunity to create a best-in-class, premium HQ office building with excellent sustainability credentials in a location that is starved of high quality supply,” said Alexa Baden-Powell, senior Investment manager at Great Portland Estates.

Construction on the redevelopment is expected to start in 2028 with completion targeted for the first quarter of 2031, according to a website for the project.

Help From My Friends

Between acquiring One Chapel Place in 2015 and selling it this month, Cheung had sold the property to Hong Kong “penny stock king” and Birmingham City football club owner Paul Suen Cho Hung, only to later buy it back from the innovative financier.

Suen, best known for floating Birmingham City Football Club in Hong Kong, purchased One Chapel Place from Cheung’s YT Realty in August 2021 in a HK$235 million cash transaction that valued the building at GBP 63.70 million. Public records show Cheung took back the control of the property’s holding company, Cypress Dynasty Limited, in May 2023 as Suen exited.

Last May, Suen came to Cheung’s rescue again by buying a Travelodge Hotel near Liverpool Street station from YT Realty for HK$33.75 million in cash and releasing YT Realty from its guarantee obligations for a HK$480 million loan for the property. YT Realty had bought the hotel for £43 million in 2016.

London Downsizing

WIth CC Land’s rental income from its British properties having declined 3.3 percent last year to HK$455.7 million at the same time that the company’s overall cost of debt climbed by one percentage point to 5.9 percent, according to its annual results released last week, Cheung continues to seek new owners for some of his other London properties.

CC Land last year hired Savills to help find a buyer for One Kingdom Street in central London’s Paddington district, with an account by CoStar earlier this month indicating that British Land and Singaporean sovereign wealth fund GIC had dropped plans to buy the property for around £275 million.

With the West End renowned as one of London’s most exclusive districts, it has been a magnet for Asian investors, many of whom have been rushing to sell off their commercial properties in the area as the office market struggles.

In January Hong Kong-listed Chinese Estates sold 11-12 St James’s Square and 14-17 Ormond Yard in the West End to the Ellison Institute of Technology  at a 19 percent discount from the asking price.

In November last year an investment fund backed by investors including New World Development’s Cheng family, Wharf Real Estate’s Woo family, and Far East Consortium International chairman David Chiu, agreed to sell 3 St James’s Square to San Diego-based commercial property trust Realty Income with that at a 19 percent discount from the asking price when the asset was put on the market in 2022.

In August of 2024 Chinese Estates sold 14 George Street in the West End to local developer and investor Oval Real Estate for £125.4 million or a 7 percent discount to its asking price.