For the second time this month a Chinese financial institution has acquired a London office building, as China Construction Bank was revealed today to have purchased a tower in the city’s financial district for 110 million pounds ($187 million).
China Construction Bank, which recently became the first Chinese bank permitted by the government to provide renminbi clearing service in London, bought the 7-storey structure at 111 Old Broad Street from Belgian Bank KBC, which also occupies part of the 122,880 square foot (11,400 square metre) building.
The bank, which is one of China’s “big four” state-owned lenders is said to be the second largest bank in the world by market capitalization and the 13th largest company globally. According to a statement from UK-based property consultancy Knight Frank (which represented KBC in the transaction) Construction Bank intends to use the building as its European headquarters.
Nick Braybrook, Knight Frank’s Head of City Investment said of the acquisition, “KBC and Knight Frank invested a huge amount of time and effort in refurbishing the building to create an exceptional headquarters office building in the heart of The Square Mile.”
Second Chinese Acquisition in London this Month
The purchase of the office tower by China Construction Bank follows less than two weeks after China Life Insurance led the acquisition of an office building along London’s Canary Wharf for 795 million pounds (US$1.35 billion). The Canary Wharf deal was the largest property purchase in 2014 by a Chinese investor, and the second major deal in a year by a mainland insurer.
Before China Life, which is the country’s biggest life insurer, made its London deal, China’s sovereign wealth fund, CIC, acquired a London office park for $1.28 billion during November of last year. Also during 2013 China Life’s insurance industry competitor, Ping An Group had already blazed the path to London by purchasing the Lloyd’s of London building in the City of London for 260 million pounds ($442 million).
Earlier this year Knight Frank pegged Chinese investment in London as a global trend. An article in Forbes quoted Stephen Clifton, head of Central London for the real estate consultancy as saying,
We see (Chinese) property companies and institutions targeting London and they will consider a wide range of asset types and projects. The occupational market has seen an exceptional recovery since the global financial crisis. In 2013 alone, there was 13.6 million square feet of office space acquired by Central London tenants, a 41% increase on the previous year, and we expect levels to continue to rise alongside the ongoing economic recovery. At the same time, the supply of office space is falling. We see opportunities for Chinese investors in both the acquisition of well-located, long-let, quality stock and also in joint ventures.”
Know the property brokers seems to be proving themselves prescient by closing this latest deal.