China’s cashed up investors landed another billion dollar property last week when the country’s biggest life insurer teamed up with an investment firm belonging to the Qatari government to buy an office building along London’s Canary Wharf for 795 million pounds (US$1.35 billion).
The acquisition is the largest property purchase this year by a Chinese investor, and the second major deal in a year by a mainland insurer.
According to a statement released on Friday by Songbird Estates, which owns Canary Wharf, China Life Insurance is acquiring a 70 percent in the 93,000 square metre (1 million square foot) tower. Qatar Holdings, an indirect subsidiary of the oil state’s Qatar Investment Authority is taking up another 20 percent, and Songbird will retain a ten percent share while continuing to manage the property.
The statement specified that the acquisition of the property at 10 Upper Bank Street, which is rented to UK law firm Clifford Chance for an annual fee of 44.35 million pounds, was financed through equity proportional to investor shareholding, as well as through bank loans.
China’s sovereign wealth fund, China Investment Corporation (CIC) is a major shareholder in Songbird Estates.
Second London Office Tower Bought by Chinese Insurers
The Canary Wharf acquisition more than doubles the value of the largest previous acquisition of a London property by a Chinese firm, outpacing the 260 million pound ($442 million) pick-up of the Lloyd’s Building by Ping An Group last year.
In October 2012, the Chinese government adjusted regulations to make it easier for the country’s insurers to invest in overseas assets, including real estate. A survey of China’s insurance funds that was published in December found that more than 75 percent of them were looking for real estate investment opportunities, with 38 percent indicating that overseas property deals were their top priority.
Hong Kong-listed China Life commands 45 percent of China’s market for individual life insurance, group life, accident insurance, and health insurance policies. The company also made a major property acquisition domestically last year, when it bought the 5 Corporate Avenue project in Shanghai from developer Shui On Land for RMB 3.32 billion ($545 million).
Fifth Major Deal By Chinese Investors in 12 Months
In addition to the purchase of mature real estate assets by Chinese institutional investors, the country’s property developers and wealthy individuals have also been flocking to Britain’s capital.
Dalian Wanda, the real estate firm owned by China’s richest man – Wang Jianlin, acquired the $1.1 billion One Nine Elms project in London last year, while its Shanghai-based rival picked up a $984 million residential project in the city along the Thames in January. In March this year Greenland followed up by finalising a $1 billion deal for a mixed-use development of its own along Canary Wharf.
Research released last December by property consultancy JLL found that Chinese investment in London real estate had risen over 1500% since 2010, increasing from US$88.2 million to over US$1.63 billion at the end of the third quarter last year. The increase made Chinese the third-largest foreign property buyer in the UK, according to the survey. Only Germany and the USA, which invested US$1.96 billion and US$1.79 billion respectively, ranked higher.
A separate study by Knight Frank indicated that Chinese wealthy individuals became London’s number one foreign buyers of luxury homes last year, accounting for six percent of all purchases over 1 million pounds.