China Overseas Land and Investment (COLI) is set to become the second Chinese real estate developer to purchase an office tower in London within the last month according to a report published on Friday.
One of China’s top five developers by sales, China Overseas will purchase the 130,000 square foot (12,000 square metre) Helicon building in the City of London from Deutsche Asset and Wealth Management per an account in UK trade publication Property Week.
China Overseas’ acquisition would come close on the heels of fellow state-owned developer Poly Real Estate’s £145 million purchase of 5 Fleet Place, which was announced just last week. An affiliate of COLI, China Overseas Holdings International, also spent A$80 million ($56 million) to acquire a development site in Sydney earlier this month, as mainland developers grab for more overseas properties in the midst of a currency slide in their home market.
COLI Buys a Piece of the City
Situated at the north end of Moorgate in the traditional core of the City financial district and originally completed in 1996, the Helicon (which is also known as 1 South Place) was recently remodeled and currently is home to tenants including travel website Experian, railway industry group RSSB and the Chartered Institute of Management Accountants. Deutsche had purchased the building in 2004 for £100 million, according to public records.
In addition to 119,000 square feet (11,000 square metres) of offices, the building also has retail space on the lower floors, including a Marks and Spencer department store and an HSBC branch.
Closing Overseas Deals as the Currency Slides
With China’s currency having slid nearly 1.5 percent against the US dollar in the past 30 days, Chinese companies working on overseas acquisitions are feeling a new urgency to close deals quickly. And that pace could quicken still further with investment bank Goldman Sachs predicting that the yuan could slide another 6 percent over the next 12 months as China’s economy continues to come under pressure.
Until the final months of 2015, Chinese acquisitions of London properties had actually fallen off in the last 12 months, as many mainland firms were finding themselves outbid for trophy assets by buyers from the Middle East and other locations.
Before China Overseas and Poly jumped in over the last month, there had been only three major mainland acquisitions of stabilised real estate assets in London over the last year, after Ping An Insurance started off 2015 by purchasing a building in the financial district for ₤327 million ($490 million) in January.
Shopping Before the Holidays
Coming soon after China Overseas’ Sydney deal and Poly Real Estate’s London acquisition, this latest UK purchase could also be a signal of a rush for Chinese property firms to close their deals before the Chinese New Year holidays next month.
While most Chinese companies legally operate on the western calendar year, in practical terms there is a significant push to close deals before the country shuts down for the week-long spring festival holiday, which starts on February 8th this year.
Should COLI ultimately close on the Helicon, it would add the office block to a portfolio of three other London assets that the developer acquired last year through a transfer from its parent company, state-owned engineering giant, China State Construction and Engineering Co (CSCEC).