China Vanke Buys 20% Stake in $1.16B London Project

The mainland’s second largest developer by sales took its first step into the UK property market recently when China Vanke reportedly invested more than £30 million ($46.4 million) to acquire a stake of just over 20 percent in a London mixed-use project.

Vanke is said to have entered into a joint venture to develop The Stage, a £750 million ($1.16 billion) project that includes a forty-storey residential tower, with a consortium of British investment firms, according to a report in London’s Estates Gazette. Planned on the site of a former home of Shakespeare’s drama troupe, The Stage is being built in the up-and-coming Shoreditch area in London’s east end, just north of the city’s financial district.

Although this latest deal appears to be Vanke’s smallest overseas venture to date, it pushes the developer’s overseas investments to over $600 million in 2015, and expands the Shenzhen-based company into its fifth cross-border market.

Vanke Picks Up a Piece of a Shakespearean Project

The Chinese developer, which has $79.2 billion in assets under management globally, purchased its stake in the project from a consortium of investors including Cain Hoy Enterprises, McCourt Global, Galliard Homes and Investec Structured Property Finance. Cain Hoy and Galliard bought the 9,300 square metre (2.3 acre) site of the Stage project, plans for which were approved in 2013, from local east end developers the Bard family in March this year for £150 million ($232 million).

The plans drawn up by architects Pringle Brandon Perkins+Will centre around a showcase for the ruins of the Curtain Theatre, which was home to Shakespeare’s company from 1597, until it moved to the Globe Theatre in 1599. The historical site, which was unearthed in 2011, was where the Bard’s Romeo and Juliet and Henry V were first performed.

More recently, the area has become a centre for international technology companies setting up offices in London, and Amazon announced last year that it would be moving into a new UK headquarters just across the street from the Stage in 2016.

In addition to the 385-unit residential tower, the project includes two office buildings totalling 23,000 square metres (250,000 square feet) and 4,700 square metres (50,000 square feet) of retail space.

Developer Achieves Own Milestone With Expansion into Europe

While not quite as historic as the Shakespearan theatre, Vanke’s decision to enter the London market is another milestone for a company that has quietly become one of China’s biggest overseas investors among the nation’s real estate developers.

Since chairman Wang Shi led the firm into a partnership with US developer Tishman Speyer for the Lumina project in San Francisco in 2013, Vanke has wholly acquired or bought up stakes in two projects in New York and one in Singapore, in addition to three projects in Hong Kong.

Vanke’s investments in these eight projects now totals more than $1.03 billion since the beginning of 2013. During this year alone, Vanke has invested more than $632 million in projects, and more could be on the way.

Now the company that got its start building homes for China’s middle class, may rank ahead of famous names such as Dalian Wanda among China’s leading cross-border property developers. According to figures compiled by Mingtiandi, Vanke finishes behind only China Overseas Land & Investment, which has spent $1.4 billion outside of the mainland’s borders since 2012, and Greenland Group, which has invested $1.3 billion overseas in the same time period, among China’s biggest cross-border developers since China’s outbound real estate investment wave started nearly four years ago.

Among the next targets for Vanke could be more deals in Great Britain. The company appointed former UBS executive Lily Lin as its UK managing director in January this year, signalling that taking a 20 percent stake in a joint venture may not be the limit of Vanke’s British ambitions.

And the developer doesn’t seem content to limit its horizons to just the Asian, North American and European continents either. Reports in the Australian press this week note that Vanke executives attended a briefing on opportunities in Sydney at property consultancy JLL’s office there on Monday.