HNA Group, the parent company of China’s privately owned Hainan Airlines, jumped into the London real estate market this week by purchasing a ten-storey tower that is Reuters news agency’s European home.
HNA, which is chaired by Hainan Airlines founder Chen Feng, announced on Tuesday that it had acquired 30 South Colonnade on Canary Wharf from KanAm Grund Group. According to media reports, the seller – a German real estate investment house – had been asking ₤215 million ($331 million), for the building when it was put on the market in May. A final purchase price for the deal has not yet been announced.
The acquisition is the first for HNA in the London market after the investment company had earlier bought up properties in New York and invested in a hotel chain in California. HNA has been among the earliest and most active of Chinese investors in overseas real estate, with figures from Real Capital Analytics indicating that the parent company of the Haikou-based carrier had already invested more than US$5 billion into global real estate by 2011.
Will Canary Wharf Become a Chinese Neighborhood?
Reuters current lease on the 305,600 square foot (28,400 square metre) Kohn Pedersen Fox-designed building runs until 2020. 30 South Colonnade was completed in 1991, and sits just five minutes walk away from 10 Upper Bank Street, which was acquired by a consortium led by China Life Insurance last year for ₤795 million (US$1.2 billion).
Last year Shanghai’s Greenland Group also acquired a $1 billion residential project on Canary Wharf from Commercial Estates Group (CEG).
Property consultancy JLL, which advised on this latest transaction, will also continue to provide HNA with property management services for 30 South Colonnade, according to a statement.
London Falls Behind Sydney and New York in 2015
HNA’s latest overseas conquest comes as Chinese investments in London real estate have dwindled in 2015 compared to 2014, when acquisitions by mainland investors in the British capital reached a record of more than $3.55 billion.
This year, with the US dollar rapidly gaining ground against global currencies, and investors worried about the prospects for European growth, Chinese purchases of major London real estate assets totalled $1.65 billion by the end of July, far behind the $2.79 billion that mainlanders sank into Sydney. The Australian gateway city has become the leading destination for Chinese real estate investors this year, according to data compiled by Mingtiandi.
New York, which has brought in $2.66 billion in Chinese property investment through July 2015 also bested London, which led all cities globally last year. Malaysia’s Johor Bahru, which sits across the border from Singapore, has also outpaced London by bringing in $1.73 billion by the end of July.
HNA Continues Global Diversification
HNA, which joined the Fortune Global 500 (ranking #464) had annual revenues last year of approximately US$25.6 billion, and has put a surprising amount of its assets into overseas real estate.
Although the deal for the Reuters building was HNA’s first real estate acquisition in Europe, the company has been venturing across the border to buy properties for several years.
Already in 2011, HNA paid more than $112 million for an office tower in Sydney, plus another $265 million for a Manhattan office block and $130 million for a hotel in New York.
More recently, an HNA subsidiary this June bought up a 15 percent interest in Spokane, Washington-based Red Lion hotels that was valued at $21.5 million. Also this year, Chen Guoqing, who is the brother of founder Guo Chen and head of HNA’s main US arm, bought two luxury condos in New York for a total of $94.7 million.
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