China’s Poly Real Estate Group has become the latest mainland developer to enter the UK market after confirming this week that it has purchased 5 Fleet Place in London for £145m ($208.6M).
The acquisition from sovereign wealth fund Abu Dhabi Investment Authority (ADIA) is the first UK deal for state-owned Poly, which previously had ventured out of the mainland to develop projects in Australia and Hong Kong.
London’s large and liquid market has been a favorite target for Chinese investors in the past as the country’s real estate developers, institutions and wealthy individuals have become increasingly eager to find stable havens for their cash as markets on the mainland begin to lose their lustre.
Poly Buys into London’s Financial District
Reports of Poly’s purchase of the 130,000 square foot (12,000 square metre) office block first surfaced last month, but the deal was only confirmed this week. “Poly is delighted with the acquisition of 5 Fleet Place as our first UK investment,” Arthur Wang, head of Poly’s international division said in a statement. The Shanghai-listed firm was advised on the transaction by property consultancy JLL.
The building in London’s financial district is principally occupied by UK law firm Charles Russell Speechlys which will reportedly continue to occupy 68,677 sqft of space in 5 Fleet Street. ADIA originally paid £112m to purchase the freehold building from developer British Land in April 2008, and construction was completed in 2007.
Another Chinese Giant Steps into the UK Market
Poly, which was among China’s top five developers by sales for 2014, is coming to London after first developing or acquiring projects in 70 mainland cities, in addition to sites it has acquired in Sydney, Melbourne and Hong Kong.
Although the developer is new to the UK, however, it will find some familiar faces in the neighborhood. China’s Ping An Insurance has already acquired two office blocks in London’s financial district, after spending ₤327 million ($490 million) a year ago to buy Tower Place.
Ping An’s most recent UK deal was followed in July by Hui Wing Mau, the billonaire chairman of Shanghai-based real estate developer Shimao Holdings, buying a 303,000 square foot (28,150 square metre) that houses Goldman Sachs’ headquarters in London’s financial district for an undisclosed sum.
More recently, China Vanke, another top mainland developer, paid £30 million ($46.4 million) to acquire a stake of just over 20 percent in a London mixed-use project just north of the financial district in October.
Although investment yields for properties in London have compressed considerably over the last three years, many Chinese investors continue to see the market as a safe haven, particularly as the development prospects on the mainland dim, and uncertainties continue to grow regarding the Chinese currency.