Country Garden, China’s biggest developer by contracted sales, has made its British debut by buying up a 785-home project in east London for a reported £80 million ($112 million), in a rare recent acquisition of a UK development site by a mainland investor.
Guangdong-based Country Garden partnered with an unidentified Hong Kong fund for the acquisition of the Ailsa Wharf site, which has been approved for development into a £400 million ($562 million) project of thirteen housing blocks ranging from three to 16 stories high.
The sellers, British developers Galliard Homes and Lindhill, spent five years acquiring the 270,000 square foot (25,084 square metre) site from several landowners. “It is a ringing endorsement for the UK to have Country Garden make a significant investment on residential development East London,” said Galliard Homes chief executive Don O’Sullivan in a statement to Mingtiandi.
“International investment has contributed enormously to the delivery of much needed homes for London, and we welcome the arrival of Country Garden adding strength to this significantly important part of the market,” he added.
Through the acquisition, Country Garden builds on a portfolio of overseas housing projects that includes developments in Melbourne and Sydney, as well as its struggling $100 billion Forest City mega-project in Malaysia and projects in Thailand and Hong Kong.
Chinese Builder to Create New Urban Quarter in London
Construction work on Ailsa Wharf is likely to start in the summer, with the first properties due for completion in 2021, according to a Country Garden executive who spoke to the South China Morning Post. The executive also revealed that the London project will target local buyers, unlike Forest City, which is mainly aimed at Chinese.
Ailsa Wharf, which is located between the River Lea and a motorway in London’s Poplar neighbourhood, has planning consent for 782 residential units along with 1,914 square metres of commercial space. The urban regeneration project aims to transform a long-barren, heavily contaminated stretch of land into a thriving mixed-use hub, and the unnamed executive said that Country Garden would build shops and public space along with 556 private apartments, 229 subsidised homes and four villas.
Country Garden’s first British foray comes amid a slump in London’s residential market, with property sales plunging by 20 percent over the four-year period from 2014 to 2017, according to figures from market research firm Residential Analysts.
The deal also follows less than two months after Guangzhou-based Poly Real Estate Group won its first residential project in the UK, a 706-home site in the north London suburb of Mill Hill.
Other mainland enthusiasts for development sites in the British capital include Greenland Group, which is working on two residential projects including the country’s tallest housing skyscraper in London; and rival developer China Vanke, which bought into a project that includes a forty-storey residential tower in 2014.
Commercial builder Dalian Wanda Group has also tried its hand at development in London but sold off its pair of flagship projects in the city over the past year after falling afoul of new Chinese regulations on outbound investment.
Country Garden Finally Enters UK
A source at the time said the company was eyeing the development of entire new towns in Britain, adding that “It’s not just a few thousand houses.”
Country Garden’s London bet comes as the developer struggles to sell homes in Malaysia. Sales at Forest City dropped to RMB 8 billion ($1.15 billion) in 2017 from more than RMB 10 billion the previous year after the Chinese government clamped down on overseas housing purchases by mainland citizens.
In March of last year, Country Garden closed mainland sales offices for the 1,400-hectare tropical project, where the developer is building homes for 700,000 people.
Building a Cross-Border Portfolio
Last August, Country Garden snapped up a residential site in a suburb of Melbourne for A$400 million ($303.6 million), where the developer could build over 4,000 houses if the deal is approved by the Australian government. The company also has residential projects in the Sydney suburbs of North Ryde and St Leonards.
Country Garden has also been active in Hong Kong, paying HK$2.44 billion (US$312.3 million) last September for a 60 percent stake in a waterfront residential site at Ma On Shan in its second investment in the city within four months. The developer is also said to be an investor in Artisan Ratchada, a two billion baht ($64 million) mixed-use project in Bangkok’s Huay Khwang led by Thai Factory Development Public Company Limited, according to market sources who spoke with Mingtiandi. The Artisan Ratchada project kicked off sales this week.
The company chaired by Yang Guoqiang achieved contracted sales of RMB 580.8 billion ($89.3 billion) in 2017, surpassing other Chinese heavyweights including Evergrande Real Estate and China Vanke. Country Garden chalked up an estimated RMB 187.8 billion (US$29.9) worth of homes sales in the first quarter of this year.