China again declared its love for overseas real estate yesterday with developer Greenland Group agreeing to acquire a historic London site for a £600 million (US$984 million) development project. And in the same day, the developer announced that it would spend an additional £600 million to purchase a site along the city’s famed Canary Wharf.
The state-owned property firm secured a preliminary deal with Minerva, the property investment and development group acquired by clients of Ares Management LLC and Delancey in 2011, to buy the Ram Brewery site in Wandsworth, London, for a mixed-use residential and commercial development.
The nearly billion dollar project has already received outline planning permission for 661 new homes, including a 36 storey landmark tower on the 7.7 acre site. 166 of the new flats and 9,500 square meters of space for shops, cafes, bars and restaurants would be provided through the new tower.
Greenland Group has already been successful in taking over foreign real estate projects and marketing the homes in them to buyers in China and other parts of Asia. The Shanghai-based company is now said to be one of the biggest developers in the world with approximately 55 million square metres of large-scale commercial and residential projects currently under construction in 80 cities throughout China.
Greenland Becoming China’s Overseas Investment Leader
In addition to its domestic projects, Greenland has taken on a number of new developments overseas in recent years. During 2013 the Shanghai-based real estate firm bought the US$1 billion Metropolis site in Los Angeles, took over the US$4 billion Atlantic Yards project in Brooklyn, and also took over developments in Sydney, Melbourne and South Korea.
In the case of Greenland’s Sydney project which it acquired in March last year, by the beginning of December the developer had already successfully sold RMB1.5 billion (US$246 million) in homes in a development which had not yet broken ground.
According to a report in the Wall Street Journal, the brewery acquisition, was not even Greenland’s only buy of the day.
Separately, Greenland said it plans to invest another £600 million in a residential tower on the other side of London, in the Canary Wharf financial district. The deal is expected to be completed by the end of January.
Further details on the Canary Wharf acquisition were not available at the time of publication.
London as Preferred Destination
When asked to comment on choosing London as Greenland’s first stop in Europe, Zhang Yuliang, Chairman and President of Greenland Group said:
“Due to the active trading in London local real estate market in the last two years, the average residential price rose by 10% in 2013, and the increase in demand is expected to continue in 2014. There have been more and more individual investors who favor UK market, thanks to the stable return on asset, high quality assets and sound market liquidity.”
In 2013, rival Chinese developer Dalian Wanda took on the US$1 billion One Nine Elms project in London, and China’s sovereign wealth fund CIC agreed in November to purchase a US$1.28 billion office park in the city from private equity firm Blackstone. According to a study by real estate consultancy Jones Lang LaSalle, Chinese investment in London has risen 1500 percent since 2010.
Alistair Meadows, Head of International Capital Group, Asia Pacific, Jones Lang LaSalle, which acted on behalf of Minerva in the sale, commented:
“Greenland’s first acquisition in London is a strong example that 2014 has started as 2013 left off with increasing investment by Chinese groups in the global real estate market, especially the UK, US and Australia. We believe this growth marks the start of a long term structural shift as Chinese investors seek to diversify their capital into the international real estate markets.”
The new site comes with a fine head of history, with beer having been brewed their continuously since the 16th century. The planned development will apparently complement the existing structures which remain from when their primary function was brewing and serving ale at the original Young’s brewery.