Hong Kong’s Kingboard Buys KPMG London HQ for $533M

A Hong Kong laminate maker has headed back to London to buy the Canary Wharf headquarters of financial consulting firm KPMG.

Hong Kong-listed Kingboard Chemical Holdings (KCH) has agreed to buy 15 Canada Square from KPMG and its real estate affiliate KPMG CW Properties for just two pounds short of £400 million ($533 million), according to an announcement to the stock exchange dated Friday.

The deal includes provisions for the “big four” accounting firm to lease back the 14-storey grade A office tower from its new owners for 25 years, and comes just over a week after Lloyd’s Banking Group agreed to sell its London home to a mainland investor under similar terms.

Chinese Buyers Still Love London

KPMG is slated to lease the 430,000 square foot (40,000 square metre) office block from KCH at a rate of £18.1 million per year after the financial consulting firm instructed JLL to find a buyer for the 999 year leasehold property in June of this year. The 2009-vintage, Kohn Pedersen Fox-designed tower occupies a 3,844 square metre site.

On December 7^th, Lloyd’s Bank announced its own sell and lease back arrangement with China’s Hengli Investments Holding for the mainland firm to take possession of 25 Gresham Street in London for an undisclosed amount.

Also this month, Chinese developer Cheung Kei Group made its second London real estate acquisition by purchasing 5 Churchill Place on Canary Wharf from Syrian investor Wafic Said’s Saïd Holdings for £270 million. In June, Cheung Kei had spent £410 million ($530 million) to pick up 20 Canada Square – just up the street from KCH’s new prize.

Despite Brexit uncertainty, the UK’s falling exchange rate and high grade office assets have made the city’s properties appealing to Asian investors, with buyers from Hong Kong and the mainland accounting for almost 50 percent of the $16.1 billion spent on London office properties during the first three quarters of 2017 according to a report by Knight Frank. In 2015 the two locations were responsible for only about seven percent of London office investments.

Hong Kong Moves in After Malaysia Backs Out

While Hong Kong and mainland firms rush into London, this latest Canary Wharf deal didn’t look quite kosher to investors from all parts of the Asian region.

The Kingboard announcement comes just over one month after the board of Malaysia’s Lembaga Tabung Haji, a fund supporting Muslim religious pilgrims, walked back its earlier approval of a plan to purchase 15 Canada Square over concerns regarding the stability of London’s property market post-Brexit.

KCH Buys £731M in London Assets in 14 Months

Kingboard seemingly remains confident about the UK’s future, however, as the Canary Wharf deal follows up on the Hong Kong firm’s October 2016 £271 million purchase of Moor Place – an office building in the City of London which serves as WeWork’s European headquarters.

In addition to core operations in chemical processing and circuit boards, chairman Paul Cheung Kwok Wing’s KCH owns three commercial properties in Guangzhou along with the Kingboard Modern Plaza in Shanghai. The company’s development division also has residential projects in the Huaqiao and Zhangpu districts of Jiangsu province’s Kunshan, and has a 3 million square metre land bank in China according to its website.