Hong Kong’s Lai Sun Group has won approval to develop a 56-storey office tower on London’s Leadenhall Street, after tycoon Peter Lam’s textiles-to-property group had purchased a pair of existing properties on the same block as London’s Gherkin office tower in 2014 and 2015.
Hong Kong-listed Lai Sun Garment (International) Limited and Lai Sun Development jointly announced to the stock exchange last week that they had been given planning consent by London authorities to redevelop their pair of properties in the City of London into 263 metre-tall tower, which has already been dubbed “The Diamond” is set to join the growing cluster of skyscrapers in the City of London and will be the financial district’s third-tallest building when completed.
Lai Sun’s new Skidmore, Owings & Merrill-designed tower will add 102,000 square metres of office space to a growing cluster of skyscrapers in London’s traditional business district, and marks the latest major financial commitment by a Chinese investor to the British capital’s office market.
Chinese Investors Still Loving London
“Lai Sun has been present in London since 2010 and is committed to its long term development,” Lai Sun Development Deputy Chairman Chew Fook Aun said in a statement. “The City, as the world’s pre-eminent financial capital, has a continuing need for ‘best in class’ office, retail and public space and this investment is a reflection of our confidence in the City’s future as the world’s financial centre.”
The Diamond will rise next to the Cheesegrater, a 225-metre tall tower which now belongs to Lai Sun’s Hong Kong-listed rival, CC Land, after the Chongqing-based developer bought the London landmark from British Land and Oxford Properties for £1.15 billion in the first quarter of 2017.
Despite the deepening Brexit drama, Chinese investment in London’s office market has been helping keep up investment volumes and values via a steady stream of transactions.
Within the first six months of this year CK Asset Holdings purchased the UBS headquarters in London from GIC and British Land for £1 billion, while privately-held rival Nan Fung paid a reported £270 million to purchase the Regent Quarter office complex in north London from ADIA and mainland developer Beijing Zhaotai Group bought 45 Cannon Street in the City for £145 million.
Lai Sun Joins London’s Eastern Cluster
The City Corporation, which governs London’s financial district, announced that its Planning and Transportation Committee had approved construction of the Diamond, which will involve the demolition of 100, 106 & 107 Leadenhall Street.
“I’m delighted that we have approved latest addition to the City’s growing office district,” Chris Hayward, Chairman of the City of London Corporation’s Planning and Transportation Committee said in a statement. Together with a group of some seven other tall towers planned for the area, the Diamond forms part of what London’s planners have dubbed the “eastern cluster”.
Lai Sun Development acquired 100 Leadenhall Street, a 125,000 square foot office building in the City of London for £107 million ($162 million) in January 2015. The low-rise commercial building is located adjacent to Bankside House, a property at 107-112 Leadenhall Street that Lai Sun acquired from RBS in April 2014 for £60m.
Fulfilling Redevelopment Expectations
The group’s acquisition of a pair of properties next to 30 St Mary’s Axe (widely known as the Gherkin), and opposite the planned Scalpel Tower, which is being built to house insurer WR Berkeley on Lime Street, had already raised the expectation that Lai Sun would undertake a new project on the site.
Earlier reports indicated that Bankside House was leased to tenants through 2025, but London media reports now have those deals ending in 2023. At the time that 100 Leadenhall was acquired, it was let to ACE Global Markets, whose lease was due to expire in January of this year. Lai Sun is expected to negotiate early termination of remaining leases at its Leadenhall Stret properties.
The Hong Kong Group is working with London developer London & Oriental as the asset manager for the project and expects construction to last for four years.