More than two years after first putting the property on the market, Chinese state-owned developer Poly Global has sold its 5 Fleet Place office building in the City of London for £191 million ($250.6 million), with a longtime Hong Kong political figure emerging as the new owner.
Manhattan Garments Group, controlled by former Liberal Party boss James Tien, purchased the 130,500 square foot (12,124 square metre) building as its first solo acquisition in London, the company said in a release. In 2018, Manhattan bought Commerszbank’s City of London headquarters for £460 million ($591.1 million) in a 50:50 joint venture with developer Wing Tai Properties.
“5 Fleet Place is the type of high-quality investment we want to be making in London,” Tien said. “The building has extremely strong credentials: its excellent base build, strong tenancy profile and longer-term reversionary potential make it a very attractive long-term investment for us.”
The disposal by China’s fourth largest developer by contracted sales comes as mainland builders accelerate their divestment of overseas assets at the same time that investors from Hong Kong have stepped up their acquisitions.
City Springs to Life
Poly Global had originally commissioned JLL to market 5 Fleet Place in 2020, but the sales process was postponed after the outbreak of COVID-19.
5 Fleet Place was built by local developer British Land in 2007 and has since been the headquarters of law firm Charles Russell Speechlys, with other key tenants including fintech giant PayPal and accounting firm Wilson Wright. Poly Global had acquired the building from sovereign wealth fund Abu Dhabi Investment Authority for £145 million ($208.6 million) in 2016.
The building was relaunched at the end of 2021, and CBRE reported that central London’s property market sprang back to life in the first three months of 2022 with £5.1 billion in investment volume — the highest-ever level for a first quarter.
The strong start to the year was boosted by the return of Asia Pacific investors who accounted for 45 percent of total volume, up from 17 percent in the year-earlier quarter, the property consultancy said.
The £191 million transaction for 5 Fleet Place reflects a net initial yield of about 4 percent, with Manhattan paying roughly £1,464 ($1,919) per square foot of space. Allsop, Millennium Group, Mayer Brown and Deloitte advised Manhattan on the acquisition, while JLL, CBRE, Taylor Wessing and EY Global acted on behalf of Poly Global.
“5 Fleet Place is a landmark building that provides exceptional office space in one of the world’s leading business hotspots,” said Allsop partner Christopher Room.
Heading for the Exits
The sale of 5 Fleet Place by Poly Global is at least the third disposal of a London property by a mainland Chinese developer in as many months.
In late January, China Vanke announced the sale of its Ryder Court office building in London’s posh West End for £132 million ($178.2 million) to M&G Real Estate, chalking up a modest gain on the disposal after holding the Grade A asset for five and a half years.
In March, Guangzhou R&F Properties agreed to sell its Vauxhall Square mixed-use project to Hong Kong-based Far East Consortium for £95.7 million ($124.8 million), with the cash-strapped developer expecting to record a loss of more than £68.8 million ($89.9 million) on the disposal.
Sovereign wealth fund China Investment Corporation is considering putting its Winchester House office building in the City of London on the market for between £275 million and £300 million, according to UK website Property Week. The 312,000 square foot building at 1 Great Winchester Street is leased to Deutsche Bank until 2023, after which the bank plans to move to a new headquarters at 21 Moorfields on the City’s northern edge.
Poly Global, meanwhile, is also putting up for sale several properties it owns in Australia, including its landmark A$300 million ($225 million) office project at 1000 La Trobe Street in Melbourne, the Sydney Morning Herald reported on Monday.
HK Still Loves the UK
While mainland investors have been liquidating, some of Manhattan Garments Group’s hometown competitors have been snatching up assets in some of London’s most prestigious locations.
In late February, HKEX-listed Chevalier International announced that it had agreed to purchase 30 King Street in the City of London from the BBC Pension Trust for £45.9 million, marking its second purchase of an office asset in the UK capital in less than one year.
In January, privately held Hong Kong developer K&K Property Holdings purchased 15 Adam Street in London’s West End from Sweden’s Stockholms Enskilda Bank for £66.1 million, with that investment marking the fourth acquisition in the posh district within the past two years by the company led by Bossini heir Raymond Law and his son Kino.