A Chinese insurer made another record breaking real estate acquisition this week, but in the case of London’s Walbrook building the buyer didn’t come from the mainland.
Taiwan’s Cathay Life made its second major purchase of a UK office asset this week when it acquired the 38,000 square metre (410,000 square foot) office tower for ₤575 million ($901 million) from British property firm Minerva Ltd.
The deal is the largest acquisition in London this year and is the latest in a series of acquisitions in the city by investors from Greater China. The UK capital continues to attract investors who are looking for large real estate assets in stable markets, and comes despite rising property values in the city’s business district.
Achieving a 280% Return in Four Years
The Foster and Partners-designed Walbrook, which is located just 150 metres from the Bank of England, also incorporates 3200 square metres (35,000 square feet) of retail space and was completed in 2010.
Minerva, which is owned by Ares Management LP and Delancey Real Estate Asset Management Ltd purchased the still empty building in 2011 for £203 million ($320 million), and only signed up its first tenants in 2013, according to an account in the UK press. The office tower is now said to be 100 percent occupied.
Minerva was represented in the sale by property consultancy Knight Frank.
Asian Insurers Continue to Look for London Office Assets
The acquisition by Cathay Life follows just nine months after the Taiwanese firm bought the Woolgate Exchange office building on Basinghall Street in London for £311 million ($491 million). This latest deal affirms the ongoing appeal of London’s commercial assets to Asian institutional investors looking for long terms plays where they can park large sums of cash.
Insurance companies from Greater China have made a number of large profile purchases of London real estate in recent years, with Ping An Insurance having invested nearly $900 million to acquire two buildings there. Last year, the mainland’s biggest insurer, China Life teamed up with the Qatari government to buy an office building along London’s London’s Canary Wharf for £795 million.
However, many analysts expect rising values in London to begin driving investors to other cities in search of yield. In a study published earlier this year, industry group The Urban Land Institute and adviser PwC said that “core” assets in London were overpriced in “almost all markets.”
In the past year China’s Anbang Insurance has scooped up two New York properties, including acquiring the Waldorf Astoria Hotel for $1.95 billion. Beijing-based rival Sunshine Insurance also bought a hotel in New York this year for $230 million and acquired a Sydney hotel for $401 million in 2014.