Unless you have been living under a rock, you are likely to have read or been following up on the developments of Brexit — the impending divorce between the UK and EU is inevitable.
With an extension at least till April 12 and pundits speculating on the possibilities of the UK going with a deal or no deal, it’s anyone’s guess right now on what is likely to happen.
When news of the Brits voting to leave hit the stands, investors decided to take a wait and see approach, resulting in subdued demand in the property market, especially in London.
However, CSI PROP saw this as a silver lining for investors: the weak pound has drawn in global investors, despite the uncertainty created by the referendum. In fact, many institutional investors from the Asia Pacific were quick to latch on and invest in some of the best commercial properties in the UK.
Hong Kong-based food company, Lee Kum Kee Group made their first purchase out of Hong Kong and China when they bought over 20 Fenchurch Street in London.
The 37-storey ‘Walkie Talkie’ is the sixth tallest building in London. Lee’s property investment arm, Infinitus bought over the tower from Land Securities Group and the Canary Wharf Group.
LKK Health Products Chairman Sammy Lee in a press statement said, “The acquisition enables the Group to not only achieve a reasonable return from rental income but also extend its property portfolio to a major overseas financial centre for sustainable and stable capital appreciation.“As such, the property will be held by the Group as a long-term investment.”
Thomas Lam, Head of Valuation & Consultancy at Knight Frank shared that good investment deals were mostly above HK$ 20bil in Hong Kong.
“The weaker pound, which has fallen about 20 per cent from the peak, now makes London property more affordable,” Lam added.
THE TOWER OF CANARY WHARF
Another Hong Kong-based company, the Cheung Kei Group made their second investment in London when they acquired an office building in Canary Wharf for £270mil.
Cheung Kei made their debut into the London property market in June 2017 when billionaire Chen Hongtian bought over 20 Canada Square in Canary Wharf for £410mil. This marked the biggest real estate acquisition in the financial district since 2014!
Sensing the opportunities ahead due to the slumping value of the pound, Asia Pacific investors have since flocked into the London market. According to CBRE, Asian investors contributed a total investment of £4.8bil in Q3 2017.
LONDON’S STOCK EXCHANGE TOWER
Blackstone, the previous owner of the building had acquired it for £320mil in 2014.
The 27-storey tower, located near the Bank of England, is CDL’s second investment in London, following a £183m transaction in September 2018 for Aldgate House.
“We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value,” said CDL’s Group Chief Investment Officer Frank Khoo.
The Leadenhall building, or better known as the “Cheesegrater” due to its wedge shape was bought by CC Land, a firm run by Chinese property tycoon Cheung Chung-kiu.
CC Land, which also owns an office building at Canary Wharf, bought over the Cheesegrater from British Land and Oxford Properties for £1.15bil — one of the largest property deals to be made in London.
BATTERSEA POWER STATION
Two Malaysian state-backed funds, Employees Provident Fund (EPF) and Permodalan Nasional Berhad (PNB) bought into the iconic Battersea Power Station in London. Developed by Battersea Power Station Development Company (BPSDC), the building was purchased for £1.583bil —- making it the biggest property deal carried out in the UK.
Battersea Power Station was previously owned by SP Setia and Sime Property, before they disposed of their stake to PNB and EPF. “They have acquired the commercial assets in the Power Station through a joint venture, of which they own 65% and 35% respectively” SP Setia said in a statement.
The iconic building, built in the 1930s was left in a derelict state for decades, before restoration work began in 2014.
A statement issued by PNB said, “It is currently being restored and will, on completion from end-2020, become home to hundreds of shops, restaurants, cafes, event spaces and cinemas as well as new homes, Apple’s London campus and business members club No18.”
A SILVER LINING FOR INVESTORS
These sales reiterate that the interest in UK properties remain strong, despite Britain’s vote to leave the EU in 2016. With Brexit just weeks away, the UK’s economy is likely to be in limbo for a while.
Savvy and smart investors should take heed of these institutional investors and leverage on the weak pound for attractive investment opportunities in the UK.