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Hong Kong investor acquires landmark office in London for £1.3b

by Andrea Waitrovich

Lee Kum Kee Group, the Hong Kong company best known for its oyster sauce condiment, has acquired London’s landmark Walkie Talkie building in the United Kingdom’s biggest ever deal for a single office building.

The sales price was £1.3 billion ($1.7 billion).

The sellers were Land Securities Group and the Canary Wharf Group.

Infinitus Property Investment, Lee’s property investment arm, will buy the office located at 20 Fenchurch St.

Completed in 2014, the 37-story “Walkie Talkie” tower is the sixth-tallest building in London and totals 1.4 million square feet of office, retail and commercial space.

Lee’s family business was founded in 1888 by Lee Kum Sheung in Guangdong province. It has created and produces more than 200 types of Chinese condiments.

Infinitus Property Investment, a wholly-owned subsidiary of LKK Health Products Group, owns and manages premium office and retail space in the CBDs of Guangzhou and Shanghai, China; and Central District, Hong Kong Special Administration Region of China. The total office and retail space managed by the group will total more than 3.2 million square feet including the new Guangzhou Infinitus Plaza (under construction for completion in 2020).

Recent major London properties bought by Hong Kong–based companies this year include Cheung Kei Group’s acquisition of 20 Canada Square for £410 million ($537 million); Joint Treasure International’s purchase of 3 St. James’s Square for £135 million ($177 million); Chinese Estates Holdings’ acquisition of 11 and 12 St. Jame’s Square for £175 million ($229 million); and CC Land Holdings’ deal for the Leadenhall Building, nicknamed The Cheesegrater, for £1.15 billion ($1.51 billion).

Cushman & Wakefield names the 20 Frenchurch St. acquisition as the largest U.K. single asset transactions, surpassing the £1.175 billion ($1.5 billion) paid by the Qatar Investment Authority to acquire the HSBC Tower in Canary Wharf in December 2014.

Top 5 UK single asset transactions (Source: Cushman & Wakefield)

Rank

Address

Price (m)

Date

Purchaser

Vendor

1

20 Fenchurch Street, EC3 (C&W acquisition) £1,282.5/$1,676.9 July 2017 LKK Landsec / Canary Wharf Group

2

8 Canada Square, E14 £1,175/$1,536.3 December 2014 QIA NPS Korea

3

The Leadenhall Building, EC3 (C&W sale) £1,150/$1,503.7 March 2017 CC Land British Land / Oxford Properties

4

8 Canada Square, E14 £1,090/$1,425.2 April 2007 Metrovacesa (Cresa Patrimonial) HSBC Plc

5

Citigroup Tower, 25 Canada Square, E14 £1,000/$1,307.5 May 2013 AGC Quinlan/Propinvest JV

Buyers from Hong Kong have purchased £2.2 billion ($2.9 billion) of offices in the City of London over the first half of the year, according to Knight Frank. The total is significantly above the £458 million ($600 million) recorded over the same time period last year.

And according to JLL, Hong Kong and mainland Chinese investors in 2017 accounted for £3.4 billion ($4.5 billion) of total London investment turnover of £8.0 billion, a share of 42 percent. Hong Kong and mainland Chinese buyers have been particularly active on large lot sizes in both the City and the West End, having transacted ten single asset deals in excess of £100 million ($130 million) in the year to date.

Chinese investors rank behind the United States as the second largest source of global cross border capital. JLL expects Chinese investors to continue increasing influence on the U.K. market.

"Currency movements have bolstered the case for investment in the short term, but long term trends are towards a rising share of investment in the U.K. irrespective of these movements," said Eric Pang, head of China desk at JLL. "Many investors from China come to the United Kingdom with different motivations and return aspirations to traditional U.K. and global investors. They seek diversification and safe haven forms of investment, and are less concerned with traditional return benchmarks.”

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