Cheung Kei Buys Canary Wharf Office for $363M

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Mainland billionaire Chen Hongtian has picked up another Canary Wharf office asset

Chinese developer Cheung Kei Group has made its second London real estate play by buying a Canary Wharf office building for £270 million ($363 million), adding another deal to this year’s surge of Asian investment in the city.

The Shenzhen-based firm is buying the 319,000 square foot (29,636 square metre) 5 Churchill Place from Syrian investor Wafic Said’s Saïd Holdings at a value of £846 ($1,138) per square foot, reflecting a net initial yield of 5.2 percent, according to an account in Britain’s Property Week.

Cheung Kei entered the London market with a splash this past June, when the company chaired by mainland billionaire Chen Hongtian spent £410 million ($530 million) to pick up 20 Canada Square in Canary Wharf – marking the biggest real estate acquisition in the financial district since 2014.

Financial Crisis Orphan Gets New Owner

Built in 2009, the 12-storey property in the heart of London’s Canary Wharf financial district is adjacent to the headquarters of Barclays and a short walk from the Canary Wharf tube station. The building served as the headquarters of Bear Stearns until the firm was absorbed by JP Morgan Chase in 2008 and the US financial giant now occupies 10 levels in the tower. Other major tenants include Time Inc, American Express, Balfour Beatty and Cision Gorkana.

5 Churchill Place changed hands for $363 million

Capital Real Estate Partners, which advised Saïd Holdings on the sale, expects 5 Churchill Place to benefit from next year’s opening of Crossrail, a high-frequency railway for London that will have a station in Canary Wharf.

Saïd Holdings bought the building from Canary Wharf Group for £208 million in 2009, when financial markets were in turmoil. “A well let asset in Canary Wharf seemed to our board to be a sound investment at that difficult time,” commented Wafic Saïd, founder of Saïd Holdings in a statement.

“We are still confident in the strength of the London market, but received a compelling offer from buyer Cheung Kei Group.”

Mainland Money Still Making It to London

Investors based in Asia Pacific have rushed into London’s property market this year, sensing an opportunity in the slumping value of the British pound. Asian buyers grabbed a total of £6.4 billion ($8.4 billion) in London office assets in the first three quarters, according to international brokerage CBRE, and they dominated transactions in the third quarter, accounting for £3.2 billion ($4.2 billion) or 68 percent of total volume.

Just last month, an affiliate of Chinese property firm Beijing Guorui Holdings agreed to pay £134.5 million ($177 million) for a grade A commercial building at 100 St Pauls Churchyard in the City of London. Two other mainland investors – Bank of China and Hengli Group – were said to be close to buying office properties in the same area for £68 million ($90 million) and £150 million ($198 million), respectively.

Cheung Kei Builds Overseas Portfolio

Cheung Kei’s newest London trophy is just across the Bellmouth Passage waterway from 20 Canada Square, a 12-storey prime office asset that the Chinese company scooped up from Brookfield Properties in July. Privately held Cheung Kei reportedly paid in cash for the property within a month of signing the purchase agreement, at a time when many mainland investors were having trouble moving money overseas due to China’s tightening capital controls.

That maiden UK deal came a year after Cheung Kei bagged a major Hong Kong asset by spending HK$4.5 billion ($577 million) for the east tower of Wheelock and Company’s One Harbourgate, a 15-storey office property in Kowloon, in July 2016.

Born in the city of Foshan, Chen stitched together a fortune in garment making before building up a sprawling investment business focussed on real estate in Guangdong province. The low-profile but sartorially-splendid magnate made headlines in June of last year when he purchased Hong Kong’s most expensive house for HK$2.1 billion ($271 million) after calling his $49 million apartment “too tiny.”

Chen, together with his wife Yao Lini, have an estimated fortune of $4.5 billion, earning the couple 75th place this year in Hurun Report’s ranking of China’s wealthiest people.

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