China Minsheng Investment's involvement in £1.7b London development in doubt
China Minsheng Investment, China's largest private investment fund, is delaying its investment in a £1.7 billion integrated development in east London, seven months after it signed an agreement with the project owner in Shanghai.
In February, the fund announced it had teamed up with ABP (Global), a private Chinese developer, to transform Royal Albert Dock into what was described as a third financial centre for the British capital.
"China Minsheng has not yet become our investor after signing the letter of intent early this year," ABP chairman Xu Weiping said yesterday, adding that both parties still in active discussion.
The announcement of a new strategic investor would take place in London next week, he said.
The 4.7 million sq ft integrated development had also attracted institutional investors in Hong Kong, he said.
"Today, I meet four companies that are looking for investments in the UK," Xu said before flying back to London after a three-day road show in Hong Kong. He said ABP would remain the project's controlling shareholder.
Due to rising construction costs, the total investment cost had soared 30 per cent to £1.7 billion, Xu said. The initial phase of 800,000 sq ft would require an investment of £300 million, he said.
The project in east London was secured by ABP in 2013 and is expected to add 20,000 jobs and £6 billion to the local economy.
Xu said financing for the mega project would come from equity investment, bank loans and proceeds to be generated from property sales.
Early last month, the firm pre-sold as much as 400,000 sq ft of office space when it was launched in London.
"Buyers came from Hong Kong, different parts of Europe, Qatar, India and local firms," Xu said. "Most of them bought the offices for their headquarters in London in order to expand into Europe."
Three Hong Kong firms each bought six-storey office blocks of 20,000 sq ft for their own use.
"They are a property investment firm, an internet company and a business management consultant," Xu said.
Prices for the first batch ranged from £600 to £680 per square foot, about half the cost of office space in the City of London.
The whole project will be developed in three phases and is due to be completed in 2025. The phase one development will be completed in 2018.