‘Cheesegrater’ owner CC Land says London better value than Hong Kong
‘With the same money, you could only buy a second-class commercial building in North Point,’ said CC’s deputy chairman Peter Lam
CC Land, the Hong Kong property developer that made headlines earlier in the year for its acquisition of London’s landmark “Cheesegrater” skyscraper, is keen on snapping up more property in Britain, where targets have become “much more affordable” compared with Hong Kong, says its deputy chairman.
The company has completed three headline London acquisitions so far this year, as part of its change in strategic focus from mainland China to overseas markets.
The developer surprised the market in March when it bought the Leadenhall Building in London, the Square Mile’s tallest tower known as the “Cheesegrater”, for £1.135 billion (US$1.4 billion), marking the largest ever Chinese purchase of British real estate.
Most recently, partnering with Guangzhou R&F Properties, it has also emerged as the buyer of a £470 million, 10-acre high-end apartment project at New Covent Gardent Market in the UK capital’s Nine Elms district.
That land plot had been set to be sold to Chinese magnate Wang Jianlin’s Dalian Wanda Group, but Wanda scrapped its plans last week, amid heightened scrutiny of its debt levels by the Chinese government.
Peter Lam, CC Land’s deputy chairman, said it and R&F will have an equal 50/50 share of the Nine Elms development, a project consisting of three residential towers which will provide around 1,800 units and start pre-sales of phase I next year.
“The depreciation of the pound after Brexit and its high liquidity make London very attractive for us,” said Lam, “And as we speak English, we feel more comfortable investing in London.”
He described London properties as very “good buys” even the iconic Cheesegrater, where current prices are less than HK$20,000 per square foot.
“With the same money, you could only buy a second-class commercial building in North Point,” Lam said.
He added the owners of Hong Kong’s best buildings have become unwilling to sell, and that the market is not as vibrant as London. And even if they do sell, the yield could be much lower as it could cost HK$60,000-70,000 per square feet.
The company said both its One Kingdom Street and Leadenhall Building offices in London are 100 per cent leased, the current yield of the former is 5 per cent, and the latter 3.5 per cent.
The company expects to take 6-7 years to complete the Nine Elms project, which will also contain affordable housing, office and retail space.
“The project will target global buyers,” said Lam, adding he believes it will draw strong attention from Hongkongers as the prices could be put on a par with buying a flat in Hong Kong’s City One Shatin, for instance.
CC Land, controlled by Chinese tycoon Cheung Chung-kiu, posted an 84 per cent rise in its first-half net profit to HK$59.9 million although revenue slumped 92 per cent to HK$61.9 million.
The reduction in revenue was blamed on decreased property sales after the company disposed of all its mainland property assets over the past few years. Profit was mainly contributed this time round to a HK$101.8 million rental top up received from the seller of the Leadenhall Building.
Lam said CC Land will continue to target investment opportunities in the UK, Australia, US and Japan, stressing the company is not exiting China, but is still open to good investments in first-tier cities.
“We want to develop a global footprint, with our investment properties,” Lam said, “accounting for 30 per cent of our revenue.”