UK developer backed by Hong Kong tycoon Henry Cheng eyes US$171 million in tokenisation plan for London residential tower
- The investment scheme involves a residential tower in central London’s Greenwich Peninsula area
- London-based developer Knight Dragon is offering 100,000 tokens worth £1,400 each to investors with a projected yield of 3 per cent to 3.5 per cent
A UK developer backed by Hong Kong billionaire Henry Cheng Kar-shun is planning to raise as much as £140 million (US$171.4 million) via a tokenisation plan, allowing individual investors to share the income from a residential tower in central London.
“Investors can potentially share the economic interests of the rental income of the 191 units” in the tower, Lee, vice-chairman of the UK developer, told the Post on Tuesday. Called KDB4 Tokens, the digital asset offers a projected annual return between 3 and 3.5 per cent. As with any other risk assets, returns are not guaranteed, Lee added.
This is the first time that a property in central London has been tokenised, Lee added. Law firm Baker McKenzie advised the firm on the legal structure, while Deloitte was consulted for finance and tax issues, Lee said.
The investment scheme could be likened to a digital real estate investment trust (REIT) in that it promises to share the property’s rental income.
Announced in 2017, the project includes apartment units, office space and hotel rooms. The tokenised building, known as Building 4, was rented out about two years ago and is typically fully occupied. Average rents have risen between 5 and 8 per cent, Lee said. A one-bedroom unit is typically leased out for about £2,000 a month, while a two-bedroom flat rents for about £2,700.
“At a corporate level, Knight Dragon has revolutionised the entire European property market and will now move to do so internationally,” Lee said. “At an individual level, for a relatively modest investment, individuals can own a piece of central London real estate profit.”
When completed, the development is slated to have 800 homes, office space, and 500 hotel rooms totalling 1.4 million square feet, sitting atop a complex that will house a bus station, cinemas, bars, and shops.
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As of May, 123,400 Hongkongers have applied under the scheme since its launch in January 2021. More than nine out of 10 have been successful in their application, according to the British government.