International Property

International Property

Hong Kong investors set sights on St James’s Square, as office prices at home go through the roof

The recent purchase of no. 3 St James’s Square, by Joint Treasure International for £135 million, is the latest in a series in the Georgian-designed quadrangle by Hong Kong parties

PUBLISHED : Tuesday, 16 May, 2017, 5:06pm
UPDATED : Thursday, 13 July, 2017, 8:25am

As Hong Kong asset prices continue to break all-time highs, some of the city’s richest families and listed firms are believed to be scrapping it out for trophy assets in one of London’s most prestigious office locations: St James’s Square, home to the headquarters of a number of well-known businesses including BP and Rio Tinto.

The still-weak pound and higher yields are making property right across the UK capital highly attractive.

The recent purchase of 3 St James’s Square is only the latest in a series in the Georgian-designed quadrangle by Hong Kong parties.

Joint Treasure International, which is backed by a number of major Hong Kong names, paid £135 million (US$ 174.33 million) for the site, bringing total Hong Kong purchases there to £579 million (US$747.66 million) since January, property sources told South China Morning Post.

“We believe there were more than 20 investors looking at it (3 St James’s Square) some of which were from Hong Kong,” said Thomas Yiu, a senior advisor to Joint Treasure International.

“By acting swiftly and preparing our underwriting well ahead, we managed to take it off the market through a pre-emptive bid before agents had a chance to call for offers from other buyers,” he said.

Covering a total gross floor area of 51,747 square feet, the price tag represented £2,608 per square foot (US$3,367 per square foot).

Joint Treasure comprises nine main investors, including Henry Cheng Kar-shun and family, who control New Word Development, Peter Woo Kwong-ching and family, controlling shareholders of Wharf Holdings, and David Chiu Tak-cheong, the chairman of Far East Consortium International.

“We are more like an investment club. Some [members of the group] like hotels, some like offices. Therefore, different projects will have different interested parties,” Yiu said, adding the pound’s fall in value has attracted huge and growing interest in London from Hong Kong investors.

Other buyers on the square in recent times including Joseph Lau Luen-hung’s Chinese Estates Holdings and gaming guru Stanley Ho’s Shun Tak Group.

And only last week, Chinese Estates Holdings said it had agreed to buy a mixed-use building at 11 and 12 St James’s Square, as well as 14-17 Ormond Yard, for £175 million, or £2,187 per sq ft (US$2,824 per sq ft).

That St James’s building provides 80,000 square feet office space and is fully let with a current rental income of HK$79.35 million (US$10.19 million)per year.

In January, a private investor linked with Shun Tak bought 7-8 St James’s Square for £269 million or £3,425 per sq ft, and it is believed that other bidders who have failed to secure sites on the square including Soho China and Emperor Group.

On Monday, SEA Holdings a;so announced it had acquired an office building at 33-41 Old Board Street and 1-6 Union Court in central London for £258 million.

Local investors are pouring capital into London as Hong Kong office prices become too expensive. More importantly, the weaker pound makes London property more affordable
Denis Ma, head of research at JLL

Denis Ma, head of research at JLL, said grade-A office space in Central Hong Kong has now soared 10 per cent in the past year, to an average HK$33,000 per sq foot (US$4,238 per sq ft).

“Local investors are pouring capital into London as Hong Kong office prices become too expensive. More importantly, the weaker pound makes London property more affordable,” said Ma.

Last week, The Kwok family – controlling shareholders in Sun Hung Kai Properties – unveiled it planned to build a joint venture residential-commerci­al project on the banks of the River Thames in east London, as a cost of £500 million, representing the largest development by a Hong Kong company in the UK since Brexit.

Kwok Family Interests and Ballymore, the 35-year old Irish developer, have formed a 50-50 joint venture partnership and plan to build an 804-unit residential project called “Goodluck Hope” on a 2.7 hectare site, due for completion in 2020.

Joint Treasure has already built up an investment portfolio worth more than £500 million in the UK.

“Brexit has only had a short-term impact on investment sentiment [in London] and we are optimistic in the mid- to long-term,” said Yiu.

“London is an international hub attracting capital from all over the world. We still see a great potential for capital appreciation there.”