London docks revamp eyes China for funds

Silvertown developer hopes to raise money from corporate entities in mainland and Hong Kong

PUBLISHED : Wednesday, 05 August, 2015, 12:01am
UPDATED : Wednesday, 05 August, 2015, 9:55am

A £3.5 billion mixed-use development transforming a large part of Silvertown - an old industrial site in east London's Royal Docks - into a creative community is looking for corporate entities mainly from Asia to fund its first phase scheduled for construction in early 2016.

It is one of the latest large-scale developments that the London government promoted to revamp the historic and rundown dockyard that once served as a trade centre for the city.

In 2013, Advanced Business Park (ABP), a Chinese developer, signed a £1 billion (HK$12 billion) deal with the mayor of London to acquire a 4.7 million square foot site at the docks.

ABP planned to convert the site into a business district for Asian companies to set up their European headquarters.

"Silvertown [project] is very different. We are not a business park. We are actually a new piece of London," said Barry Jessup, director at First Base, which is part of the project's developer The Silvertown Partnership (TSP), which also includes Chelsfield Properties and Macquarie Capital.

Located on a 7.2 million sq ft site at the docks, the first phase of the project will create 1.8 million sq ft of modern offices and residential units, which will take four to five years to complete.

It includes the conversion of the 450,000 sq ft iconic Millennium Mills building - a former flour mill and now a set for movies - into a hub for London's start-ups, according to the developer.

In January this year, the government granted £12 million to fast track the renovation of the building ahead of the conversion.

For phase one, the developer is seeking funding of £500 million from corporate entities to help kick off its construction next year. The major focus of the fundraising is in mainland China and Hong Kong, according to Jonathan Dick, a senior director from CBRE Central London Development, who is working with the developer to seek a funding partner.

Last year, Chinese investors poured £2.2 billion into London's property market, according to media reports.

Dick said the potential sources of funding included insurance companies and property investment companies from mainland China and also well-known real estate investors and developers in Hong Kong.

In July, CBRE's development team initiated a four-day road show in Beijing, Shanghai and Hong Kong, mostly one-on-one discussions with Chinese institutional investors who have shown interest in funding the project via equity partnerships, according to Ken Wang from CBRE London.

"We are definitely talking about much larger corporate and family office investors," Jessup said.

"But it is very rare for a project, which is actually the largest project in London that is available at the moment, to come forward to the international market for funding. And I think that makes quite a unique proposition."