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A view of the London skyline shows the City of London financial district, seen from St Paul's Cathedral in London, Britain February 25, 2017. Photo: Reuters

Hong Kong buyers make beeline for London assets, lured by stable rent, rule of law, cheap money

Hong Kong-based Tenacity recently bought a commercial property in the city for £271.4 million.

Stable rental income, the rule of law and cheaper money are the drivers of Hong Kong’s continuous demand in the London real estate, says a Hong Kong-based Tenacity, which recently bought a property in the city for £271.4 million (US$358 million).

While some investors have pulled back from the UK property market following the Brexit referendum last year, the company is confident in the long-term outlook of London.

“The uncertainties arising from Brexit will probably last for two to four years, but we eye on long-term prospect,” said Patrick Wong Tsu-an, chief executive of Tenacity.

The company bought 70 Gracechurch Street through a venture in August from Legal & General Investment Management for £271.4 million. The deal, providing a net initial yield of 4.4 per cent, is the investor’s first property acquisition in the UK.

“We are confident in the investment as it provides a long and accretive income stream from two strong covenants,” said Wong, who is the son of Dah Sing Bank’s founder and chairman David Wong Shou-yeh. Prior to establishing Tenacity International Limited, he had more than a decade’s experience in the US and in Asia.

The property, which measures 214,000 square feet , is currently let to Marks & Spencer and global insurance firm XL Catlin for 11 years.

The property is located close to the 34 storey skyscraper known as the Walkie Talkie at 20 Fenchurch Street, which Hong Kong food conglomerate Lee Kum Kee bought in July for 1.28 billion pounds - a record for an office building in Britain.

In the first six months of 2017, Chinese investors spent a combined £3.96 billion on London commercial property, according to international property consultant CBRE.

CC Land, controlled by Chinese tycoon Cheung Chung-kiu, paid £1.135 billion for the Leadenhall Building in London, the Square Mile’s tallest tower, also known as the “Cheesegrater.”

This article appeared in the South China Morning Post print edition as: Tenacity has firm eye on London’s long-term prospects
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