From Hong Kong’s central bank to China’s largest property developer, Asian investors have a lot riding on London’s real estate market.
Britain’s decision to leave the European Union has clouded the outlook for property,prompting asset managers to freeze withdrawals from real estate funds as investors rushed to redeem their money. Commercial property values could fall about 10 percent over the next year, led by declines in oversupplied central London, BlackRock Inc. said after the vote.
Investors from Asia accounted for 12 percent of the 10.7 billion pound ($13.9 billion) of direct real estate investment in the U.K. in the first quarter, making them the largest international group, according to Jones Lang LaSalle Inc. The country has been among the top five global real estate investment destinations for decades, especially for buyers from Singapore, China and Hong Kong.
“It’s a confidence crisis,” said Reid Mackay, managing director of EastGate Asia Pte, a real estate brokerage and advisory firm. “It will very much affect transactions that are pending.” Deals that are pending “are virtually put on hold. The transactions volume will probably fall,” said Mackay, who previously was executive director of Asia Capital Markets at CBRE Group Inc. for 15 years.
Shares of Dalian Wanda Commercial Properties Company Ltd., which is building homes in London’s Nine Elms district, have fallen 7.2 percent in Hong Kong since June 23, while those of Malaysian company SP Setia Berhad have lost 9.5 percent. China’s largest developer China Vanke Co., whose shares started trading in Shenzhen on July 4 after being halted for more than six months, plunged almost 20 percent this week amid a tussle for control with shareholders. Here’s a list of select projects in London under development and some of the Asian backers whose money is riding on them.
Hong Kong Monetary Authority
Bought a 50% stake in a project in London’s luxury-shopping district Hanover Square Estate site
Oxley Holdings Ltd.
Bought former Royal Wharf site in east London where it plans to build 3,400 homes
Eco World Investment Co.
Jointly developing three London residential projects with U.K.’s Ballymore Group near Battersea Power Station
Bought the remaining 40% in a mixed-use project in London’s Greenwich Peninsula
Building 436 homes in Nine Elms and a hotel
SP Setia, Sime Darby, Employees Provident Fund
Former Battersea Power Station; plans to build more than 4,000 apartments
Former Ram Brewery site and building tallest residential tower at Hertsmere House at Canary Wharf
Owns a 20% stake at the The Stage project in Shoreditch
Mitsui Fudosan Co.
Owns 25% in U.K. developer Stanhope Plc., which is developing 3 mixed-use projects including Whity City Place, the BBC Television Centre and One Angel Court
Advanced Business Park and Citic Construction
Developing former London Royal Albert Dock site
67.5% stake in 67-acre Kings Cross Central development project
Citic Capital, Cindat Capital
JV with U.K.’s Brockton Capital for 60 Curzon Street
City Developments Ltd.
Residential project on former Stag Brewery site
Hotel Properties Ltd.
Mixed-use project on former Royal Mail delivery office
Temasek, Hotel Properties, Amcorp Properties
Bankside Quarter on the former Sampson House, Ludgate House site will be developed by U.K.’s Native Land with the Asian investors.