In 2010 the windswept area outside St Mary Axe in the heart of London's insurance sector saw activity behind the hoardings in preparation for commencement of building works. British Land had commissioned the construction of "The Cheesegrater" or to call it by the official name, The Leadenhall Building. This came at the same time as developers rushed to start their glass towers before the end of a generous planning window allowing the likes of the Shard, Heron Tower, the WalkieTalkie and our Cheesegrater to be built.
Chinese demand
The same wind now blows again except this time it brings vast Chinese wealth in the form of a £1.15bn bid to buy the 224 meter tall Cheesegrater from British Land and its developer partner Oxford Properties. CC Land, the HS$5.4bn Hong Kong listed company owned by Cheung Chung-liu, made the agreed bid at the beginning of March and subject to CC Land Board approval the deal will go through. This would make it the second highest price paid for a UK property behind the £1.18bn purchase of HSBC Tower in 2014.
2016 trends
Such large transactions mask the mid-level investor interest for commercial properties which has recovered after uncertainty over Brexit. According to Estates Gazette and Knight Frank, Q4 2016 saw a bounce in investor demand with overseas investors taking advantage of weak Sterling. We have also seen a urge in investment in Manchester and the surrounding area as the Chinese buy into the Northern Powerhouse concept. Other areas of demand have been logistics where a £1bn strategic investment fund was created in October 2016 between Shanghai-based PGC Capital and Salford-based McCafferty Asset Management.
2017 trends
Continuing the trend in commercial investment we have seen sustained demand by Chinese investors into healthcare real estate, in particular care homes and hospitals. This demand satisfies the dual demand Chinese have for real estate investment as well as access to highly skills healthcare delivery systems that they can import to China to help with their own health support system.
At the upcoming China UK Property and Healthcare MarketPlace on 5th May we will see Chinese investors travel to the UK and join locally based Chinese to look at opportunities presented by UK developers and asset managers. Such an event will help benchmark the depth of Chinese demand, even if it is not for acquisition for Cheesegrater style assets.