Chinese property group buys former London home of Bear Stearns (The Financial Times)

2017.12.06

Chinese property group buys former London home of Bear Stearns

Cheung Kei Group pays ￡270m for its second Canary Wharf tower in six months.

Chinese property developer Cheung Kei Group has added the former London home of defunct investment bank Bear Stearns to its growing property portfolio as Asian investment into London reaches record highs.

The group has bought 5 Churchill Place in Canary Wharf for ￡270m from Saïd Holdings, founded by Wafic Saïd, a Syrian born business man and philanthropist. The purchase is Cheung Kei's second acquisition in the area since July.

The sale price for the 319,000 square foot, 12-storey building represents a net initial yield of 5.2 percent for Saïd Holdings, according to analysis from Capital Real Estate Partners, which advised the group on the deal.

"We are still confident in the strength of the London market, but received a compelling offer," Mr Saïd said.

Saïd bought the building in 2009 from Canary Wharf Group for ￡208m. It is still let to JP Morgan, which absorbed Bear Stearns during the financial crisis.

The deal is a sign of continued interest in London commercial real estate from Asian investors who channelled record amounts of cash into London office deals in the third quarter of this year.

Two-thirds of the total ￡4.8bn invested in London offices between July and September came from Asian buyers, according to figures from property servicescompany CBRE. More than 90 percent of all commercial property transactions in the city during the period involved investment from overseas.

The average proportion of foreign investment in London offices each quarter since the beginning of 2010 has been about 60 percent, according to historic CBRE data and Financial Times' research.

Cheung Kei previously bought 20 Canada Square from Brookfield Properties for ￡410m. That 12-storey glass tower boasts 556,000 square feet of office space and 16,679 square feet of space for shops. It is cuttently home to oil company BP and publisher McGraw Hill International.

Analysts have said that a fall in sterling following Brexit has lured overseas buyers to the UK market, while many Chinese and Hong Kong-based investors may also be aiming to park capital in London.

In August, the Chinese government implemented regulations targeting "irrational" investments in overseas sectors including property. Although Hong Kong companies are not subject to these curbs, many fear the impact of potential Chinese market instabilitu and so are moving cash.