A Chinese property developer has made its first foray into the London market with plans for a £400 million housing project in east London.
Country Garden, China’s largest property developer, is planning to build 785 new homes in Poplar, Tower Hamlets, after buying an 8,700 sq ft site close to the River Lea.
The proposed scheme, known as Ailsa Wharf, will include a riverside walkway, office space, a gym and an art show room with a cafe, as well as a children’s play area for residents of the new estate.
The Guangdong-based company also owns the £79 billion Forest City development in Malaysia, according to The Times.
The London project consists of 13 blocks ranging from three to 17 storeys in height.
Planning permission for the site on Ailsa Street was granted by the local authority last November.
The brownfield site was previously used for waste disposal, scrap yards and the breaking down of vehicle parts, but is now set to house hundreds of homes as well as commercial floor space.
The scheme is set to include more than 200 affordable homes, including 152 rented units. Construction is set to begin this summer with some of the properties finished by 2021.
It marks Country Garden’s its second major overseas foray after Beijing’s crackdown on capital flight sent sales at its Malaysian mega project tumbling.
Country Garden is not the only Chinese developer targeting the UK capital’s property market.
According to CoStar News, Beijing Zhaotai is also making its London debut with a £145 million deal to buy a prime City of London office building from Morgan Capital Partners. The development at 45 Cannon Street comprises 81,000 square feet of grade-A office space as well as restaurants and retail space.
Country Garden’s purchase of Ailsa Wharf follows the disappointment of its sprawling Forest City project in Malaysia, which has seen sales fall as tighter capital curbs put the brakes on outbound investment. The project, including homes, office towers, malls and schools, had been touted as being worth US$100 billion in investment over 20 years.
Sales slid last year to 8 billion yuan from more than 10 billion yuan in 2016 as mainland investors found themselves unable to shift their cash out of the country.
“The purchase [in London] is financed overseas so it totally complies with state policies,” a Country Garden executive told the South China Morning Post. “Unlike the previous Malaysia project which mainly targeted Chinese, this project will target locals.”
Country Garden has a market capitalisation of US$44.8 billion, and in 2017 it topped China’s developers with contracted sales of 550.8 billion yuan, more than half of those in third- and fourth-tier cities.
China, including Hong Kong, was the biggest foreign buyer of London property last year with investment totalling £7.34 billion, according to JLL data.
Zhang Ping, standing director of International Federation of Finance & Real Estate, told the South China Morning Post that a big draw for Chinese investors is the high liquidity of London properties.
Although Brexit has ushered in uncertainties, foreign investors still have confidence in the city’s status as an international financial centre, and the fall of sterling also creates opportunities.
“Last but not the least, as more Chinese investors are bound by state-imposed capital controls, this actually give companies with overseas financing channels an advantage as they face less rivals when bidding,” she said.
DealMakerz thinks the deal demonstrates that London’s status as a top property market among international investors hasn’t been damaged by the uncertainty surrounding Brexit.
The scheme looks set to revitalise Tower Hamlets and is in line with the Mayor’s ambition to boost the amount of affordable housing in the capital.