Hong Kong’s Chinachem Acquires London Office Bldg For £350mil
UNITED KINGDOM – Chinachem Group, a top commercial property owner in Hong Kong’s Causeway Bay, has purchased the One New Street Square office tower in Central London for £349.5 million ($432.12 million), reported IPE Real Assets on Saturday afternoon (28 January, SGT).
The 276,502 sq ft office property was divested by Land Securities at a discount compared to its £362.8 million valuation as of September 2022.
Currently, One New Street Square is fully leased by Big 4 accounting firm Deloitte, which has a remaining lease term of 14 years in the commercial property.
The divestment was in line with the UK landlord’s strategy to sell mature office assets in the country’s capital. After a strategic review in late-2020, the company announced plans to dispose £2.5 billion worth of London office buildings in the medium term.
“With the inclusion of 1 New Street Square, the company has now sold £2.1 billion of offices, representing an average yield of 4.4 percent,” noted Land Securities.
The sale also “crystallises a total return on capital averaging 10 percent per annum since the UK landlord’s acquisition of the site in June 2005 and subsequent redevelopment in 2016”.
“We’re delighted to have acquired One New Street Square successfully as it is located in the strategic Central London area with best-in-class building specifications and attractive returns. This is an important step forward for the Group and we intend to hold this property for long-term investment,” said Chinachem Group’s Chief Executive Donald Choi.
“While Hong Kong will remain our home and core market, we intend to incrementally increase the group’s exposure in gateway cities of major developed markets, so as to fulfil our business diversification objectives and build a resilient, long-term income stream,” he added.
The sale of One New Street Square comes as UK landlords are facing falling real estate valuations amidst broader economic uncertainty and rising interest rates.
Last November, Land Securities disclosed that the total valuation of its property portfolio dipped by 2.9 percent in Q3 2022 compared to their valuation during the 1st quarter of 2022. In particular, the valuation of its key office portfolio fell by 4.4 percent.