CIC vies for office complex in London

Deal could become biggest in UK realty market since financial crisis

China Investment Corp, the country's sovereign wealth fund, is reported to be among a trio of Asian investors vying to buy an 800 million pound ($1.3 billion) London office complex, in what could become the latest in an increasing number of international property deals by Chinese buyers.

According to the Financial Times, citing unnamed resources, the deal would be the United Kingdom's highest value property deal since the start of the financial crisis.

Other bidders for the 1.1-million-square-foot (102,193 square meters) development, Chiswick Park, which is owned by the US private equity firm Blackstone, include government-backed funds from South Korea and Malaysia, according to the report.

The buyers are attracted by what are considered bargain prices in the UK capital.

The continued appreciation of the renminbi has also made international purchases more appealing to Chinese buyers.

Blackstone bought the property from a British-led consortium involving Aberdeen Asset Management Plc, Schroders Plc and Stanhope Plc at the start of 2011 for 480 million pounds, the FT said.

Grant Ji, a senior director in the investment department at the real estate service provider Savills Property Services (Beijing) Co Ltd, said: "London has seen a really brisk property market this year, as the financial crisis brought more buying opportunities.

"Moreover, the investment return in London's commercial property market is more steady than that at home, as the leasing terms there are much longer and the rent more steady."

CIC has been a regular bidder for British property.

The fund, which manages $410 billion, is reported to be in talks to buy Deutsche Bank's headquarters building in London for $403 million, according to a recent FT report.

CIC made its first investment in the UK property market in 2009, when it became a shareholder in Songbird Estates, which owns Canary Wharf — a district in the city employing 90,000 people, mainly financial services, and is home to the global headquarters of banks such as HSBC and Credit Suisse.

Zhang Ping, head of research at the international real estate service provider Cushman & Wakefield, added: "We have noticed a growing enthusiasm among Chinese investors for buying overseas real estate, and the UK and the United States are their favorite target markets."

Gingko Tree Investment Ltd, a London-registered Chinese State-owned fund controlled by the State Administration of Foreign Exchange, is also believed to be closing in on a 550 million pound deal to buy a stake in the University Partnerships Program currently owned by Barclays Plc, an industry insider told China Daily.

According to Cushman & Wakefield, Asian investors accounted for 45 percent of property transactions in the City of London this year.

For institutional investors such as CIC and other property developers, centrally located real estate in London, New York and Paris, offering steady cash income, are the top targets, said Zhang.

But there is also strong interest in acquisitions not necessary aimed at high-income generation by companies looking to take advantage of the current economic conditions in those cities, Zhang said.

"A number of real estate funds and property developers have contacted us seeking bargain projects overseas," said Zhang, who added that Chinese buyers have been swayed into overseas buying by the appreciation of the renminbi and rigorous real estate policies at home.

Chinese real estate companies have already made a number of trial investments overseas this year.

Beijing Capital Land Ltd, for instance, signed an agreement to purchase a land parcel in France on which it plans to establish a Sino-French economic zone.

Wanda Group, the country's largest commercial property developer, has revealed it plans to invest $10 billion in the US over the next decade, particularly in hotels, retail and commercial property.

And China Vanke Co Ltd, China's largest property developer by market value, has just set up a team to promote its business in the US.

"Compared with international competitors, Chinese property investors are sometimes a bit slow in the decision-making process, and as a result have missed out on some good prospects," said Zhang at Cushman & Wakefield.

"In some cases they are still unfamiliar with the legal and investment environment in target countries, but generally I think they are still a bit conservative."