The Hong Kong Monetary Authority (HKMA) has bought into a central London site for £202 million (€241 million; $324 million) to be developed by the seller, Great Portland Estates.
The investor has structured the transfer of a number of properties making up the Hanover Square Estate in the West End of London as a 50:50 joint venture, they announced today.
The JV is the latest example of how long-term, institutional investors are circumnavigating high prices for core London property by investing into developments with local operating partners.
Another recent examples is Canada Pension Plan Investment Board (CPPIB) which teamed up with another UK REIT, Land Securities, investing £768 million (€898 million; $1.2 billion) into a development in London’s Victoria totalling 727,000 square feet of offices, retail, leisure use and luxury modern apartments. The site, also in the west of London, was part of the pension fund’s strategy to own and develop properties for the long term.
Meanwhile, Qatari Diar, the developer established by sovereign wealth fund, Qatar Investment Authority, and its local partner, Canary Wharf Group over the summer planning consent, for a 1.4 million square foot scheme to redevelop the Shell Centre site on the south bank of the River Thames. In total, around 800,000 square feet of office space including the 27-storey Shell Centre Tower will be developed along with 80,000 square feet of retail units, restaurants and cafés, and around 800,000 square feet of residential space incorporating up to 877 new homes. Oxford Properties, the real estate subsidiary of the Ontario Municipal Employee Retirement System (OMERS) formed a £320 million joint venture with The Crown Estate to develop two blocks in St James’s in west London also.
The HKMA’s site already benefits from planning permission won by Great Portland two years ago for a 163,500 square foot Grade A office, retail and residential for completion in 2018.
The move comes two years after the HKMA decided to enter real estate as previously reported by PERE. HKMA launched in April 1993 to ensure the stability of the former British colony’s currency and banking system but decided to launch into real estate investing in 2010/2011 after entering into private equity. It has been reported that Hong Kong suffered major inflationary pressures created by a huge budget surplus in 2007 and 2008 creating a need to diversify holdings. Last year PERE reported how it saw a dip in its real estate investments to K$295 million (€28.7 million; $38 million) in the year to 31 December.