Chinese government bodies have revealed their commitment to the commercial property sector in the UK through extensive investments.
The China Investment Corporation (CIC) has been involved in a series of investments in British property, having primarily bought a nine per cent stake in Thames Water. In November 2012, CIC further bought the Deutsche Bank London headquarters, Winchester House, for £250 million.
Another government body, the State Administration of Foreign Exchange (Safe), has covered a lot of ground in the UK, having attained a 49 per cent stake in the new Co-op headquarters at One Angel Square and its UK-registered unit Gingko Tree Investment having spent at least £1 billion on various office sites and student accommodation in both Manchester and the capital city.
Gingko Tree Investment began its sweep of UK property in May after spending £285 million on the Drapers Gardens complex in central London. This was actually the most money spent on an office investment in this cycle, at a yield of 4.5 per cent. The firm then continued to buy a 40 per cent stake in the University student housing Partnerships Programme which deals with on-campus accommodation and offers rooms for at least 28,000 students who are studying at university. This firm, which is run from offices of the People's Bank of China in the City of London, ended up spending £550 million on the stake.
These recent movements are a sign that the Chinese government wants to change its current strategy of just focusing on US government bonds. Even though the investments are quite low yielding, they are generally quite safe for Chinese investors. By investing in other currencies, the Chinese economy is continuing to prove why analysts estimate that it will be the leading economy in the world by 2020.
China invests in UK commercial property
