Author: Cyril Richert
Chinese investment has been a booster for many property developments in London, and a huge funder for Wandsworth Council for more than a decade.
However, the recent Chinese property market financial difficulties have had dramatic consequences abroad, over pressure from the Chinese authorities to pull out from foreign spending to concentrate on inland projects.
Shanghai-based Greenland Holdings, which owns the Ram Brewery development site in Wandsworth, has now sold the project, reported the FT last week. They said:
“Greenland is now backing away from completing the scheme having sold more than 300 homes. It has sold the remainder of the project to British housebuilder Berkeley Group for about £40mn, according to two people close to the deal.”
Although Greenland UK said the company would retain control of the completed portion of the site, it raises doubt over the completion on the other phases, including the very controversial 37-storey tower.
The Ram Brewery site in Wandsworth was bought by Greenland Group in 2014 from London-based British developer Minerva. In May 2021, however, Greenland put it up on sale, raising concern about the future of foreign property investments in the UK.
The move from the giant state-owned Chinese property developer is the latest sign that Beijing’s squeeze on the real estate sector is triggering a sell-off of assets beyond the country’s borders.
Wandsworth Council is seeing also construction works in limbo for Nine Elms projects, amid R&F financial difficulties. In recent weeks, the £900m One Nine Elms project has seen contractors leaving the site after their employer failed to be paid for months. Work on the towers is not expected to get back up to speed until the spring, Building information website said.
- Read our article: Constructions halted and Contractors pulling out: Nine Elms in trouble
The Greater London Authority has sent a final termination notice to a developer
Meanwhile, the Hong Kong Economic Journal (HKEJ), revealed yesterday that the Greater London Authority has sent a “final termination notice” to Advanced Business Park (ABP), the developer of the Royal Albert Dock (RAD) project in the east of the city, the biggest Chinese real estate project in Britain. The £1.7b project has seen no construction progress since April 2019.
Due for completion in 2023, the 15-hectare site was to provide headquarters to Chinese and other international companies and become the capital’s third financial district. But after completing Phase One of the project in April 2019, ABP ran out of money and has done no construction work since then.
It raises some echo – albeit being on a smaller scale – with the difficulties that occurred for the Peabody development site on St John’s Hill in Clapham Junction. However, in that case, no final termination notice was served on the developer because of delays, and Wandsworth Council agreed to accept the new conditions and revised plans for bulkier and taller construction made by Peabody (more recent article HERE).
The grasp of Chinese investment in property development in London started a decade ago, and was encouraged by then prime minister David Cameron and then London mayor Boris Johnson. HKEJ says that many questioned the choice of a little-known company that had done no projects outside China, when the British government chose ABP for this large project in 2013. But Boris Johnson saw it as an opportunity and said at the time: “ABP are very confident that they can deliver; they are backed by the Bank of China”. It appears now that it was a very wrong bet!