China Vanke buys office building in London for £115 million

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Mainland’s biggest home builder can expect a 4.3 per cent rental yield from its first UK commercial property

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Brexit has brought uncertainty to London’s commercial real estate market, though the decline of the pound still makes it attractive to Asian investors. Photo: AFP

Zheng Yangpengin Beijing

Published: 7:08pm, 7 Sep 2016Updated: 10:59pm, 7 Sep 2016

China Vanke, the mainland’s largest home builder, confirmed that it has stepped up its overseas investments with the purchase of an office building in Central London for £115 million(HK$1.2 billion).

Despite being embroiled in a tussle for corporate control among shareholders, Vanke has agreed to buy Ryder Court in Mayfair, Central London, a company spokesman told the South China Morning Post on Wednesday.

The deal marks the developer’s first foray into the UK’s commercial real estate market.

Vanke bought Ryder Court from UK-based Henderson Global Investors, which had acquired the property from LaSalle Investment for £82 million in October 2013. It is the first major sale by the fund after Brexit, and comes after its investors demanded an exit amid uncertainty over the country’s commercial property sector.

“The acquisition is in line with the company’s strategy of diversification,” said Liu Feifan, a property analyst with Guotai Junan Securities, adding that the 4.3 per cent rental yield of the building is comparatively high.

Buying foreign currency-denominated assets helps China’s biggest investors to diversify their portfolios

Darren Xia, head of JLL’s International Capital Group, China

This is Vanke’s second investment in the UK property market. Last October, the company spent £30 million acquiring a 20 per cent stake in a residential project under London developer Galliard Homes.