Advanced Business Park (ABP) Holdings Group, the private Chinese developer which last month announced a £1 billion project to turn East London's Royal Albert Dock into an Asian business port (Chinese Developer to Turn London Docks Site into Asian Business Port), has said that the value of the property investment after completion would be at least double its construction costs.
“Huge” Demand for Buildings at London’s Asian Business Port
Royal Albert Dock was Britain's largest purpose-built dock when completed in 1880 at the heyday of the British Empire. At that time, it was the country's most modern dock, the first to use electricity and also equipped with cutting-edge cranes and steel winches that unloaded tobacco from the US and fruit and meat from continental Europe. But like the other docks in London, the Royal Albert fell into decline in the 1950s and closed in the 1980s. Yet, the site is now set to be transformed by ABP into the capital’s third business district after the City of London and Canary Wharf.
The Chinese developer signed an agreement with London officials last month to redevelop the Royal Albert Dock site near London City Airport and create a 3.5 million square feet of office and retail space. ABP will target Asian businesses, particularly financial services companies, looking to expand into Europe. Most of the Chinese businesses with operations in Britain rent space and struggle to find desirable offices to buy, “let alone an opportunity to gather, share resources and interact,” ABP Chairman Weiping Xu told reporters at a briefing yesterday in the UK embassy in Beijing. He said that at least 56 companies, mostly from China, had expressed interest in buying a building at the London docks site, 60 to 70 percent of which would be offered for sale and the rest for rent.
“The demand is huge,” Xu noted. He added that this robust interest has prompted ABP to nearly double its target for the number of buildings, whose construction should begin in the second half of next year as the first phase of the project, to as many as 100 buildings from about 60, sized between 6,500 and 32,300 square feet.
Value of Property Investment to Top Building Costs at more than 2:1
ABP said last month that the redevelopment of London's Royal Albert Dock would be divided into five phases, each of which would require an investment of £200 to £300 million. Xu further elaborated that internal capital would account for 30 percent of the property investment, while another 30 to 40 percent would be raised from other investors and the rest will be financed by rent and sale revenue of the project.
The building costs of the project would be about £800 million, an average of about 20,000 yuan (£2,078) per square metre, Xu said. The remaining £200 million of investment would cover management fees and personnel costs. After completion the project would be worth at least 40,000 yuan (£4,156) to 50,000 yuan (£5,195) per square metre -- more than double the amount of building expenses.