Bank of China is buying a 60,000 sq ft office building in the City from Standard Life as part of long-term plans to expand its footprint in the capital.
The bank has placed the long leasehold of 60 Gresham Street, EC2, under offer for around £68m – a net initial yield of 4.25%.
It comes in the same week as the bank became the first Chinese bank to launch private banking services in London on Tuesday.
Standard Life Investments Pooled Pension Property Fund instructed Strutt & Parker (now rebranded BNP Paribas Real Estate) in June to sell the building with a quoting price of £72m – a net initial yield of 4%.
The building is next door to the bank’s existing London headquarters at 1 Lothbury, EC2, a 117,500 sq ft building that it acquired for its own occupation in 2009.
The 60 Gresham Street block is multi-let to tenants including financial services firm Trium Investment Management, management consultancy company 4 Most Europe and serviced office operator i2 Office. However, Bank of China intends to take over occupation of the building as floors become available.
The bank is keen to increase its business in the UK and launched a three-year fixed-rate residential mortgage last year. Earlier this week, the bank launched a private banking service and in June, the lender agreed a deal to jointly finance CC Land’s acquisition of the Leadenhall Building, EC3, with HSBC and ING.
Bank of China was the first major Chinese financial services institution to set up in London, when it opened an office at 90 Cannon Street, EC4, in 1994, according to EG data.
Since then, other large state-controlled banks that have set up offices include:
■ Industrial and Commercial Bank of China, which leased 40,000 sq ft at 81 King William Street, EC4, in 2010;
■ Agricultural Bank of China, which took 7,065 sq ft at 1 Bartholomew Lane, EC2, in 2010;
■ China Construction Bank, which took 32,653 sq ft at 111 Old Broad Street, EC2, in 2014; and
■ Shanghai Pudong Development Bank, which agreed a deal this year to open an 8,500 sq ft permanent office at Angel Court, EC2.
A state-owned enterprise
Bank of China was one of the 16 fastest-growing Chinese state-owned enterprises in the UK last year, according to research by Grant Thornton.
Chinese SOEs in the UK, 75% of which are based in London, achieved an average growth of 146%, while Chinese private companies in the UK grew by 210% on average.
Together, the top 16 SOEs and 14 largest privately owned Chinese companies in the UK had a combined turnover of more than £9.8bn and employed more than 20,000 people.
The prevalence of Chinese companies based in the UK is expected to grow, in line with the Chinese government’s “one belt, one road” policy to create a new “Silk Road” of trade links and markets.
There are around 77m registered companies in China, of which an estimated 150,000 have the potential to grow into international businesses and invest overseas, according to China’s Administration for Industry and Commerce.
The 280 companies currently established in the UK are therefore thought to be merely the tip of the iceberg.
To send feedback, e-mail Louisa.Clarence-Smith@egi.co.uk or tweet @LouisaClarence or @estatesgazette
