Four years after ABP emerged as the frontrunner to develop London’s Royal Albert Dock, E16, the land has finally been released by the Greater London Authority to the Chinese company for development.
Since 2013 there have been setbacks, new financing arrangements, trade delegations to and from China, scepticism, government intervention – from both sides – photoshoots, investigations and promises. Now, the developer has stumped up the cash and is getting to work.
Given the time that has elapsed, cynics in the market have wondered if the development would ever happen. The rigmarole could also be seen as telling of the confidence UK PLC has in Chinese investment.
The normally ebullient chief executive Xu Weiping keeps things brief when asked what the most important milestone has been at the development.
“The land drawdown,” he says.
“This is the most important thing for the project,” he adds. “Because it is not easy to establish these relationships of trust with the UK government, I think the land drawdown means the recognition of the UK government of ABP.”
Xu sits comfortably in his enormous office in the 1000 Building on the north side of the dock. ABP has the top floor, Newham Council is downstairs. Various ornaments decorate the room, including a large dragon in the lounge and a brass tea set. There is also a Star Wars comic and an industrial themed sellotape holder.
He is smiling and says he is going to take the rest of the day off.
He says: “In the past four years, from signing the development agreement, to getting all the pending approvals, to procurement, to the land drawdown… This is very important for the project and that is the thing that makes me most happy.”
The normally flamboyant frontman seems at first somewhat sombre in a tailored black suit and white shirt. But on closer inspection the suit has a snakeskin print on the fabric; the shirt a huge tiger embroidered on one side.
A lot of convincing
Outside, the April sun is blazing as contractors from Multiplex bore into the 35-acre site, looking for bombs. The Albert Dock was hit hard in the second world war by the Luftwaffe, though it was Britain’s post-industrial decline which finally led to its closure in 1981. Since then it has sat vacant, unable to attract the development seen at Canary Wharf, North Greenwich and now even Victoria Dock further to the west.
It has been a long road for the dock, and ABP, which has had to jump through a lot of hoops to get this far.
Multiplex workers are joined by those from CITIC Construction, lead contractor on the site. They have only just been able to get going in the past few weeks.
The scheme is a UK first for the construction arm of the enormous Chinese conglomerate. For the moment, the CITIC presence in limited. It has a handful of people against Multiplex’s four dozen. The conglomerate’s financial presence, while invisible, is far more important.
It, backed in part by the Chinese government, took equity in the site back in 2015, to the tune of £100m, effectively kickstarting the funding process.
“CITIC has been playing an important role in the development,” says Xu, who explains it is active in the build out: monitoring quality, site control and the management of sub-contractors.
“At the end of last year they helped ABP set up a funding platform and secure funding from the five major banks of China.”
The five Chinese banks – CITIC Bank, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank Corporation – are providing development finance for the £1.7bn build out of the scheme.
Other equity holders include Thailand’s Charoen Pokphand Group, which signed a deal at the end of 2016 to provide a further £425m in equity, and residential developers Strawberry Star.
That money was important in unlocking the land, says Xu.
A change in London mayor did lead to Sadiq Khan looking into the site, as happened with other public land disposals under the previous administration, though in the end nothing was changed.
“When they had a new team at the GLA,” says Xu, “They had done a study on the project internally, but their support for the project remained the same.
“That is because when we do procurement, when we do a planning application, we fit in with the UK law and regulation closely, so everything is done properly. Which means they do not need to change anything. That also means they are still supportive of the project, and also of the later phases.”
To add to the security of the development, the Chinese government will also be guaranteeing the money through its state insurance company Sinosure, which backs overseas investment.
“They are a Chinese credit export organisation, state owned, they have given us full guarantee of the funding coming to the UK from China,” says Xu.
The company, also known as the China Export & Credit Insurance Corporation, is, according to its website, “A state-funded policy-oriented insurance company with independent status of legal person, established for promoting China’s foreign trade and economic co-operation.”
“The Chinese government has been very supportive to the project, both the central government and the Chinese embassy in the UK,” says Xu.
It was the proof of funds, alongside detailed planning and a business plan, that finally warranted the GLA handing over the land.
All of which shows the level of scrutiny, and perhaps lack of faith, the UK government has had in the viability of the development. This could be seen as rich considering the list of bidders for the site when it was put up for sale, as revealed in a London Assembly investigation.
“This wasn’t a site that everyone was rushing for. There was very little interest – that was part of the problem,” said then deputy mayor Edward Lister.
Onwards
But all of that is water under the bridge. Xu says construction proper is likely to start in the third week of May. Buildings should start coming out the ground later this year.
Phase one of the site will span five buildings, while the total plan is for about 40. Phases two and three will follow swiftly after. ABP wants to speed up construction.
Xu is hoping that before phase one is completed, phase two will start. He sees the residential included in later phases as important for the development of the site.
Occupiers are the next task. The Chinese government has already said it will help encourage tenants to relocate from mainland China. Now, Xu is relatively coy about who will take the space – and it seems each year brings new and contradictory announcements – though now construction is starting, he will inevitably be keen to secure pre-let.
“We have quite a lot of intending tenants, but we need to make some selection. The best time to select our first occupiers will be the second half of this year, after construction begins, and the first half of next year.”
Pre-sales will also be on the agenda, as ABP does not intend to keep the entire site. Xu says it intends to sell about 60% of the building to owner occupiers, and retain a further 40% for leasing.
“We are still looking for new investors,” he says, “but we put the value and influence of the investors as top priority. We want to have investors that can have a positive impact on UK and China trade relations, not just purely financial investors.”
Inevitably, tenants will be granting the enigmatic and elusive developer a lot more credence now development is finally moving, so will many others.
Perhaps the wait for the redevelopment of the Albert Dock is finally over.
Plans for the site
• 3.5m sq ft of office space, across around 40 buildings
• 35 acres in total, with a £1.7bn build cost
• Phase one to start imminently
• CITIC Construction lead contractor, Multiplex sub-contractor
• Development finance provided by five Chinese banks: CITIC Bank, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank Corporation
• Equity provided by CITIC, Charoen Pokphand Group and Strawberry Star
• Stanhope is acting as development manager
• Savills advises on development, consultancy, marketing and agency
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