Last month in Beijing, the lord Mayor of London met Han Zheng – vice president of the People’s Republic of China. Rishi Sunak, a British economist, warned days later that China was the “greatest threat” to UK economic security. However, the City of London Corporation shows no signs of tension between the two countries.
According to a report from China’s Ministry of Foreign Affairs, Han and Michael Mainelli (the lord Mayor) exchanged warm words regarding “in-depth ties” between the UK and China.
Guildhall’s corporate headquarters is not comfortable with this relationship. Uncertainty over several significant Chinese-funded real estate investments could be the catalyst for a deterioration of relations.
The vice president of the People’s Republic of China and the lord Mayor of Beijing, Han Zheng
It has learned that several major developments are mired in insecurity, due to the fallout of the Evergrande Real Estate Crisis and the slump in share prices for property companies in Hong Kong.
Lai Sun Development is a Hong Kong listed company that has plans to build “the Diamond”, the third largest tower in the City. Chinese Estates Holdings is undergoing a PS429million redevelopment, including refurbishing the Daily Express Building. Magnificent Hotel Investments of Hong Kong has been redeveloping the City of London Police’s former headquarters.
There are concerns that this problem could lead to the Square Mile being exposed to empty structures, construction sites mothballed and economic damage in communities.
Since the end of 2020, China’s massive property sector has been hit by a series defaults. The developers in the second largest economy of the world, notably Evergrande, Country Garden and others, have suffered from falling sales and debt problems.
Artist’s impression of “the Diamond”, the Lai Sun Development project wedge-shaped, centre.
City of London Corporation is the oldest continuously operating municipal democracy in the country. Its mayors have been recorded since 1189. The Square Mile is governed by the City of London Corporation, which also administers planning applications. Alderwoman Martha Grekos a planning lawyer who is a specialist in the Court of Common Council – the main decision making body – said last month that the Evergrande crisis had a “huge” impact on the City, because many of the schemes approved were “either owned or funded with money coming from China”.
She asked Shravan Joshi (chairman of the corporation’s Planning Committee): “What does it serve to celebrate and approve such schemes when the City cannot rejuvenate itself due to the stagnation caused by such projects… due to capital problems they face?”
The plans to build 100 Leadenhall Street’s third largest tower, located between the Gherkin building and Lloyd’s of London, have been delayed significantly. The “Diamond” project, which is wedge-shaped and referred to as “the Diamond”, received approval in July 2018. At the time, the corporation boasted that the plan “would boost confidence in the city”. The plan involves the demolition three commercial buildings located in the heart the insurance district. Lai Sun was said to have been waiting for tenants to vacate at the end last year.
It is understood that a lease extension has been granted up to 2026. This means that the tower will not be finished until at least 2030.
Lai Sun’s announcement to investors last month that it would “monitor market conditions in London for the possible redevelopment”, and was “considering timing and options” was a non-committal statement.
Lai Sun is headed by Peter Lam, an entrepreneur from Hong Kong. The company has lost over 50% of its value on the Hong Kong Stock Exchange in the last year. A source close to Lai Sun claimed that the delay in completing the project was due to “income and tenants” rather than problems in the Chinese real estate sector. Lai Sun has been contacted for comment.
Planning permission for 120 Fleet Street was granted in October of 2021, and demolition has been completed. The corporation declared that the project had given it “unwavering faith” in “the Square Mile’s recovery”.
The project will include “ultra-premium” art from the collection of Joseph Lau. Lau is a billionaire, whose family owns Chinese Estates. Lau is reported to have purchased Mao by Andy Warhol in 2006
The project was originally expected to be finished in the first half 2026. However, it is now mired with uncertainty. Erith, an enabling and demo contractor, informed the community of the closure of the site in February. The developer is also considering their options.
Chinese Estates stated in its last-month annual report that 120 Fleet Street was to be completed “late 2026 tentatively”, and that further investments were planned. Chinese Estates’ shares in Hong Kong have dropped by more than 50% over the last 12 months. It was an important investor in Evergrande. Chinese Estates has been contacted for comment.
The redevelopment of 37 Wood Street, the former headquarters of City of London Police, is also in doubt. The corporation hailed the acquisition of the site by Hong Kong’s Magnificent Hotels Investments in early 2020 as a “step towards our vision of the city as a 24-hour destination”.
Magnificent said that it plans to convert the property into a hotel with 216 rooms. Guildhall has raised concerns that the project, which was backed by China, “has not been completed” four years later.
The corporation praised the redevelopment of City of London Police’s old headquarters as an important step in “our vision of a City that is open 24/7”
Magnificent’s most recent results for 2023 told investors that the prospects for the hotel industry “continued to be challenging”. William Cheng said the project would “transform the quiet neighbourhood into a vibrant location”, without providing details about the project’s timeline. Knight Frank, however, has started marketing the property to developers according to a brochure.
Another development, 55 Gracechurch Street is just a short walk from the current site. Its future is uncertain.
Tenacity Group was founded by Patrick Wong in 2019. He became a Freeman of the City of London, and in January 2021, he received planning permission for a 30 storey development centered around offices. In January 2021, the Tenacity Group received planning permission for a 30-storey office-led development. Wong hailed the two as “a post Brexit investment of approximately £400 million in the City”.
Tenacity has agreed to sell Gracechurch Street 70 in April 2022. The status of Gracechurch Street 55 is not clear. Tenacity is believed to have been out of the picture for two years, and construction has yet to begin. Tenacity has not responded to requests for comments.
China Daily, an English-language state-owned newspaper in China, was seen at Guildhall alongside UK-based newspapers. The corporation removed copies that it claimed to have never “ordered” or “accommodated” nor distributed.
It is not easy to free the City of Shanghai from its ailing property developers in China. The corporation’s spokesman said that it was “confident” in the strength and health of the property market in the city.
The spokesman stated that planning approvals are limited to deciding the merits of application and other issues must be “addressed” by the commercial team and the investor or developer. He added that Han’s meeting with the Lord Mayor was arranged through the Foreign Office and Department for Business and Trade.