A Hong Kong firm struck a record deal for a London skyscraper today amid a rise in foreign investment in property since the Brexit vote, but a slump in domestic demand hit the profits of real estate agent Foxtons.
Condiment-maker Lee Kum Kee, a family business that is best known for its oyster sauce, is buying up the building nicknamed the “Walkie Talkie” for GBP1.3 billion (HKD13 billion, USD1.7 billion), the highest price ever for an office building in Britain.
The iconic 34-story skyscraper in London’s insurance district, with three-tiered sky garden and restaurant on top, hit the headlines just after being built when it was blamed for damaging a car by reflecting the sun’s rays.
“This is the UK’s largest ever office deal,” Cushman & Wakefield, a commercial property giant which advised on the deal, said in a statement.
“Since the vote to leave the EU, capital targeting London from the Asia-Pacific region has increased to record levels,” said James Beckham, head of London capital markets at the property company.
“This is partly due to currency fluctuations but is more indicated of longer-term confidence in London and investment strategies which are not derailed by short-term political uncertainty,” he said.
The deal comes months after Chinese property magnate Cheung Chung-kiu bought another London landmark — the “Cheesegrater” building — for GBP1.15 billion.
The previous highest price for a single piece of British commercial property was the HSBC tower in Canary Wharf which was bought by the Qatar Investment Authority in December 2014 for £1.175 billion.
The value of the pound dropped sharply against the euro and the dollar following Britain’s vote last year to leave the European Union, making foreign investment into Britain more attractive.
While that has boosted some parts of the property market, sales have slowed down overall because many Britons have been hit by the inflationary pressures caused by the increase in the price of imports.
London estate agent Foxtons said it had fallen victim to the lower demand on Thursday as it reported a 64-percent drop in pre-tax profits for the first six months of the year from the same period last year.
Profits fell to GBP3.8 million from GBP10.5 million.
Foxtons boss Nic Budden said in a statement that the company’s performance “has been further impacted by unprecedented economic and political uncertainty”.
The Foxtons announcement was the latest sign of a cooling in Britain’s property market as what happens in London tends to have a knock-on effect around the country.
Banks approved the lowest number of new home mortgages for nine months in June, according to data released this week by trade association UK Finance.
Official data earlier this month meanwhile showed that house price growth is slowing, at 4.7 percent in the 12 months to May.
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