London's past seen as London's future
Updated: 2013-06-07 09:16
By Zhang Chunyan (China Daily)
Xu Weiping, chairman of ABP Chinese (Holding) signs the $1.51 billion deal with Boris Johnson, the mayor of London, in City Hall, London on May 29. Bai Yang / for China Daily
Derelict dock area to be revitalized with development of Asian business park
Royal Albert Dock, which opened in 1880 in east London, used to be Britain's most modern dock, was the first to use electricity and was also equipped with the latest cranes and steel winches that unloaded tobacco from the US, as well as fruit and meat from continental Europe.
But like the capital's other docks, the Royal Albert fell into decline in the 1950s, and the last ship set sail from there in 1980.
Now a new master plan aims to revitalize the famous dock, with a multi-billion business park for Chinese and Asian companies to be developed by a Chinese company.
On May 29 the commercial developer Advanced Business Park Chinese (Holding), signed a $1.51 billion (1.16 billion euros) deal with Boris Johnson, the mayor of London, to develop a 14-hectare complex of offices and shops at Royal Albert Dock.
It is the largest commercial real estate project that Chinese companies have invested in in Britain.
Liu Xiaoming, China's ambassador to Britain, and Eric Pickles, the British communities secretary, attended the signing ceremony.
Johnson calls it London's third financial district after the City of London and Canary Wharf and says it is expected to generate 20,000 jobs.
The little-known ABP was chosen following a procurement process to identify someone to develop the site for employment focused use.
Xu Weiping, chairman of ABP, says that of the 1 billion investment, 30 percent will be from ABP, 30-40 percent from bank loans and private equity and the rest partly from pre-sales and the sale of property.
The project is designed to be carried out in three or five phases and completed in about eight or 10 years, Xu says.
The area is about as large as 20 football fields, and ABP plans to turn it into a complex of businesses, shops and flats.
"My vision is to develop a world-class international business district that will initially target Asian businesses to help them secure a destination in London, which in China is seen as the gateway to both the United Kingdom and the wider European economy," Xu says.
In the park, also called Asian Business Port, Chinese and Asian companies will be targeted as office-space buyers.
"Asia is the fattest-growing area in the world, and this century is being called the Asian century," Xu says.
"China, India, Japan, South Korea, Indonesia, Singapore and Malaysia and so on, all have potential to invest in London and Europe."
Asked how to attract Chinese and Asian companies, Xu says: "Good wine needs no bush."
ABP can provide best-value, top-quality office space for Asian companies who will work with ABP, he says.
Working with the British developer Stanhope, and architects and master planners Farrells, ABP is committed to developing a minimum of 55,740 square meters in the first phase. The first occupiers are due in 2017.
Xu says ABP has yet to sign up tenants for the project but has seen strong interest from Chinese firms, including some of the country's top banks and regional banks, looking to take space.
The project hopes to sell 70 percent of the space to Asian companies, as Chinese companies prefer to own rather than rent their offices, while it also hopes to sell other space to European companies, he says.
Johnson agrees with Xu that the site is expected to attract British and European companies doing business in Asia.
"It will of course be largely Asian but I don't think it will be exclusively Asian," Johnson says. It will be like London; it will be a melting pot."
Johnson says the ABP project will not become an investment trap like the Rockefeller Center in New York, bought by the Japanese in the early 1990s.
"No, absolutely not. Because London has the fastest growing population in Europe and it's a fantastic city to live in. London is a great long-term bet."
Some property industry insiders have questioned the viability of the project, particularly in regard to the suggested $1.51 billion development value.
The Financial Times quoted one property developer as saying: "To spend that kind of money on a scheme that is always going to be height-restricted (due to its proximity to London City Airport) just doesn't add up.
"The rent they would need to achieve to justify that kind of spend would be far higher than has ever been paid in the area."
Speaking of the risks of the project, Xu says he is confident about the future as long as the Asian macro-economy is good.
He says he hopes the area can become an example of Eastern and Western business and culture integrating.
ABP, founded 10 years ago, is a private company with a record of investing in and transforming large areas in need of regeneration.
"ABP always prefers investing in cheap land and in areas that other people ignore," Xu says, adding that such land can be highly profitable after being developed.
The Royal Albert Dock project is the first project outside China for ABP, which has built a business park in the Fengtai district of Beijing and is building two others in the coastal city of Qingdao, Shandong province, and Shenyang, Liaoning province.
London is keen to regenerate derelict sites around its eastern waterways after holding the Olympic Games last year.
"Creating a third financial district in the capital, this development will act as a beacon for Eastern investors looking West, bringing with it tens of thousands of jobs and billions of pounds of investment for the UK economy," Johnson says.
"This deal symbolizes the revival of that great era, continuing the reinvention of this once maligned part of the capital into a 21st century center of trade and investment."
The deal is expected to boost local employment in Newham in eastern London by 30 percent.
Robin Wales, the mayor of Newham, says: "The Royal Docks Enterprise Zone offers an unrivalled investment opportunity, and this deal further strengthens Newham's growing reputation as an ideal destination for international business."
Wales also says the Asian business port would not repeat the "mistakes" of Canary Wharf, the 1980s development that has become a symbol of a divided London, where a wealthy cosmopolitan workforce is largely cut off from some of the capital's poorest neighborhoods.
"For all that Canary Wharf meant well and it has created wealth local people didn't benefit. We looked at that and learnt from that," The Guardian quoted Wales as saying.
The ABP business park will provide "lots of jobs" for local people and the council will help people, including long-term unemployed, get these positions, both skilled and unskilled, he says.
"We will work with the employers that come; we will understand what it is they are looking for. We will get the employers already in Newham and we will get people into work."
Chinese investment in Britain amounted to $8 billion last year, the Chinese embassy in London says.
The ABP project is the latest investment this year. Xu says that as more Chinese companies go abroad, ABP will provide the most suitable solution and best service for them.
(China Daily European Weekly 06/07/2013 page23)