Architects Journal reported The Royal Albert Dock mega-project, backed by Chinese developer Advanced Business Parks (ABP) and announced in May 2013, is now on the brink of collapse.
On a 35 acre strip of derelict land, ABP promised to create thousands of jobs from the—project known as Asian Business Port with a cost of $2.3 million. The first phase will deliver 63,000 square meters of offices, and the whole project will create 300,000 square meters of commercial space by 2023.
But today, almost two dozen buildings in London’s Royal Albert Dock are primarily unoccupied.
According to ABP London’s latest accounts, the coronavirus pandemic has badly damaged the market for sale and rental developments. As a result, it lost $17.6 million last year and has $18.9 million in net financial obligations.
ABP is not the only Chinese property developer facing challenges in the UK, as many other Chinese real estate developers are also struggling.
Bloomberg reported that UK-China frosty relations, the introduction of capital controls, and the Brexit’s negative impacts are the main factors.
In a note last week, Bloomberg Intelligence senior analyst Patrick Wong wrote that “China’s debt-saddled private developers face growing risks of a liquidity crunch, with home buyers and bondholders’ shattered confidence raising the specter of broader financial contagion.”
Greenland Group, a Chinese state-owned real estate firm, also seeks to reduce the affordable housing offer for its supertall skyscraper, The Spire.
To reduce debt, Dalian Wanda Group Co. was forced to sell all of its London projects in 2018, including the $1.2 billion One Nine Elms building.
Chairman of mainland Chinese developer Shimao Group Holdings, Xu Rongmao, spoke with Goldman Sachs about selling an office property in London’s Paternoster Square.
Other real estate developers like China Vanke Co. and Fosun International Holdings Ltd. are looking to sell London office buildings.
According to Real Capital Analytics Inc. data, mainland Chinese real estate transactions in the United Kingdom have decreased by approximately 88% over the last five years. According to the data, the reduction in development site deals was even more dramatic, dropping to just $12.8 million last year from a 2017 high of $829.3 million.