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July 28, 2017

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Hong Kong firm in record London deal

Source: AFP | 00:01 UTC+8 July 28, 2017 | Print Edition

A HONG Kong firm struck a record deal for a London skyscraper yesterday 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.

Lee Kum Kee, a family business best known for its oyster sauce, is buying the building nicknamed the “Walkie Talkie” for 1.3 billion pounds (US$1.7 billion).

The 34-story skyscraper in London’s insurance district, with its three-tiered sky garden and restaurant on top, hit the headlines after it was built when it was blamed for damaging a car by reflecting the sun’s rays.

“This is the UK’s largest ever office deal,” said Cushman & Wakefield, a commercial property giant which advised on the deal. “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 its London capital markets.

“This is partly due to currency fluctuations but is more indicative 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 1.15 billion pounds.

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 pounds.

The value of the pound dropped sharply against the euro and the US dollar following Britain’s vote last year to leave the European Union, making foreign investment in Britain more attractive.

While that has boosted some parts of the property market, sales have slowed 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 lower demand as it reported a 64 percent drop in pre-tax profits for the first six months of the year from 10.5 million to 3.8 million pounds.

The 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.

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