13 April, 2017
An Australian trading house which co-ordinates investment with some of China's biggest businesses is to partner with a London council on an ambitious new housing scheme, it has announced.
In a letter to the Australian stock exchange (2-page / 24KB PDF), ASF Group said it had seen "strong interest" from its Chinese investment partners in the AU$9 billion (£5.5 billion) Castle Green regeneration project, in the London Borough of Barking and Dagenham (LBBD). The planned scheme includes 15,000 new homes and 3.7 million square feet of new commercial property, and will require the developers to re-route part of the A13 trunk road as it passes through the borough.
Representatives from the three major state-owned Chinese companies that will invest in the project received 'strategic partnership' certificates at a launch ceremony in Barking last week, according to the filing. The investors are China Construction Overseas Development Co. Ltd, China Harbour Engineering Company (UK) Ltd and China International Marine Containers (Group) Ltd.
ASF chair Min Yang said that the investors would bring "a wealth and unrivalled depth of expertise" to the project, "from concept design to construction, marketing and sales".
"Given the potential scale of the regeneration, we see this as an immensely exciting opportunity, not just for ASF, but for Barking, London and the UK," she said.
"This ambitious investment, if it were to get the green light, would play to the UK government's need to increase housing supply in London and relieve congestion on London's busy road network," said infrastructure expert Graham Robinson of Pinsent Masons, the law firm behind Out-Law.com.
"Britain remains a highly attractive destination for inward investment in infrastructure due to large infrastructure and housing deficits and sizeable project opportunities, as well as Britain's open for business attitude towards investment.
China's huge and capable construction and engineering businesses, and its truly massive manufacturing capability,
need delivery partners to be able to deliver infrastructure in the UK and navigate complex regulations, but what the UK needs is China's wall of money in the form of much-needed investment in infrastructure," he said.
Chinese businesses are expected to invest over £100bn into UK infrastructure and real assets by 2025, according to a report by Pinsent Masons. The report estimated that up to £36bn of this investment would be in real estate.
Australian infrastructure expert Anthony Arrow of Pinsent Masons said that the LBBD project was a "unique" one from an Australian equity investor perspective, which would involve "an enticing mix of road infrastructure, industrial development and domestic housing".
"It is certainly encouraging to see an Australian equity fund teaming up with contractors and developers in Asia to support such a huge UK project," he said.
"We have definitely seen investment flows in the opposite direction into Australia, but an investment of this size with funds flowing out of Australia into Asia and the UK is far from common. There are undoubtedly large pools of equity in Australia looking to find a home at the moment, and it is encouraging to see these kinds of international transactions are taking place," he said.
For further information, please contact:
David Rennick, Partner, Pinsent Masons
david.rennick@pinsentmasons.com
