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Li Ka-shing becomes biggest overseas investor in UK

By Zhang Ye Source:Global Times Published: 2014-4-3 9:01:46

Li Ka-shing in Hong Kong on March 21 Photo: IC

Li Ka-shing's Cheung Kong Group of companies has poured over 30 billion pounds ($49.93 billion) into the UK, making it the biggest overseas investor in the country, the Hong Kong Daily News reported Wednesday.

The group now provides gas distribution service to one-fourth of the population in the UK and controls 30 percent of the country's power supplies through Electricite de France SA's British electricity network business, which Asia's richest man bought in 2010, according to the report.

On Tuesday, Hutchison Whampoa Ltd, a subsidiary of Cheung Kong, won preliminary approval from London Mayor Boris Johnson to build 3,500 homes in the borough of Lewisham, less than 3.2 kilometers from the Canary Wharf financial district in London, according to Bloomberg, citing statements from the mayor and the company.

Hutchison Whampoa did not reply to e-mail inquiries from the Global Times by press time. The price of the deal was not revealed in the report.

High returns of investment and strong protection for foreign investors offered by the EU market is a major draw, Li Zhanjun, research director at Shanghai-based E-House China R&D Institute, told the Global Times Wednesday.

"As the EU's economy recovers, the property market there started to restore gradually. So it is a good time for Chinese investors like Li to further their presence in the market now, in order to take advantage of rock bottom prices," said Li Zhanjun.

The Hong Kong billionaire has been heavily investing in Europe in recent years.

In 2011, Li acquired Northumbrian Water, one of the UK's leading water companies, for 2.4 billion pounds. A year later, he bought UK gas company Wales and West Utilities for 645 million pounds.

And in the first half of last year alone, Li made four overseas acquisitions including the Irish subsidiary of Spanish telecommunications provider Telefonica SA and Waste processing RAV Water Treatment I B.V. in Netherlands, worth a total of HK$24.9 billion, according to media reports.

Given demand from overseas buyers and low borrowing costs, the average home price in London, for instance, has risen 13.8 percent to exceed 414,000 pounds in the year through February, read data from the UK property database Land Registry.

Since 2013, Li has sold several real estate properties in China's top locations and acquired assets in overseas markets at the same time.

In October, a 31-story Oriental Financial Center in Shanghai, which was owned by Hutchison Whampoa and affiliate Cheung Kong Holdings, was sold to Hong Kong-listed China Everbright Ltd, HYZL Development Co and HYZL Investment Co for HK$8.9 billion. Roughly two months before that deal, Li sold a 71,000-square-meter shopping mall in Guangzhou, capital of South China's Guangdong Province.

In contrast to foreign markets, China's property market is undergoing a slowdown in both average home price and demand, Liu Yuan, a senior research manager at Shanghai-based Centaline China Property Research Center, told the Global Times Wednesday.

A Tuesday report by the China Index Academy, a Beijing-based real estate research institute, said that the average home price in 100 of China's cities continued increasing in March, but the year-on-year growth has narrowed for three consecutive months.

However, China's property market is still ­robust, Li Zhanju noted.

Li Ka-shing is just making a company-level strategic move, Li Zhanjun said. "He wanted to sell his China properties to put the money into places with higher returns."

Like Li's conglomerate, Fosun International also agreed to buy a tower in New York for $725 million last October.

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