June 18 (Bloomberg) -- ABP (China) Holdings Group Ltd., the Chinese developer that announced a 1 billion-pound ($1.6 billion) London business center last month, said the project would be valued at more than twice what it will cost to build.
“The demand is huge,” ABP Chairman Xu Weiping told reporters at a briefing yesterday in the British embassy in Beijing. That’s prompted the company to raise the target for the first phase of the project to as many as 100 buildings from about 60, he said.
ABP signed an agreement with London officials last month to transform the 35-acre (14-hectare) site at Royal Albert Dock near London City Airport into the capital’s third business district after the City of London and Canary Wharf. The project will target Asian businesses, particularly financial-services companies, according to the May 29 announcement.
Most of the Chinese companies with operations in Britain rent space and can’t find desirable offices to buy, “let alone an opportunity to gather, share resources and interact,” Xu said.
More than 10 investment banks and private-equity firms have approached ABP to offer funding since the announcement, Xu said. At least 56 businesses have expressed an interest in buying a building, bolstering confidence the project can be completed within about 12 years after construction starts next year.
The project will be built in five phases with plans for about 300 office buildings by the time it’s done, according to Liu Tongbo, ABP’s general manager for overseas affairs. The Beijing-based company plans to rent out as much as 40 percent of the space and sell the rest as whole buildings, Xu said.
The building costs of the 400,000 square meter (4.3 million square foot) project will be about 800 million pounds, an average of about 20,000 yuan ($3,265) per square meter, Xu said. The remaining 200 million pounds of investment would cover management fees and personnel costs, he added.
The project will be worth at least 40,000 yuan to 50,000 yuan a square meter after completion, Xu said.
About 30 percent of the 1 billion-pound investment will come from ABP, which is 95 percent owned by Xu, he said. Another 30 percent to 40 percent of the funding will be raised from other investors, while the rest will be financed by sale proceeds of the project, Xu said.
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