China Construction Bank Corp., the nation’s second-largest lender, bought an office building in London for 110 million pounds ($187 million) as it expands in Europe after becoming the city’s first yuan clearing bank.
Construction Bank will use the 122,880 square feet (11,420 square meters), seven-story building on 111 Old Broad Street as its European headquarters, Knight Frank LLP, which advised on the sale, said in an e-mailed statement today. The seller, Belgian bank KBC Groep NV, will remain in the building under a lease agreement.
The lender follows other Chinese financial firms including China Life Insurance Co. and Ping An Insurance (Group) Co. in buying real estate in London, which has emerged as a haven for foreign wealth. London’s prime rents may rise “substantially” in next three to four years amid an U.K. economic recovery and shortage of office space, according to Knight Frank.
China Life, the nation’s largest insurer, last week bought 70 percent of an office tower in London in a deal with a total value of 795 million pounds. Ping An Insurance, the second biggest, agreed to buy in July 2013 the Lloyd’s of London building from a Commerz Real AG-managed fund for 260 million pounds, according to people familiar with the matter.
Beijing-based Construction Bank last week won its first yuan-clearing mandate in London as China seeks to bolster global usage of the currency. The pound also became the fifth major currency to trade directly against the yuan in Shanghai.
At the end of 2013, Construction Bank had operations in 15 countries and regions, including Hong Kong, Singapore, Frankfurt, Luxembourg and New York. Its total overseas assets surged 41 percent last year to 732 billion yuan ($118 billion) while pretax profit gained 23 percent to 3.9 billion yuan, according to its annual report.
(An earlier version of the story corrected the floor area of the building.)