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WHAT represents chaos and confusion for one can be someone else’s gain. This was clearly played out when Singapore tycoon Kwek Leng Beng bought two London buildings in a span of two months. Britain is going through Brexit blues with the 2019 deadline around the corner.
The executive chairman of one of Singapore’s largest real estate company City Developments Ltd (CDL) Kwek Leng Beng has bought the former Stock Exchange Tower in the City of London for £385mil (RM2.059bil) in a Brexit-linked opportunity which represents “deep value” for the billionaire tycoon, the Financial Times reported in its online version yesterday.
The vendor is American private equity group Blackstone.
According to Friday’s Financial Times, the 27-storey building at 125, Old Broad Street will generate a yield of about 4.7%. Tenants include property agents Cushman & Wakefield, law firm King & Spalding and China International Capital Corp.
CDL chief investment officer Frank Khoo said in a statement, seen by FT: “We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value.”
Blackstone bought the 330,000 sq ft commercial building in July 2014 for £320mil. Stock Exchange Tower is CDL’s second purchase in London a month after buying a prime freehold commercial building.
In September, CDL bought Aldgate House, a prime freehold Grade A building, in London for £183mil (RM978mil), which translates to a yield of about 5%.
Aldgate is located in the district of Aldgate, right beside Aldgate Underground Station and with six other stations within a five-minute walk.
It has a net lettable area of 211,000 sq ft with office, retail and ancillary spaces. It is 88% occupied.
Khoo said CDL’s purchase of Aldgate was “to grow our recurring income significantly over the next 10 years through acquisitions and organic growth, which will help to mitigate the volatility of development projects.”
“This acquisition will enhance CDL’s recurring income portfolio. We see tremendous potential in this… building and we continue to believe that London will remain as a global financial hub,” Khoo reportedly told Singapore Straits Times. CDL sees a lot of positives in Aldgate district, which accommodates a range of industries, including financial, fintech, legal, cultural and creative companies.
“It is also emerging as the heart of ‘Digital London’ and the presence of healthtech companies is expected to increase with plans to develop a world-class life sciences research facility in the vicinity,” he noted.
London properties saw strong interest this year, according to property agents Savills, who said £8.63 billion had been transacted by the end of September, 2018.
This puts the full 12 months of 2018 on track to reach £12bil, although Savills says the year’s figure is unlikely to reach last year’s record of £12.6bil. Over in Kuala Lumpur, Kwek’s CDL has a 65% stake in the Grand Millennium in Jalan Bukit Bintang, Kuala Lumpur. It also owns hotel Copthorne Orchid in Penang, according to CDL’s 2017 annual report.
Previously known as The Regent, Kwek changed the name to the Grand Millennium in line with his global Millennium brand.
In 2010, Kwek caused a stir when he sold a 29,127 sq ft, less than an acre, next to Pavilion KL for a record price of RM7,209.80 per sq ft after he changed his mind about building a golden multi-storey serviced apartment next to his Grand Millennium hotel.
He had, as far back as before the 2007, toyed with the idea of building a set of luxurious serviced apartments linked to the Grand Millennium where guests can opt for the hotel’s services.
He, however, changed his mind and instead sold that site to Malton’s Tan Sri Desmond Lim, who owns Pavilion KL. Pavilion Elite sits on that exact spot today.
A big picture person, Kwek’s business acumen is legendary. Coupled with his taste for fine things and impeccable service, he has put together a package which appeals to the moneyed, be it luxury homes or hotel accommodation.
He likes hotels because the sector is constantly evolving. In his earlier days, he used to visit his hotels posing as a guest. He talks to other guests and in this way, gets a lot of feedback this way.
“Life is, after all, experiences,” he says in a 2007 interview with StarBiz.
“Whatever business you are in, you must be passionate about it. You must try your level best to understand the subject matter because there will be pitfalls.
“Look at your business model and cash flow. Make sure they match the earnings and have a good financier who understands you and the marketing and sales of this lifestyle.
“In other words, you must fall in love with the subject. But that is still not enough. You must have a vision and big dreams. You may not achieve the dreams to the degree you want, but if you keep at it, you will achieve a part of it.”
Kwek inherited his wealth from his father, the late Kwek Hong Png. His business acumen and entrepreneurship helped to expand that many times over.
The story of the Kwek fortune is a classic overseas Chinese success story.
Kwek Hong Png left Fujian province in China as a penniless teenager with three brothers.
They arrived in Singapore in 1928 and later founded the Hong Leong group there, named after one of the brothers. Kwek Hong Png’s brother, Hong Lye, moved to Malaysia to expand the family business. When the next generation took over, the business interests diverged, the Singapore/Malaysia cross-shareholdings remain.
While Kwek looks after the family business in Singapore, his cousin Tan Sri Quek Leng Chan, who is Hong Leong Group executive chairman, looks after the Malaysian interests.
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