Chinese insurer Hexie snaps up US$1.4 billion Beijing tower from SK Group in largest office deal since onset of coronavirus pandemic

·3-min read

Beijing-based Hexie Health Insurance has bought the SK Tower in the Chinese capital for 9.06 billion yuan (US$1.4 billion) from SK Group, South Korea’s third-largest conglomerate.

The deal is the biggest transaction for an office building in China since the onset of the coronavirus pandemic, according to agent Cushman & Wakefield. It could potentially become the largest deal for the year for a single commercial real estate project in China, Cushman said on Tuesday, without mentioning the second-highest deal value.

“The Beijing market has long been a key focus for investors, where major transactions have exceeded 50 billion yuan [US$7.8 billion] annually for three years in a row,” said Alvin Yip, president of Cushman’s Greater China capital markets team.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

His team has brokered deals worth about 10 billion yuan in this year’s first half. These include the sale of Beijing Diamond Plaza in the Chinese capital’s technology hub Zhongguancun. The building was acquired by ACR Asset Management, which is backed by global investment manager GLP, from private-equity firm Sino-Ocean Capital mid last month for an undisclosed price.

The SK Tower transaction is particularly significant, given the 35-storey office building’s prime location in the heart of Beijing’s central business district, right next to the Chang’an Avenue thoroughfare.

Previously known as Capital Tower, the building – with 107,627 square metres (1.2 million square feet) of building area – was sold by Singapore-based developer CapitaLand to SK Group in 2008. That deal was also brokered by Cushman.

The capital values of Beijing’s grade A office buildings were steady, at an average 83,285 yuan (US$13,009) per square metre at the end of March, according to a Savills research report published in April.

They carried an average gross rental yield of 5.1 per cent. The city’s investment market was gradually shaking off the impact of the pandemic that began at the start of last year, Savills added.

China’s economy grew 18.3 per cent in the first quarter from the same period last year when the economy suffered a dramatic collapse due to the impact of the coronavirus. The central government has set an economic growth target of “above 6 per cent” for 2021.

“The overall performance of Beijing’s investment market was stable in this year’s first quarter,” Vincent Li, Savills’ head of research for North China, said in the report. “Domestic and foreign investors, as well as developers, were all actively seeking projects worthy of investment in Beijing’s post Covid-19 market.

“Institutional investors preferred mature properties with stable returns and appreciation potential to improve their asset allocation.”

More from South China Morning Post:

This article Chinese insurer Hexie snaps up US$1.4 billion Beijing tower from SK Group in largest office deal since onset of coronavirus pandemic first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.