At a total cost £1,040.5m, the National Pension Service of South Korea, the fifth biggest pension fund in the world, has bought three properties in London. These are half of a six storey commercial building in Grosvenor place, followed by a tower at 88 Wood Street in the heart of the City. But the most prestigious, and the most expensive – but also a sign of the global shift in economic power – is the HSBC building at Canary Wharf which set the fund back £773mm. The UK property-buying spree commenced under previous NPS head Park Hae-Choon, who secured an invitation to Buckingham Palace off the back of the investments, according to the UK Trade & Investment magazine.
Park has now stepped down from the NPS post, but his successor Jun Kwang-woo (formerly Korea’s top financial regulator) is set to continue the overseas investment strategy, seeing the UK in particular as an attractive place for infrastructure investment in the context of the 2012 Olympics. This week a £100mm investment in London Gatwick Airport was announced.
No-one could accuse the Koreans of buying at the top of the market. The HSBC building had originally changed hands for £1.1bn only two years before the Koreans bought it. And the FT reports that Gatwick was sold by its Spanish owners to an investment partnership for £1.5bn in October last year. If the NPS is paying only £100mm for a 12% share, that also implies a bit of a bargain.
Links:
- National Pension Fund Head Resigns, Korea Times, 11 September 2009. Korea Times on Park Hae-Choon’s resignation
- Tower sold for third time in two years, Daniel Thomas in the FT on the HSBC building sale, 14 November 2009
- Korea pension fund widens its horizons, Christian Oliver, FT, 2 Feb 2010
- S Korean fund to buy 12% stake in Gatwick, Christian Oliver, FT, 2 Feb 2010