Property investments top €1.2bn

Tue, Mar 5, 2013, 00:00

China’s foreign-exchange regulator has spent €1.23 billion on at least four deals in recent months, including student residences, a water utility and office buildings in London and Manchester.

Since May, UK-registered Gingko Tree Investment Ltd, a wholly-owned unit of China’s State Administration of Foreign Exchange (Safe), has been investing in the deals, the People’s Daily reported. Among the investments were a 49 per cent stake in Manchester office building One Angel Square.

British infrastructure

In recent years Safe, which is responsible for investing most of China’s €2.5 trillion worth of foreign-exchange reserves, has increasingly looked overseas.

China Investment Corporation (CIC), China’s sovereign wealth fund, has also been actively investing in British property and infrastructure.

Last November, it bought Winchester House for about €300 million. Its investments in British infrastructure include small stakes in Heathrow Airport Holdings and water utility Thames Water.

The move shows how keen China’s state bodies are to diversify out of US government bonds, into higher-yielding assets. China has invested most of its huge foreign exchange reserves in US government bonds as well as a relatively small amount of non-dollar sovereign bonds over several decades.

“Safe is a government agency, and should serve the public interest,” Xi Junyang, deputy director of the Research Center for Modern Finance at Shanghai University of Finance and Economics, told local media.

“Its main duty is to preserve and increase the value of foreign exchange reserves and maintain the country’s financial stability.”

Irish assets

The move has also prompted speculation that perhaps Irish assets might find a buyer from a Chinese sovereign wealth fund. There has been interest in the past in assets held by Nama but these were mainly London properties.