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The Numbers Behind China’s Massive London Embassy Purchase

Royal Mint Court

Last Friday it was confirmed that the Chinese government is purchasing Royal Mint Court on the eastern edge of the City of London for a massive new embassy complex. The vacant office complex was sold by Delancey and LRC.

It is one of the largest London development deals of this cycle, and will see China build one of its largest global embassies.

Here are the numbers behind one of the most spectacular real estate deals in London this year.

1810: This was the site of the Royal Mint until the 1980s when the current offices were built. The first coin was struck on the site in 1810, and one of its first tasks was to strike medals for the troops at the victorious battle of Waterloo.

700 million: During World War II more than 700 million coins a year were minted there, with British workers paid using coins rather than banknotes to thwart a Nazi plan to destabilise the British economy by flooding the country with fake notes.

5.4: The site is rare in that at 5.4 acres it is both large and centrally located, making it more appealing than rivals in Nine Elms or London’s docklands. And the fact that it is already walled gives it the extra level of security demanded by major global embassies.

Royal Mint Court

200M: The price paid by China was not disclosed, but it is likely to be north of £200M. The Department for Communities and Local Government estimated City of London development land prices to be around £100M per hectare, and the site extends to just more than two hectares.

40: That sale price compares to the £50M paid by LRC for its 50% stake in the site in 2014, which was a 40% discount to the value of the loan taken out by the previous Irish owners before their 50% stake went into bankruptcy. Delancey’s ownership goes back to the early part of this century. The investors will make a good profit on the sale.

750M: The cost of building the embassy could extend to more than £750M — that was the value put on the redeveloped scheme being planned by Delancey and LRC. That scheme had planning consent for around 600K SF of office space and 1.8 acres of public space. China will likely look for a new planning consent. Combined with the land price, that could see China invest more than £1B in the facility.

1: The deal is the largest office leasing deal this year, easily trumping the 210K SF taken by Publicis at Television Centre last week.

430K: To see what direction the new embassy might take, it is worth looking to Washington. The 430K SF embassy built there in 2009 drew on traditional Chinese architecture, and the new plans could feature significant cultural facilities, according to EG.

20: The current Chinese embassy on Portland Place just north of Oxford Street will inevitably hit the market soon. The building is around 20K SF, and development values in the area are around £1K/SF.