What Is Beijing Construction's Greater Manchester Strategy?
It is another big week for Beijing Construction and Engineering Group International.
If the purchase is confirmed it will be BCEGI's second Greater Manchester shopping centre scoop, having been chosen by Bolton council to redevelop 280K SF Crompton Place in a joint venture with Midia.
The Wigan deal coincides with two other landmarks for BCEGI as it tops out the 560-unit second phase at Scarborough International’s £1B Middlewood Locks, Salford, and begins construction of Airport City Manchester’s new hotel district. This includes a 280-bed Holiday Inn and a 262-bed Ibis Budget. Beijing Construction Engineering Group International has been appointed as the main contractor on the £45M project.
It is also bidding for a share of the £1.5B ID:Manchester development on the former UMIST campus, and a role in Stockport town centre’s residential regeneration.
The Chinese business has come a long way since it was first announced as a 20% partner in Airport City Manchester in October 2013 by then chancellor George Osborne.
Is its policy to throw everything at the Manchester property sector, in the hope that something sticks? Or is there a more nuanced strategy? Here are the three lessons so far.
The One That Got Away
The £200M St Michael's hotel, office and residential development in central Manchester was originally a BCEGI-partnered scheme. It has since left the project. Skyscrapers are expensive to build, especially if they are intended to house high-end apartments and a top-notch hotel, so getting the pricing right matters. Margins will be relatively small, the risks on a high profile scheme high, and whilst involving yourself in a conspicuous scheme supported by the town hall has its upsides (see below), that can’t be the only motive. The market consensus is BCEGI was happy to let the St Michael’s consortium move on without it.
What we learned: Nobody needs complications.
The Foot In The Door
Back in 2012-2013 the coalition government and Manchester City Council, were looking for ways to make the (then) brand new Northern Powerhouse initiative look like it had legs. Manchester Airport had been designated an enterprise zone and was the initiative's flagship, Chinese investment was then very heavily favoured by the government, and Manchester wanted to see the iffy track record of development at the airport turned into something more solid. BCEGI secured a foot in the door by satisfying these requirements. Argent and Carillion, originally involved, dropped out long ago for various reasons, but for BCEGI the 160-acre Airport City scheme proved it could cope with long-term projects that mattered to the public sector.
What we learned: Governments like reliable partners.
Shopping for Opportunities
It is no secret that the traditional retail scene is in crisis, and several over-large 1990s shopping centres in Greater Manchester urgently need a rethink. Getting involved in Wigan council’s Grand Arcades (acquired from Luxembourg investor Colcastor SARL in 2018) and Bolton council’s Crompton Place offer BCEGI a chance to take on meaty contracts. Both schemes may be misguided attempts to paint a blush on the corpse of town centre retail, but that scarcely matters if the local authority client is happy.
What we learned: Always please the client.