The China Investment Corporation is close to agreeing a deal to sell a major City of London office building for as much as £260M, and whether the building is knocked down and redeveloped or refurbished is a decision set to be closely watched.

Private property company Castleforge Partners is the frontrunner to buy Winchester House from CIC and its joint venture partner Invesco Real Estate, React News reported. The building is the current UK HQ of Deutsche Bank, but the company is vacating in 2023 and consolidating several London offices into a new 500K SF HQ at 21 Moorfields.

The building could be knocked down and a new scheme of 400K SF to 650K SF built in its place if planning consent were to be achieved, React said. But large new developments such as the redevelopment of M&S’ store on Oxford Street and ITV’s HQ on the South Bank have attracted criticism or failed to achieve planning consent because they have picked redevelopment over refurbishment.

Constructing a new building is more carbon-intensive than refurbishing an existing one unless it is particularly difficult to retrofit an older building and improve the carbon-efficiency of its operations.

When Deutsche moves out, Winchester House will be 25 years old. Multiple buildings of this age will need to be refurbished if the City office market is to reduce its carbon emissions.

CIC bought Winchester House a decade ago for £250M, and in that sense it would make a profit on its investment. However, the price being paid by Castleforge is below the £275M for which the building was put on the market. CIC has decided to sell rather than undertake any refurbishment or redevelopment itself.

Immobel Capital Partners was the underbidder on the deal, with Ares, GPE, Tishman and HB Reavis also having bid, React reported.