Hongkong Land and Central Group Buy UK Embassy Site in Bangkok for $595M
Thanks to its chummy relations with the UK’s colonial-era governments, developer Hongkong Land owns much of the prime real estate in the former British colony that it calls home. Now that the sun has set on Britain’s empire in the east, the unit of Jardine Matheson group is making one last deal with its mates from back in London, as it teams up with Thailand’s Central Group to purchase the UK embassy site in Bangkok in the Kingdom’s biggest ever land deal.
The UK’s Foreign & Commonwealth Office announced late yesterday that it had sold its 3.5-hectare (9-acre) embassy site in Bangkok to a Hongkong Land-Central Group joint venture for over £420 million ($595 million).
Tos Chirathivat, chief executive of Central Group, said the group “wants to develop a mixed-use project that links to our Central Embassy shopping project,” a hotel and high-end shopping complex which is adjacent to the embassy site, according to a report.
Britain Sells Colonial-Era Site as Property Values Rise
The colonial-era embassy was built in 1922 in what was then the rural outskirts of Bangkok, but the location at the corner of Phloenchit and Witthayu Roads in the metropolis’ Pathumwan area is now a commercial hub that is home to shopping malls, luxury hotels and some of the city’s most expensive condo developments.
The nearly century-old embassy building requires a significant upgrade and refurbishment to fit a modern working environment, with large parts of the building no longer usable, the Foreign Office said in a statement. “In a tight fiscal environment, it is right that we take tough decisions to ensure that the UK can maintain a global presence while getting the best value for taxpayers,” said Simon McDonald, Permanent Under-Secretary at the Foreign Office.
Central Group already bought one-third of the Embassy’s then 12-acre compound for $95 million in 2006, after the UK foreign office put the site on the market the previous year. The parcel has been transformed into the Central Embassy complex, which now displays Chanel and Gucci and operates the Park Hyatt Bangkok hotel where her majesty’s diplomats used to stroll around the garden.
The latest deal gives Hongkong Land and family-owned Thai conglomerate Central Group the chance to redevelop the historical embassy building itself and the remainder of the compound. Diplomats and consular staff at the Embassy will relocate to commercial space in the 29-storey AIA Sathorn Tower on South Sathorn Road close to Bangkok’s Silom Road banking district by 2019, according to the Foreign Office.
The proceeds from the sale will be reinvested in the foreign office’s overseas estate and will fund 30 to 40 embassy modernisation projects worldwide.
Hongkong Land Grows Overseas Portfolio
The deal marks the second overseas acquisition in the past two weeks for leading Central landlord Hongkong Land. The developer bought a plot of commercial land in Nanjing, the capital of eastern China’s Jiangsu province, for RMB 4.8 billion ($745 million) in January with plans to invest RMB 13 billion ($1.9 billion) in developing the site.
The developer and its Indonesian affiliate Astra International also announced plans late last month to build a $74.5 million apartment complex in Jakarta.
Central Group is a top five Thai conglomerate, with over 70,000 employees and investments in retail, property development, brand management, hospitality, and food and beverage. The group acquired La Rinascente, an Italian-based luxury department store operator, and Illum, a Danish department store chain, in 2011 and 2013 respectively.