A view of Canary Wharf on the River Thames in London March 15, 2012.© Kieran Doherty/Reuters
Ambitious plans for a £1-billion ($1.55-billion) "Chinatown" property development in London's Royal Docks, a launchpad for 19th century imperial trade, are close to being finalized in what would be one of the largest Chinese investments in the U.K.
In a sign that recent political tensions between Whitehall and Beijing have not weakened the two countries' business ties, Advanced Business Park, a Chinese developer, is hoping later this month to commit to building an office complex on a 35-acre (14-hectare) site next to the giant docks. The move would symbolize east London's shift from major port to international commercial centre.
ABP bosses met David Cameron at a global investment conference on Thursday and held talks with Boris Johnson, the London mayor, who said the company had "very interesting proposals" for the land next to City Airport.
Although Mr Johnson said the deal was "not quite there," officials close to the negotiations said they expected ABP – a little-known developer – to announce an investment of more than £1-billion later this month.
"No one here had heard of ABP when they first expressed interest, but people have gone from being skeptical to pretty confident that they will deliver on their claim," said one person involved in the process.
However, property industry insiders questioned the credibility of the proposed project on Friday, particularly in regard to the suggested £1-billion development value.
"To spend that kind of money on a scheme that is always going to be height-restricted [due to its proximity to London City Airport] just doesn't add up," said one property developer. "The rent they would need to achieve to justify that kind of spend would be far higher than has ever been paid in the area."
ABP has already spent several million pounds on putting together a proposal for the site, which it hopes will be transformed into a 24-hour mini-city hosting the European headquarters of Chinese companies.
A deal would support Downing Street's claim that Anglo-Chinese trade is flourishing despite the diplomatic cold-shoulder being shown towards Mr. Cameron by Beijing after the prime minister's meeting with the exiled Tibetan leader the Dalai Lama last year.
One minister said: "It's going gangbusters. Whatever tension there may be at a political level is not being seen in our commercial relationship."
Mr. Cameron hopes to visit Beijing in the autumn at the head of a trade mission. Downing Street said: "Britain has benefited from 1,500 major inward investments – and £6-billion of Chinese investment alone – over the last year."
The prime minister badly needs investment from cash-rich investors in China and the Gulf to pay for new infrastructure and to boost growth, and the Docklands is proving an attractive destination.
Foreign investors have poured billions into property and infrastructure in east London, including the Abu Dhabi government's £320-million acquisition of the ExCel exhibition centre in 2008 and the Qatari government's stake in Canary Wharf.
U.K. Trade and Investment has been working with ABP and Stanhope – its British partner – for months, offering advice on future transport connections to the new Crossrail line and on power supplies for the site. ABP refused to comment.
The company appears to have only one completed project to its name – a large development located on the far outskirts of Beijing in the city's least affluent district – but its chairman Xu Weiping is well-connected with China's ruling Communist party.
The lease on the Royal Docks site is thought to run for about 75 years, with the development program expected by property market experts to take 10 years.