GIC continues to show its faith in China’s office market with the acquisition of LG Twin Towers, a two-building office complex in Beijing’s Chaoyang District. GIC, Singapore’s sovereign wealth fund, purchased the 1.5 million-square-foot property from South Korea-based conglomerate LG Group in a transaction valued at RMB 8 billion, or approximately $1.1 billion.
The high-rises that comprise LG Twin Towers stand 30 stories tall, hovering above Guomao central business district. As noted in a report by Savills, LG Group invested $400 million in the development of LG Twin Towers in 2005. A Class A office destination, the complex features a retail podium as well as direct subway access. Presently, the buildings are home to a diverse list of businesses, including Banco de Chile, Cathay Pacific Airways, anchor tenant Willis Insurance Brokers Co. Ltd. and a bevy of law firms.
Anticipating resilient returns, GIC plans a long-term hold for LG Twin Towers. Currently, the Beijing office market is undergoing a change, with the economic downturn causing demand to slow considerably for the first time since 2010, according to a 2020 outlook report by JLL. However, despite the slump, Beijing remains a magnet for capital. “The true value of the market still managed to shine through for investors. In fact, the slower performance may be viewed as the starting point to a long overdue adjustment period, helping to remove weakness and setting a better position for the market to benefit from healthier gains in the long run,” according to the JLL report.
Global Shopping Spree
GIC has been enhancing its commercial real estate portfolio around the world over the last several months, with a particular focus on office assets. In the fourth quarter of 2019 alone, the investment firm acquired the iconic 650,000-square-foot PB6 skyscraper in Paris and purchased the 580,000-square-foot Jessie Street Centre in Sydney in a joint venture with Charter Hall. GIC also acquired the remaining 50 percent interest in the tallest building in Beijing’s burgeoning Lize Financial Business District, becoming sole owner of the 415,600-square-foot property. The firm has been investing in China’s real estate market for more than 20 years.