Singapore buys £694 million Paddington stake

GIC, Singapore’s sovereign wealth fund, has snapped up a 75% stake in British Land’s 11-acre Paddington Central estate for £694 million.

The deal establishes a new partnership to run the site, which is home to businesses including Microsoft, Kingfisher, Finastra, Vodafone and Mars.

GIC has a further option to buy a 50% stake in 5 Kingdom Street, the last office development at the site, and 3 Kingdom Street, a Novotel hotel, at a later date.

British Land bought the site in 2013 and has invested in offices, restaurants and bars in the area, as well as new green spaces and revitalising the area around the Grand Union Canal. It has spent £680 million buying up property in the area.

Despite concerns that companies would no longer need as much office space, GIC said it was confident that good office space would continue to attract tenants.

Tracy Stroh, region head of Europe for real estate at GIC, said: “We are seeing returning demand in the take-up of new office spaces that are of high quality and in prime locations.”

With Crossrail’s opening just months away, Paddington is also set to become a key hub for travelers from the west.

British Land and GIC previously worked together on a joint venture at the Broadgate development in the City.

Lee Kok Sun, chief investment officer of real estate at GIC, said: “Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns.”

GIC aims to produce returns for Singapore by investing its wealth in assets across the world. It has around 5% of its total assets invested in the UK.

The price paid for its majority stake in Paddington is 1% below the value that British Land gave it in September 2021. The sale values the development at around £867 million.

British Land will use the proceeds from the sale to invest in logistics spaces in London, as well as so-called innovation campuses, which provide flexible working space and have increased in popularity since the pandemic forced more people to work from home.