 Hey everyone, welcome to the podcast today I did a super cool podcast from the top of the Leidenhall building on Leidenhall Street, which is one of the Prime pieces of real estate in London big office block and it's owned by Chinese investor called CC land who had called in Hong Kong listed on the stock exchange there and I had a great chat with Adam Golden who heads up the UK office and So yeah CC land invest in and develop like premium properties in major cities like London Adam Has probably got one of the top property jobs in London Previously worked for a couple of other big firms high-profile firms and did some really interesting developments He did the East Village former athletics village in Queen Elizabeth Olympic Park The he did the elephant castle shopping center redevelopment Which is one of the London's largest regeneration projects and Thomas Mall Square a Five hundred and sixty thousand square foot office campus in whopping So he's done some really cool stuff and we had a really great chat. We talked about Chinese investment into the UK Where London properties going next? Co-working co-living and the rental sector in London, so I hope you enjoy it Awesome and my life So I'm with Adam Golding and we're at the top of a Leidenhall building on a rather gray day It's wet raining Yeah, I'd like to arrange things for you Lewis, but today I failed. I'm afraid sorry the views are still pretty good No, it's awesome. It's awesome. It's been like a little like a 42nd floor event space. She's pretty cool Yeah, so yeah in the Leidenhall building. We've got some amazing tenants, but we've also got a Large 7,000 square foot space up here. So I thought was a good setting for us to have a chat. Nice on top of the world kind of but we can see the shard and the walkie-talkie and elephant and castle and and Pretty much a 360 of London. So things we're talking about property. I thought this was the right spot. No, perfect So what do you guys do? so CC land are a Hong Kong listed company and They've got a series of investments across the world but the majority of them are in London and Last year Sort of marked a very significant year in terms of acquisitions buying the cheese grater was Which is the Leidenhall building was probably the one that made the headlines because it was just over a billion pounds Yeah, and so So we buy you bought it rather than developed it No, we bought it was developed by British land and Oxford properties, right? Yeah, obviously two very big developers in London But actually we are now moving into looking at development opportunities as well. So we've got six assets in London now Which all what central London prime all all Zane one so you kind of Paddington in the west is the furthest west we have and then this building and and Another site across the road In in the east and then we have a big site nine alms for residential development. Okay And then we we don't go very far north. We've got We've got north being what is a tee north being north of Oxford Street So So, you know that from a from a Hong Kong East perspective from Chinese perspective You know London is the focal point. So I think quality Is very much the focus of of CC land and and and obviously is a relatively new comes to the UK The city and sub markets like Paddington are very significant and why is London so attractive? Well, I think I think London Is attractive for for a number of reasons Which I'm sure lots of the listeners already know But obviously huge population size big center for business amazing infrastructure pioneers in terms of in terms of innovation and Thinking about the next thing In terms be it from the tech sector or the well-being sector or Financial sector, so I think I think that definitely plays a part. I think Brexit has actually helped some of the Asian investment into the UK Well, I think the the pound the compression of the pound so yeah, which means that obviously they get more for their Hong Kong dollars And And actually in Hong Kong in Asia you look at the market there is actually incredible You're out there in February and the the cap rates the capitalization rates, which is the method upon which you Value property are very very low. So So they can range from one to two percent yields And so actually looking at London and being able to buy the very best at the walkie-talkie or the cheese grater or you know Big town canary Wharf Three or four percent looks like excellent value. Yeah gates something in Hong Kong, right? So So I think there's I think there's a number of factors I also think there's just a general and long-standing affinity between Not only the Hong Kong ease which is obvious because of the British connection. Yeah, but also, you know China generally And obviously the historic trading links between between the two countries. So I think there's very much a focus I think going back to your question around Around why London I think education also plays a massive part. Yeah, so you look at the universities here and especially in London super high-quality universities and so, you know a lot of the affluent and Frankly not an affluent middle-class up and middle-class people in Hong Kong Have a desire for their children to be educated into a British education system. Yeah, so, you know, you'll get a lot of Students from China come to university here parents might buy an apartment here and say there's a constant sort of stream of Of of contact and communication between the UK and a lot of the new build residential stuffs marketed in Asia first for that reason No, so actually It's not anymore. So You're right sort of five or six up to five or six years ago a lot of the schemes were very much marketed in quite a limper and Malaysia and in Hong Kong and Singapore but actually now there's a As of the rule, I don't know whether it's a legislation, but I think it's a understanding that all of The property in London has to be marketed in the UK first. Oh interesting. So it's a recent change. Yeah, I think it's I think it's Probably five years So actually all of the schemes marked in the UK first and then there's the freedom to go market Right, so how much are the Chinese actually investing in the UK at the moment? Well, I think I think you're seeing the tip of the iceberg in the answers a lot Yeah, but I think you're really seeing the tip of the iceberg. I think that What we've sort of seen is that the Chinese pioneers so to speak and maybe I'm talking more about mainland China than Hong Kong Right, right, and obviously there's other issues with capital restrictions in China in terms of investing abroad And we can maybe touch on that a little bit later, but but actually You know the wealth that you've seen coming across From you know historically a very much, you know, the workhouse the manufacturing house of the world. Yeah Is now coming to the fore and that capital? is is looking for a home that's generational and and and preservation also so effectively looking to find a safe place for For for for their investments and say you've seen, you know Interesting the walkie-talkie was bought by a Hong Kong company who make oyster sauce. I really right. So yes, you're looking at this That's what they're known for So they're fighting this thing missing London as a safe haven for their cash as opposed to any other country or China or I don't think it's just London. I think sort of major gateway cities in Europe But London's an obvious attraction For all the reasons that we set out before and actually there are difficulties in European markets in terms of barriers to entry Okay, so we're still like open for business Tracting investment Yeah, also we have it. I think employment laws, I think I think the leasing system here the ability to buy free holds are all very attractive Propositions for Asian investors And actually, you know, you're not just talking about Asian investors. I think, you know, we've seen Middle East We've seen German investors in London seen the whole of the world coming it coming in and buying it and actually I Think the Brits are much more open to foreign investment Then say New York is if you look at the statistics between New York and London in terms of how many assets are held overseas actually London has a much more open mind to to selling its assets to Asian investors or overseas investors and in the face of Brexit, I think this might get more more important and more interesting Yeah, you know, Brexit's a whole another podcast isn't it? Look, I think You know our view on Brexit or you mean speaking for myself rather than necessarily for CC land is that It's in no one's interest for a bad deal And I think if you look at the European leaders across the world And how they're influenced potentially, you know from a whole series of political geopolitical factors But also from business factors as well. If you think about the major Businessmen in Europe will have businesses in the UK, right Which and they own You know for the reasons that we just discussed the Britain being open They own businesses that are reliant on the UK being successful So I think there'll be pressure amongst the European leaders as well as amongst obviously the British leaders to make sure that the deal Is good or fair and make sure that no deals off the table And that that it's an one of a better word equitable split, right? Absolutely, and so I think that's a very high level way of looking at it And maybe maybe a bit of a leap of faith because yeah politicians allowed us down before but but I'm sort of hopeful that That the significance of this will all be limited. Yeah, do you feel there's still Feeling in the public that's quite cautious around foreign investment or too much too many foreign companies owning assets in London the UK I Think probably from where that really stems is from the housing market, so I think you know given the sort of much maligned Construction figures that we have in the UK and this sort of desire to build more. I think when you see The amount of foreign investment coming into new homes. I think that's what sticks in people's guts rather than rather than Commercial property per se, so I think you know when you see swathes of new developments being sold overseas That's almost makes the headlines because it's tangible for individual thinking about a home rather than necessarily thinking about an office block Yeah So but I don't I don't necessarily think that sits within the business world Okay, fine. How have you seen the city in the West End change for the last few years? Well, I think where we're sitting now EC3, right? Sort of you've worked here. Yeah, most of your career And of course, it's always been known as the insurance district And of course going back, you know, not so long ago possibly, you know, 30 years. It would have been Pinstripe, you know chalk pinstripe suits. Yeah, probably the bowler hats were just about phased out by the end They were gone you can bring them back And I'm very male dominated right probably an older generation And I think you know as we've seen these amazing buildings constructed in EC3 and you know credit to the city of London Corporation for Consenting them and making them happen This area has needed to expand beyond the insurance district, I don't think it's all the way there now I think the city's got the EC3 in particular has got a long way to go In terms of what? In terms of breaking the perception as being the insurance district And I think you know London if you look at it Kings Cross is a great example Yeah, you know an area that when I was growing up was basically known as the red light district. Yeah Not that it was frequented But the way Argent have transformed that area and this sort of idea of it being the tech hub for Facebook and Google Yeah, and the rents. They're actually surpassing the city core rent So you've got yeah, so you've got rents in Kings Cross which are approaching a hundred pounds of square foot And there's probably a 30% discount maybe even more crazy these buildings that you see around you So so the city is cheaper than the West End and Kings Cross rent wise 100. Yeah, absolutely So the city is it and in some respects is even cheaper than the city fringe So areas like shoreditch and Clarkinwell and Farrington where you've got these really interesting warehouse buildings And you've got this whole sort of cool vibe cool vibe and also, you know, I Think I think it brings on a bigger point Which is which is why you know why are these areas more interesting and getting better rents from a commercial perspective? And I think it's about Community and about the way London's involved and the fact that we've got younger More of a mix of guys and girls working and and actually what they want but what they what their issues are is that they they can't own their properties, so they're You know invariably living in a maybe bedshare between sort of leaving University and their mid 30s all striving to buy somewhere Yeah And so they don't socialize around their homes anymore. Actually, they socialize around their offices very tree And what you see is areas like King's Cross and shoreditch being so popular because the buildings and the areas can deliver that social life for them Absolutely and and and occupies are being much are much more concerned about Get it at getting quality so quality employees and staff retention and capturing talent and say they're much more cognizant now about What their space that they buy into is going to deliver for their employees whereas before it was more like You know, where does it sit relative to the CEO where the CEO lives in the car parking space for his roles and actually, you know So so I think from our perspective as a landlord We're looking away, you know where we're sitting these three big towers, you know Kind of the streetscape doesn't really lend itself the culture and community although there are a lot of that We're trying and we're you know sitting on Roman historic History is crazy. Exactly. So but I think from a cultural perspective, you know It's these sort of big big tower blocks. It's very difficult to create that community without central hub Yeah So what we're looking at doing is innovating and saying well, how do we break down that? How can we provide event spaces within our buildings? How can we challenge the we works and the office groups and these great amazing? concepts of Working creating communities, but how do we do that as a traditional landlord who's leasing their space on a floor-by-floor basis? Yeah, you know, we're not going to do beer on tap at the reception But can we do? Can we do well-being talks? Can we do Ted talks? Can we give up space for? For helping at the occupiers within the building And how do we do that? Do we do it through tech? You know, do we create an app? Yeah, you know, you you give people discounts for retailers You ask them about their well-being do you find ways to get into the occupiers and then deliver what they want and use that? Metrics as a landlord to then start talking to your tenants and say hey, you know your guys You know, they've they've they're talking about Well-being and they're they're really taking up the yoga classes and the plateau classes on the top floor You know and providing more meaningful feedback to To our tenants and you know that can Potentially drive their desirability to stay in our building to expand our building So it's a two-way thing right us providing things for them and then doing things for us. It's really interesting because then Compare that to a lot of big firms and I think there's one big firm here that do that They don't have enough desks for their employees. Yeah, so you're finding that and that's probably just cost driven, right? Yeah, all project-driven, you know, they might have yeah projects elsewhere where they don't think they're happy to hop there Yeah, so it's an interesting like interesting contrast between wanting to build a community offer stuff for employees and so forth and then the other side Not having enough desks people working from home more and and just trying to you know Not have as much interaction with their colleagues Well, you're never gonna force people to do things that they don't want to do and some people You know, it probably might suit their lifestyle to you to work from home or to a hot desk But actually I think as a land we have a responsibility to provide the canvas for them Yeah, right activities. So, you know here for example the 11 more building where We're just about to launch a series of events with, you know, we're thinking about boot camps and Palate classes and sushi-making classes collaborating with our retailers downstairs to To look at ways in which we can work together Yeah, even something as simple as a on for example on the on the lower floors of the building who Who work in the Lenin Hall building every day, but actually have that all their staff been up to the 42nd floor They've seen the views from the top. They probably haven't so they don't even know their experiences They don't really have a full experience of working in this building They know just know the day-to-day reality of sitting at their desks, you know, yeah Every day, so I think it's I think as landlords who've got a responsibility to start innovating more and that You know is the main reason why CC land in Hong Kong wanted to establish a UK office So we could start doing these things directly You know rather than a remote land or collecting four checks a year being actually in the thick of it becoming not only part of the London establishment, but also Innovating and thinking about different ways and to deliver services to our occupiers and to To innovate I think it's great to build in communities Which is not too dissimilar from what the co-working spaces are trying to do. Yeah Yeah seems to have really taken off the last what five six years Yeah, I mean they call it sort of the great space race because there's so many occupier there's so many A lot of the space coming out the ground in fact just around the corner from here number one poultry Is rumored to be under offering its entirety to we work. Oh, you know run into problems recently, I think Some announcement about their well, I think they're doing a bond issue are they okay fine, so Look who knows about the future that certainly they've made I Wouldn't go as far as an earthquake, but they've made a significant rumble in the market absolutely What's been the what's been the driver do you think? Well, I think you know you obviously interview Matt from Federation businesses and And you know there's I think he gave some amazing statistics about how many people work for small businesses You know it's such a large sector of the market and people don't if you work for a small business you're changing all the time you're growing you're contracting and You don't want to be stuck in a traditional lease for 10 5 3 years Because you don't know where you're gonna be the next year and sometimes you don't know where you know the next fees gonna come from So actually the flexibility. Yeah, and the community. Yeah, yeah these Co-working spaces offer is you know, it's first-class and I think the other issue is Even if you look at the big corporates, so not just looking at small businesses the big corporates you have project-based At work where say for two years they win a contract where they need to hire 50 people They don't want to turn around and take another floor in their office for 10 years They want to be able to say, okay, you know what we've got a co-working space So we've got a serviced office space in our building. We'll take a shorter term lease with you guys For the period of our contract and then we know we can walk away if it gets renewed We roll it on or we consider taking longer longer term space. I think it's from both sides. Yeah big corporates demanding Additional overflow space and the smaller companies you develop demand more flexibility and you're focusing on the big corporates Or is there some aspect of well, I mean, I think for me isn't what I know from our perspective We obviously own large buildings and so invariably There are large corporate occupiers within these buildings. I think they You know, we've got serve corporate service in this building. I think whereas before Serviced offices were almost a backfiller say you'd lose you'd lease six floors and the seventh floor You can't let so what do you do you call up the service company? And you let the seventh floor to them on you know, a softer deal than you ordinarily would do Yeah, whereas now they're almost the first one in because landlords are saying I want to have that offer Yeah, because that's gonna be a drag for the corporates to come to my building. So it's completely flipped over Yeah, and you see that getting more and more prominent over time Well, I think I Think I'm more co-working space Yeah, and we've got like you know the gig economies growing People like to work from SMEs. I think Matt stats were I mean, it's about 50% or more people in the UK work for an SME well, I think the answer to that is is We're cautiously optimistic because There's a flaky answer we but I think I think the danger is that everyone gets Gets taken away by the whole co-working Bars and there's too many companies. Yeah built up and there's and and there's that the invariably will need to be some consolidation in the market So I think it remains to be seen what I do see is more of a collaboration style Sort of incubator concept happening So where and what we can already see it where these larger tech or even going into property or architecture businesses Where they're actually Taking additional space potentially with the landlord become incubators for related companies to their industry Oh, interesting and they support and seed and back Other other Ventures, yeah That are related to their business and you know, we're starting to have a few companies Conversation with a few companies about about that concept. I think that's where it might be interesting from a landlord's perspective I think so. Yeah, there's a lot of startup incubators around. Yeah, and I know it's given me an EC3 a lot of the big insurers Funds and provide space and stuff for inshore techs and fintechs and stuff will look at Lloyd's London You know, that's one of the That's one of the first hubs, right? Yeah. Yeah, the Lloyd's market. Yeah. Yeah And so with the so you've got the co-working stuff. You've also got co-living. Yeah, so you touched on it earlier Obviously residential properties gone up a lot of people can't afford to live in London. Yeah, but yet still the jobs are here Are you seeing like how people live or are living change? Well, I mean we we've got Sort of my experience Goes back to just before the Olympics of 2010 in the residential sector Where we looked at it wasn't called PRS then private rented sector as it's sort of coin now, but it was just Effectively a rental village. Right. It's just the Olympic. This is the Olympic Village. Yeah. Yeah, so So there we we took a decision to to let the 1500 flats At the Olympic Park rather than sell them And that was part of delivering the Olympic legacy So having it being one landlord in control of the whole area controlling the environment preserving that legacy which of course is Sort of spectacularly failed in previous games Like so So I think the the the main The main driver there was was commercial legacy But actually, you know since that time you've seen a huge wave of private rental sector Investment and I think that's a function of people not being able to afford their homes Maybe a mindset change amongst Londoners saying well, actually, do I need to own home? I mean Germany you look at the statistics their home energy France as well so and then that's kind of taken a next step which is well For these sort of first few years post coming out of university Do I what my options I could either take a shared room in the palm and pay quite a lot of money? Not really get very much out of them or I could live in part of a community sort of a step up from my student digs Yeah, and so there's been this advent of co-living which hasn't really Taken off massively because it's a difficult Planning just like sharing a student flat with someone. No, no, no, so this is this is effectively like a student accommodation Okay, a profession dumb profession right effectively. I mean the best examples probably the collective You've got a big scheme out an older common where I've got something like 500 rooms and then on every floor which are tiny so under 200 square feet each right But then they supplement that with really amazing Community space so shared kitchens and each floor's got a different theme. So one's like a Disco laundry the next one's a library the next one's a Cinema room and so I think you know it goes back to what we were talking about before in terms of community And sort of craving that and it won't be for everyone You know not everyone will want to live in a co-living space. Some people will you know I want to share share a digs or take a studio or whatever. Yeah, but but actually You know looking at London and the finite amount of space that we have in the cost of living space I think there'll be a Lot of different living options that come forward and I think actually you know one other thing is that as Infrastructure improves so Crossrail one being the you know the main piece of infrastructure that's coming at the moment that I think people will spill out into the suburbs more and I think if you look at the new London plan Yeah, actually there's a big push towards density So I building bigger and more in the same spaces and higher building higher more massing in these Suburban locations close to transport and so I think you know you'll see that Infrastructure really playing a playing a big part in in how London gets to work Yeah, I think that's also good for everyone's mindset because the thing with the big cities you can go for days without speaking to anyone Yeah, you can live in a flat. You don't see anyone you come to work You haven't got your desk or you come up a little bit late and you've got to go down to Well, here we've got black sheet coffee downstairs. So you might not actually have any human contact Yeah with the stuff you're doing with that development. It's interesting It's just trying to get people to communicate and interact with things great. Yeah, I mean, I think that's not making any mistake about this I think you know that wider people wider developers do it They do it because they think they can make commercial sense. Absolutely. Yeah, but actually It's interesting to see how London is changing and no longer do you come out of university and necessarily think the first thing I need to do is save To go and get my enough money to go and buy my first flat and get on the housing ladder You think I've come out of university. I want experiences. I want to I want to learn as much as possible from my employer and I want to do lots of different things whilst I'm young So but you not think though that young people still do want to buy a flat It just can't buy the flat Because price have gone up. So I think what is it like half a million quid for a one bed or something in London, right? I mean most most people and then the average salary is like 28 29 grand in London or something. Yeah, I mean, it's just unaffordable for most of these young people Yeah, I I think It's a I think effectively what you're asking is is this out of Need yeah, or is it out of? Effectively a change in mindset and I think that's just probably a bit of both, right? I think yeah people can no longer Afford these spaces so, you know, they look at alternative. Yeah, that's and defer the problem And that's potentially why suburban London. Yeah, we'll become more popular And you know that could expand out even further because people don't necessarily accrue the capital in their first homes and so they don't necessarily they're not able to then by Use the capital from that to then buy their house in London. They have to look at their first home being further and further out Yeah, so have the experience all the experiences you want and then when you want to settle down you go out into the suburbs and you know Or you know even beyond London to then commute in and she's seeing a trend now of like developers building to lease. Oh Yeah, yeah, yeah, that's that's the PR sector. Yeah, so there is a huge market and it's becoming sort of an Institutionally acceptable market as well because of course part of the reason why we haven't seen it for 30 odd years in any great swathes because The perception was that reset residential Properties weren't an institutional product, right? And so But now with high-class management A lot of the institutional investors are coming back in and saying well if we can run this right and we do believe in the platform That's managing it. It's a sector that we want to give it all we want to have some exposure to you So so what overall what's the current state of play with London property market? Our markets a funny old place and You know, I think there's very few transactions going on in central London. Is this commercial and residential? I'm talking particularly about commercial. Yeah, and so there's no a couple of years ago You know, I think even last year there were a huge amount of transactions And obviously slightly distorted by The cheese grater and the walkie-talkie both trading into in 2017 But I think for the very best there are still buyers. I think where where assets are struggling is If there's a sort of secondary product out of there, which isn't quite cheap enough for the domestic market So the UK traditional buyers. Yeah But isn't the sort of assets that the overseas buyers want to You know want want want to invest it and say I think that will level out over the next over the next year or so And you'll see the domestic market coming back in You know a lot a lot has to do with sentiment and confidence and belief that You know, we're not going to have a seismic shift in rents one way or the other So, you know from our perspective, we think we think London's a great place to invest and we're going to continue doing so and You know, we're we're very much You know, we're very keen to sort of continue to be a long term established here awesome We've done half an hour. It's great. Okay. Thank you very much for joining me. No worries and Keep building those communities And invite me to a TED talk or something will do cool. Thank you very much. Thanks. Yeah. Hey folks Thanks for listening. Don't forget to subscribe in all the usual places