A UK developer backed by Hong Kong billionaire Henry Cheng Kar-shun is planning to raise as much as £140 million (US$171.4 million) via a tokenisation plan, allowing individual investors to share the income from a residential tower in central London.
Knight Dragon Developments, chaired and majority-owned by the tycoon who controls city developer New World Development, is selling 100,000 tokens at £1,400 each, giving holders a share of 80 per cent of the rental income from the residential tower.
The tower forms part of a £1 billion mixed-use Greenwich Peninsula project known as Peninsula Place, which Cheng's family co-developed with investors including former lawyer Sammy Lee.
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"Investors can potentially share the economic interests of the rental income of the 191 units" in the tower, Lee, vice-chairman of the UK developer, told the Post on Tuesday. Called KD84 Tokens, the digital asset offers a projected annual return between 3 and 3.5 per cent. As with any other risk assets, returns are not guaranteed, Lee added.
A view of London. Knight Dragon claims its scheme is the first time a central London property has been tokenised. Photo: Shutterstock alt=A view of London. Knight Dragon claims its scheme is the first time a central London property has been tokenised. Photo: Shutterstock>
This is the first time that a property in central London has been tokenised, Lee added. Law firm Baker McKenzie advised the firm on the legal structure, while Deloitte was consulted for finance and tax issues. HKbitEX, a digital asset exchange operated by Hong Kong Digital Asset Exchange, did all the technical work, Lee said.
The investment scheme could be likened to a digital real estate investment trust (REIT) in that it promises to share the property's rental income.
Announced in 2017, Peninsula Place includes apartment units, office space and hotel rooms. The tokenised building, known as Building 4, was rented out about two years ago and is typically fully occupied. Average rents have risen between 5 and 8 per cent, Lee said. A one-bedroom unit is typically leased out for about £2,000 a month, while a two-bedroom flat rents for about £2,700.
Besides the potential dividends, buyers may also trade the tokens with other investors. Once Hong Kong regulators approve a platform for trading such securities, they may list the tokens so investors can trade them like shares on a stock market, Lee said.
"At a corporate level, Knight Dragon has revolutionised the entire European property market and will now move to do so internationally," Lee said. "At an individual level, for a relatively modest investment, individuals can own a piece of central London real estate profit."
When completed, Peninsula Place is slated to have 800 homes, office space, and 500 hotel rooms totalling 1.4 million square feet, sitting atop a complex that will house a bus station, cinemas, bars, and shops.
The investment offering comes at a time when thousands of Hongkongers have relocated to the UK under the fast track residency scheme for holders of British National (Overseas) passports.
As of May, 123,400 Hongkongers have applied under the scheme since its launch in January 2021. More than nine out of 10 have been successful in their application, according to the British government.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.