Boris Johnson’s flagship London docks project on the brink of collapse | Financial sector
In May 2013, Boris Johnson announced a flagship £1.7 billion scheme for Chinese investors to transform the East London Docks into the capital’s third financial district.
It was the biggest commercial property deal he had announced during his time as Mayor of London and he promised it would be a “beacon for investors from the East”.
While Johnson’s proposals for a new island airport in the Thames Estuary and a new bridge linking Scotland and Northern Ireland never saw the light of day, he hoped the Royal Albert Dock project would bolster his mayoral legacy.
Despite the grand ambitions, residents say there has been no major work on the 35-acre industrial site for more than two years and the project now appears to be on the verge of collapse.
The Greater London Authority (GLA) confirmed last week that a “final notice of termination” had been served on the developer due to delays. The authority also said receivers had been appointed at six companies within the developer’s group structure.
Unmesh Desai, a London Labor Assembly member who represents East London, said: ‘It was meant to be a jewel in the crown of East London and it is now a ghost town.
“It is bitterly disappointing and we need to establish what went wrong and whether the proper due diligence was carried out on the project.”
When the town hall first announced the project, there were concerns about its profitability, but it was hoped that there would be an abundance of Chinese funds to ensure its success.
Johnson said at the time that the commercial, retail and leisure complex on public land was set to create thousands of jobs and bring billions of pounds of investment to the UK economy. He said the 19th century docks and waterways were once again the “arteries of trade and commerce”.
The project was led by charismatic property developer Xu Weiping, head of developer ABP (London) Investment Ltd. According to a profile of Money Week, he started by designing knitting machines before working as a civil servant in Beijing. His previous development experience was mostly limited to a large development in one of the less affluent areas of Beijing.
In a November 2013 interview, Weiping – who was described as often being driven around in a red Bentley and owning a collection of luxury watches – admitted that he did not yet have all the money for the project. “I don’t need to prepare £1 billion in cash,” he said. “The market is quite good.”
When Chinese President Xi Jinping paid a state visit to Britain in October 2015, enjoying a pint of beer in a Buckinghamshire pub with then-Prime Minister David Cameron, he presided over the signing of a new agreement for a new investment in the Royal Albert Dock project.
In 2019, Weiping admitted the project was in trouble. He said there had been a negative impact on the marketing and leasing of the project due to the uncertainty surrounding Brexit. He said his development company was looking into the program’s future.
Latest accounts from ABP (London) Investment Ltd, the developer of the Royal Albert Dock, said its parent company was trying to raise additional funds for the project. The accounts say there is uncertainty as to whether this is possible and “it may cast significant doubt on the company’s ability to continue as a going concern”. Another company involved in the development, also controlled by Weiping, says in its accounts that it has failed to make contractual repayments of a £99million bank loan.
A GLA spokesman said: “The GLA has been concerned for some time about the lack of progress by the developer of the Royal Albert Dock and served ABP with notice of final termination in August after the developer proved unable to meet all its obligations … for the delivery of this diagram. »
He said ABP’s guarantor, Dauphin Holdings Group, also controlled by Weiping, had now officially entered the project. It is understood that the China-backed developer will likely be pulled from the project later this year unless it meets the delivery schedule and contract.
The GLA said the program was delivered in six phases and that most of the first phase, comprising 560,000 square feet of office and retail space, was completed in April 2019. It has since reported “no significant activity, lease or investment has been undertaken by ABP.” He said most of the group was not bankrupt, but Deloitte had been appointed receiver of six companies within the ABP group structure Deloitte declined to comment.
The work stoppage will likely lead to calls for an investigation into how the deal was structured and approved. A Channel 4 investigation in November 2014 raised questions about whether more stringent checks should have been carried out on ABP activity before accepting the deal.
Caroline Pidgeon, Liberal Democrat Assembly Member for London, said: ‘Boris Johnson’s record as Mayor of London often gave the impression that he thought the vital rules of fairness in supply and contracting was something he could ignore. His record…should be scrutinized as carefully as his record as prime minister.
ABP (London) Investment Ltd did not respond to a request for comment.