Meet The Hong Kong Firm Planning To Dominate The U.K. Apartment Market

Far East Consortium, the Hong Kong developer behind the £1B redevelopment of a 350-acre slice of central Manchester, plans to become the U.K.'s largest build-for-sale apartment developer. Having missed out by a whisker on buying NCP, they want to become a leading force in the car parking sector, too. Oh, and they plan big things in hotels.

Ambitious? They most certainly are. Ahead of Mipim announcements, Bisnow discovers how they plan to use Manchester's Northern Gateway as a springboard for their U.K. expansion.

A 40-storey "ultra modern" skyscraper, a 350-acre development site, maybe 10,000 new residential units and several hundred thousand square feet of commercial floorspace would be enough for most developers.

Yet for Far East Consortium, the Hong Kong-listed developer with a £4.8B portfolio and commercial ventures operating across Mainland China, Hong Kong, Singapore, Malaysia, Australia and New Zealand, it is just a toe-hold.

As they prepare to expand from Manchester into a substantially larger London operation, and explore options in Birmingham, Liverpool and maybe Leeds, FEC have set the bar high. To become one of the leading residential developers outside London, to take a controlling slice of the car park market and expand the Dorsett hotel brand.

FEC were selected to develop Manchester's 350-acre Northern Gateway site in April. Stretching across the Lower Irk Valley, New Cross and Collyhurst to the north of the city centre, it will provide up to 10,000 new homes over a 10- to 15-year period.

Can they do it, or will Manchester prove less of a toe-hold and more of a trip-hazard?

Towering Ambition?

Redeveloping in Manchester is getting harder as local residents and conservation bodies take an ever-keener interest in the fate of historic buildings and community landmarks. FEC's £235M plan for Angel Meadow, which includes a 40-storey tower, is hardly low impact.

At the same time, the battle to control land is getting tougher, and a lot more expensive. FEC's 350-acre Northern Gateway territory is not yet under its ownership.

The ownership issue is slowly being resolved. Last week FEC acquired a 1.55-acre site at Dantzic Street for £2.7M in a deal with private clients of CBRE. The site could accommodate 400 units. A toppy price? "Yes, in a way, but it is part of a bigger picture. We bought off market and it goes into the 350-acre pot," FEC Regional General Manager Gavin Taylor said.

Does FEC plan to buy all the 350 acres it is slated to develop? The answer is, probably. “We would prefer to be masters of our own destiny, but we appreciate ultimately we won’t be able to buy everything within the red-line on the Northern Gateway plan. We are not a joint-venture business,” Taylor said, explaining that funding has to come from their own resources. “We will work with other landlords, and engage with them on plans for their site, and if they don’t want to sell to us, fine, but in that case they would have to agree with us on the plan for the site.”

Today FEC has up to £200M available for immediate site acquisitions — which will certainly help them get close to their target.

On the character issues that are now tripping up Northern Quarter developers, Taylor said early encounters with residents had taught them to be careful.

Early reactions to plans for a 41 storey tower at Angel Gardens, part of the NOMA redevelopment, left them re-thinking the scheme — and their approach to public engagement.

“We’ve been through a journey with Angel Meadow. We were relatively naïve in not engaging with some groups, and that came back to bite us later. But they engaged with us, and we sorted the problem, and they are now fundamental to the success of the project," Taylor said.

“It’s natural that as the land available dwindles in central Manchester, so sensitivity about the land that remains goes up.

“We would never get to a point of conflict with the city council — it's all about collaboration.”

Mipim will see FEC announce how the nine neighbourhoods in its Northern Gateway area will be structured, and what landmarks — ranging from co-working centres to primary schools — will anchor each one. Sir Terry Farrell is masterplanning the scheme.

Car Park Kings

Car parking is not a glamorous business but it does mean long-term cash flow and FEC are not shy about their plans: They want to be the U.K. market leader.

Taylor says they were second-placed bidder when Macquarie sold NCP — with its 150,000 spaces and 500 sites nationwide — in July. The No. 1 bidder (and successful buyer) was a consortium of Park24 Co. (Park24), a listed Japanese strategic buyer and Development Bank of Japan Inc., a Japanese government-owned financial institution.

Having missed out on the NCP opportunity you can be fairly certain they are exploring U.K. buy-ins to complement their Care Park business which operates in Australia and New Zealand. In the meantime, FEC are assembling a U.K. car parking business starting in Manchester.

FEC launched in the Manchester car park scene buying a 6-acre site at Boundary Farm, close to Manchester Airport for £13M in late 2016.

“We’re looking for more sites in Manchester and we want to be market leader,” Taylor said.

New Hotels, Too

Hotels are going to be big for FEC as they follow the "Chinese wallet" around the world's tourist hotspots, and they are bringing their brand to Manchester.

FEC holds a strategic investment in 24-hotel Dorsett Hospitality International and opened Dorsett Shepherds Bush in 2015. Its second hotel in the U.K., Dorsett City, opened in summer 2017 and two more London hotels (Alpha Square and Hornsey Town Hall) are planned, along with serviced apartments next to the Shepherds Bush hotel.

“We’ve already two Dorsett hotels in London and we’d like to bring the 4-star operation to Manchester," Taylor said.

“We’re currently procuring a hotel site in Manchester — we have two potential locations, and we hope to close a deal by April.”

Control Is Important

FEC are already exploring the options beyond Manchester.

“We want to be one of the market leaders outside London — we have massive aspirations," Taylor said.

“We’re in conversations in Birmingham and Liverpool — Birmingham is a bit behind in the cycle, but there are big opportunities. We’re talking in Leeds, too, but we’re more sceptical, because we don’t understand it and at the moment we only have so much capacity.”

“The appeal of all three is that they are cheaper than Manchester and London. But we’re not looking for quick wins, not looking for one-off turns and burns. We are looking to stabilise our business. And we’re also looking for political stability in the cities we invest in."

FEC will triple its Manchester head count to cope with the expansion — up from 12 today to 36 by 2019. And they know exactly what they want.

“It’ll be privately funded with our own equity and debt raised on the strength of that equity, we will be building purely for private sale, and we’ll retain the freeholds as well as our own estate management operations. We want to be in control,” Taylor said.

Urban regeneration has its rough side, and although FEC declined to comment, the headaches caused by their efforts to foil an allegded £2M extortion plot around their plans for a £500M Canary Wharf development are still keenly remembered. A 65-storey tower is planned as part of the Alpha Square scheme.

Being in control is important for FEC, but the U.K. regions are tough places to do business. Keeping control will be a full-time job.