Boris Johnson’s flagship London port scheme on the brink of collapse | the financial sector

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In May 2013, Boris Johnson announced a £1.7 billion master plan for Chinese investors to convert the docks of East London into the capital’s third financial district.

It was the largest commercial real estate deal announced during his tenure as Mayor of London, which he pledged would be a “beacon for eastern investors”.

While Johnson’s proposals for a new island airport in the Thames Estuary and a new bridge linking Scotland and Northern Ireland never got off the ground, he hoped the Royal Albert Dock project would cement his willful legacy.

Royal Docks Map

Despite the big ambitions, residents say there has been little work on the 35-acre industrial site in more than two years, and the scheme now looks close to collapse.

The Greater London Authority (GLA) confirmed last week that a “final termination notice” had been submitted to the developer due to the delay. The authority also said that the receivers were assigned to six companies within the developer’s group structure.

Onmesh Desai, a member of the London Workers’ Association who represents East London, said: “This was supposed to be a jewel in East London’s crown and is now a ghost town.

“It is bitterly disappointing and we need to determine what went wrong and whether due diligence was done on the project.”

There were concerns when City Hall first announced the project about its profitability, but it was hoped that there would be an abundance of Chinese money to ensure its success.

Johnson said at the time that the commercial, retail and entertainment complex on publicly owned land was intended to create thousands of jobs and bring in billions of pounds of investment into the UK economy. He said that 19th century piers and waterways were once again the “arteries of commerce and commerce”.

There has been no significant work on the 35-acre Royal Albert Dock site in over two years. Photography: JJ Archard

The project was headed by charismatic real estate developer Xu Weiping, head of developer ABP (London) Investment Ltd. According to a profile on Moneyweek, he started designing knitting machines before working as a government employee in Beijing. His previous development experience was mainly 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 driving in a red Bentley and owning a collection of luxury watches – admitted he didn’t yet have all the money for the project. “There is no need for me to prepare a billion pounds in cash,” he said. “The market is very good.”

When Chinese President Xi Jinping made 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 a new signing deal for new investments in the Royal Albert Dock project.

In 2019, Weiping admitted that the project was suffering. He said there had been a negative impact on marketing and rent for the project due to the uncertainty around Brexit. He said his development firm was previewing the future of the scheme.

The latest accounts of ABP (London) Investment Ltd, the property developer of Royal Albert Dock, said its parent company was trying to raise more money for the project. The accounts indicate uncertainty as to whether this is feasible and “this may cast 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 it failed to make contractual payments on a £99m bank loan.

A GLA spokesperson said: “GLA has been concerned for some time due to the developer’s lack of progress on the Royal Albert Dock and served ABP with final notice of termination in August after the developer demonstrated inability to meet all of its obligations … to deliver from this scheme.”

She said that ABP’s guarantor, Dauphin Holdings Group, which is also controlled by Weiping, had now formally intervened in the project. It is understood that the China-backed developer is likely to be removed from the project later this year unless it complies with the delivery schedule and contract.

GLA said the scheme is being delivered in six phases and that most of the first phase, which includes 560,000 square feet of office and retail space, was completed in April 2019. Since then, it says “no significant activity, rents or investment has been undertaken by ABP.” . She said most of the group was not in bankruptcy, but Deloitte had been appointed as recipients of six companies within the ABP group structure. Deloitte declined to comment.

The deadlock in the business is likely to lead to demands for an investigation into how the deal is structured and approved. The Channel 4 investigation in November 2014 raised questions about whether stricter checks on ABP’s business should have been carried out before the deal was approved.

Caroline Pidgeon, the Liberal Democrat MP for London, said: “Boris Johnson’s record as Mayor of London seems to have often thought the vital rules of fairness in procurement and contracting are something he can ignore. His record…must be scrutinized as closely as his record as prime minister.”

ABP (London) Investment Ltd did not respond to a request for comment.

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