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China State Construction Engineering Corporation seeks UK contractor JV

Exclusive: One of the world’s largest contractors, the China State Construction Engineering Corporation has held talks with UK firms to try to break into the property market, Construction News can reveal.

At least four of the UK’s biggest contractors are understood to have been approached by CSCEC, which has sought to form a 50:50 joint venture with a UK firm.

Sources said the four contractors were Kier, Mace, Sir Robert McAlpine and Wates.

Construction News understands one of the four has been shortlisted against three other firms for Wanda One’s £400m One Nine Elms scheme in central London (pictured).

One Nine Elms, previously known as the Market Towers project, sits on the river front at the eastern end of the Nine Elms regeneration area.

Planning has been granted for two towers measuring 200 m and 160 m and includes 439 private residential units, 52 affordable homes and a 187-room, five-star hotel, the first to be built by Dalian Wanda in the UK.

Wanda One declined to name the four contractors that have been shortlisted for the scheme but a decision on the main contractor could be made next month.

Its project team includes KPF as architects, Second London Wall as project managers and Gleeds as cost consultants.

In minutes from a recent Nine Elms construction community meeting in July, Second London Wall project manager Robert Hopkins said the team would appoint a main contractor in November 2014.

“One Nine Elms is a major project, which - unsurprisingly with a Chinese developer - is looking to explore options for a Chinese and UK partnership”

Source

Work is expected to begin on site in the first quarter of 2015.

Wanda One is a subsidiary of China commercial property giant Dalian Wanda, which has assets of RMB380bn (£36bn) and annual revenue of RMB187bn (£17bn).

Dalian Wanda was founded in 1988 and has since become the country’s largest property owner and developer with more than 17m sq m of property in its domestic portfolio.

One source told Construction News: “One Nine Elms is a major project, which - unsurprisingly with a Chinese developer - is looking to explore options for a Chinese and UK partnership.”

Another industry source said that the JV would “bring big challenges” around business culture alignment, particularly around the “understanding of
UK specification quality and technical expectations and real supply chain connectivity”.

The source added: “It wouldn’t surprise me if you start seeing more overseas players wanting a piece of the UK market, but you only have to speak to certain firms to know this isn’t a straightforward or quick market entry.”

Wanda One named former Qatari Diar executive Peter Amato as development director for the £400m One Nine Elms project in July. Demolition has already started of Market Towers.

The biggest Chinese contractor to have entered the UK market to date was the Beijing Construction Engineering Group, which was appointed to the £800m Carillion Airport City scheme in Manchester last year.

BCEG was part of a consortium with Argent, Carillion and the Greater Manchester Pension Fund for the development, which is partly funded by China’s largest bank, the Industrial and Commercial Bank of China.

In March this year, its managing director Xing Yan told Construction News it would “definitely” not be the last project the firm worked on.

PwC said in June it expected more Chinese firms to boost its UK presence through investment in infrastructure, joint ventures with UK-based contractors and by buying out UK firms.

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