Google is building its new UK headquarters in central London. The company this week purchased a 2.4-acre plot in the King's Cross Central development, where it will begin construction on a new, 1 million square foot office. Google did not disclose an official price for the land, though a source close to the deal told Reuters that the company is investing £650 million ($1.04 billion) in the project. By the time construction is completed in 2016, the building is expected to be valued at more than £1 billion ($1.6 billion).

"This is a big investment by Google," Matt Britin, Google's VP for Northern and Central Europe, said in a statement. "We're committing further to the UK — where computing and the web were invented. It's good news for Google, for London, and for the UK."

"Good news for Google, for London, and for the UK."

Construction on the new headquarters will begin in late 2013, and the building will range from seven to eleven stories in height. The company plans to fully relocate to the complex in 2016. Currently, Google's UK operations are based out of offices in London's Victoria district, where property values are comparatively higher. The company renovated its Victoria offices only a few months ago, so its move to King's Cross is likely part of an effort to consolidate and expand its operations, rather than a cosmetic upgrade.

The move may be motivated by tax incentives, as well. Tax campaigner and accountant Richard Murphy told Reuters that it makes sense for Google to invest its overseas cash holdings in property, since sending it back to the US would subject it to American taxes. "If you're not going to send it back to the parent company to repurchase its shares, which is the normal route for a U.S. corporation sitting on a pile of cash, what else are you going to do with it?" Murphy explained.