LONDON • Chinese investment in London commercial property has more than trebled since before Britain voted to leave the European Union, most of it channelled through Hong Kong at a time of heightened political uncertainty in the former British colony.
While others have pulled back from British property, following last year's Brexit referendum, investors - largely from Hong Kong - are snapping up the British capital's best-known skyscrapers, including the "Cheesegrater" and "Walkie Talkie".
In the first six months of this year, Chinese investors spent £3.96 billion (S$7 billion) on London commercial property, according to data from the CBRE real estate group, the highest amount on record and outpacing the £2.69 billion spent in the whole of last year.
Hong Kong accounted for 92 per cent of the Chinese investment, according to the Knight Frank agency. Hong Kong food conglomerate Lee Kum Kee is set to pay £1.28 billion later this month for 20 Fenchurch Street - the 34-storey skyscraper known as the Walkie Talkie - a record for an office building in Britain.
With Beijing cracking down on foreign deals by mainland companies, investors there are instead using Hong Kong as a conduit for overseas deals. Several factors are drawing the investment, including the sterling's 12 per cent drop since the Brexit referendum against the US dollar - to which the Hong Kong dollar is pegged.
"Cheaper money, the rule of law, cultural familiarity and a need to diversify out of a home market is what's driving Hong Kong demand in the United Kingdom," said Mr James Beckham, head of central London investment at property consultant Cushman & Wakefield, which advised the Walkie Talkie's buyers and Cheesegrater's sellers.
"If you're concerned that China is taking control of Hong Kong more and more and you need to take capital out of that jurisdiction, London is attractive," said Mr Chris Brett, head of international capital markets at CBRE.
The largest chunk of cross-border Chinese real estate investment continues to be poured into the United States, but that proportion declined in the first half of the year while increasing in Britain.
Real estate sources said other London landmarks, including 30 St Mary Axe - known as the Gherkin - and the Heron Tower are also attracting interest from Hong Kong investors.
These prime assets, such as the Cheesegrater located in Leadenhall Street and the Walkie Talkie, have well-known tenants and are in limited supply.
London's skyscraper boom of the last decade reshaped the skyline, adorning it with unusually shaped silhouettes inspiring nicknames such as the Shard and the 24-storey Can of Ham, which is due to open next year.