Qatar’s clean sweep builds UK assets portfolio

The Qatar Investment Authority’s most recent acquisition is only the tip of an asset-owning iceberg — one some observers are becoming concerned about.

Qatar’s sovereign wealth fund, effectively owned by the Qatari royal family, now has control of London assets that include The Shard, Europe’s tallest office block; the Olympic Village, which is rapidly being redeveloped as a new residential district as well as sporting and leisure venues; the HSBC tower at Canary Wharf; Harrods; a stake in the Shell Centre on the South Bank; the residential redevelopment at Chelsea Barracks; half of the luxury apartment block One Hyde Park, the former US embassy in Grosvenor Square; and an emerging Thames-side development in Chelsea known as Grosvenor Waterside.

Even as market analysts were scratching their heads at the implications of the Canary Wharf deal, Qatar — in the form of Qatar Airways — confounded the City again. Just a day after country’s sovereign wealth fund emerging successfully over the Docklands estate, Qatar Airways bought a 10 per cent stake in British Airways for just over £1 billion (Dh5.56bn).

Qatar already owns a 20 per cent stake in Heathrow Airport and it snapped up BA shares just months before a decision is made on whether Heathrow will be allowed to build a third runway. And it is not just infrastructure companies that Qatar is keen to pump money into.

The British retailer Sainsbury’s has had a significant Qatar shareholder for seven years, while Barclays Bank received an injection of cash from Qatar in 2008.

This emergency fundraising is now the subject of a Serious Fraud Office investigation in the UK. Qatar still owns about 5 per cent of the bank.

Some in the United Kingdom regard the level of investment as a threat. British unions in particular have expressed concern about Arabian Gulf investments in the UK.

“There’s a huge issue at stake here,” says Justin Bowden of the GMB trade union, which has more than 631,000 members.

“Who is investing in UK Plc and why? Do they pay proper taxes and are they here for the long term or quick buck? We’re not averse to investment but we need answers and openness,” Mr Bowden says.

“These are vastly powerful state companies, owned by foreign governments, and we’re putting an awful lot of power in their hands.

“Britain has to ensure that it never falls out with Qatar, or one day we might wake up and find this tiny Gulf state has us at its mercy.”

Other senior figures have a more positive view.

Happily describing himself as the “mayor of the eighth emirate”, London’s Boris Johnson has welcomed the Arab world’s keen interest in the city.

“Great cities are going to compete by being attractive to tonnes of individuals from around the world. That’s how the world economy is going to be in the next 30 or 40 years and it’s a great asset to London that we’re able to count on the affection of people from this area,” the mayor said on a recent visit to the UAE a few months ago.

“When you look at the opportunities in London, there are 18 huge opportunity areas … ripe for development; believe me, there’s plenty of room for investors, not just from the Middle East but from around the world.”

London’s population is estimated to grow by another 1 million people by 2021, making new investment even more important.

“That’s going to put huge pressure on our housing stock and on our transport infrastructure,” Mr Johnson said. “There are great opportunities for investment in both those types of things that will deliver long-term yields so it will be no secret to you that we’re having discussions about housing and development opportunities ... and our partners here are certainly very, very interested in some of the transport infrastructure opportunities as well.”

Qatar tends to be a long-term investor, but it may not have planned to hold these particular investments for quite so long. Supermarket retailing and banking remain two sectors of the UK economy that continue to be under pressure and share prices have not performed that well.

Sainsbury’s shares are now at their lowest level for 11 years. Many retail analysts suggest Qatar may choose to dump the stock this year, or conversely launch a full takeover bid.

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