Welcome to the world of international real estate! We’re going to explore the captivating story of Qatar’s growing presence in London’s property market, specifically their latest acquisition: the iconic InterContinental London Park Lane hotel.
The £400 Million Deal
Qatar’s vast natural gas wealth continues to fuel its aggressive investment strategy, with the latest target being the InterContinental London Park Lane. Qatar Holding, the emirate’s investment arm, has secured a £400 million deal, split into two parts.
Firstly, they’ve purchased the 57-year lease from InterContinental Hotel Group (IHG) for a whopping £301.5 million. This prestigious property boasts 447 bedrooms and sits close to the serene Hyde Park.
Secondly, the freehold ownership was acquired for another £100 million from the Crown Estate, the property company overseeing assets belonging to the Queen.
This purchase comes on the heels of a highly competitive bidding process that saw Qatar emerge victorious over six other contenders, including other sovereign wealth funds from the Middle East and Asia. The intense competition resulted in a price tag that delivered a 62% premium to the hotel’s book value.
Qatar’s London Legacy
The InterContinental London Park Lane deal is not just another acquisition; it’s the latest addition to Qatar’s impressive portfolio of London properties.
They already hold a stake in the Shard skyscraper, a symbol of London’s skyline, and own the prestigious Harrods department store. Their presence also extends to the Olympic Park, where they invested in the athlete’s village.
The Qataris have been actively investing in European real estate, particularly in London, where they have poured in an estimated £3 billion in the 12 months leading up to mid-August 2012. This hefty sum represents six weeks’ worth of revenue generated from the country’s liquefied natural gas exports!
Opacity and Controversy
While Qatar’s involvement in London’s real estate scene is undeniably high-profile, the companies behind these investments remain largely opaque. Qatar Holding, for instance, prefers to maintain a veil of secrecy regarding their activities.
However, those familiar with the investment vehicle believe it operates as a personal investment tool for the emir, Sheikh Hamad bin Khalifa al-Thani. Their strategy appears to focus on diversifying their vast natural resource wealth, aiming to secure future prosperity through strategic investments.
At the helm of Qatar Holding is Sheikh Hamad Bin Jassem Bin Jabor al-Thani, Qatar’s prime minister and cousin of the emir. Known in the banking world as HBJ, his name made headlines a decade ago when a £500 million arms deal between Qatar and BAE Systems sparked controversy. A transfer of £7 million to two Jersey trusts, of which he was a beneficiary, led to an investigation by the Jersey Financial Services Commission.
The case was ultimately dropped after HBJ paid £6 million as a “voluntary reparation.”
More recently, Barclays has faced allegations regarding its relationship with Qatar during the 2008 financial crisis, when the emirate provided a crucial £7.3 billion lifeline. The Serious Fraud Office and Financial Services Authority are currently investigating whether Barclays extended funds to Qatar in exchange for shares in the bank.
In conclusion, Qatar’s relentless pursuit of London’s real estate market reflects their ambition to diversify their wealth and secure a prosperous future. However, the opaque nature of their operations, coupled with past controversies, has raised questions about their business practices. Despite these challenges, Qatar’s influence on London’s property landscape is undeniable, leaving an enduring mark on the city’s skyline and economy.
