London : Developer and investor Barwa Real Estate Co. yesterday said it will buy Park House development in London's fashionable West End district for £250 million (Dh1.3 billion), as Qatari investors continue to snap up prime real estate in the city.
"Qatar has emerged as a new global powerhouse and is expected to be the largest source of cross-border real-estate capital during 2010," said property adviser Jones Lang LaSalle.
Qatar's wealth is based on the rapid expansion of its gas industry over the past 10 years and, in response to a windfall of revenue, the government has created a number of major investment vehicles including Qatar Investment Authority, Qatar Holding, Qatari Diar and Barwa, which have been buying up prime London properties and stakes in companies.
Recent purchases of property in central London by Qatari investors suggest that they have called the bottom of the market and are still benefiting from the weakness of sterling.
Wealth funds
Qatar, which operates some of the world's largest sovereign wealth funds, last month paid £1.5 billion for Harrods, one of the world's most famous department stores. Late last year, Qatari investors bought the US Embassy building in Mayfair for $664 million, and in 2007 they paid almost £1 billion for the 13-acre Chelsea Barracks site in the heart of London.
Qatar also has a 24 per cent holding in Songbird Estates, which owns most of London's second financial district, Canary Wharf.
Jones Lang La Salle expects more deals. Qatari investors are preparing to make an offer on London hotel the Grosvenor House, said a person familiar with the matter. The property is expected command a price tag of about £500 million. According to media reports, Qatari investors also are looking to buy a share in landmark Savoy Hotel.
Barwa, which is 45 per cent owned by Qatari Diar, the property unit of the country's sovereign wealth fund, the Qatar Investment Authority, will pay Land Securities Group £225 million immediately for Park House and £25 million when building work is completed. It will also meet all of the construction costs.
On top of that, Barwa will pay a share of the profit to Land Securities, the UK's largest landlord and developer. Based on current expectations for office and retail rental values, this profit share is estimated at about £33 million and is capped at £50 million.
Land Securities started developing Park House, on Oxford Street, in May and acted directly on the sale. According a person close to the company, Barwa started looking at the Mayfair site six months ago.
The project, which covers an entire city block of just over an acre on a prime Mayfair site, with frontage onto Park Street, North Row and Oxford Street, would have cost Land Securities £412 million, of which the remaining capital expenditure to complete the plan was £179 million.
