Middle East Enders: meet the Qataris hoovering up London

What do you do if you’re the leader of a tiny country with deep pockets bent on becoming a global player? Embark on a £10 billion shopping spree in London, snapping up banks, buildings and historic brands. John Arlidge on the Qataris’ capital takeover
Illustration by Peter Crowther
Peter Crowther
John Arlidge28 March 2013

God is an Englishman,’ declares Irvine Sellar, as he strides on to the newly opened 69th-floor observation deck of the Shard, the skyscraper he developed. Looking out of the vast floor-to-ceiling windows, it is tempting to agree. There’s the Shard itself; the jagged steel and glass tip of the £1.5 billion, 1,016ft tower seems to pierce the sky. To the east, the Olympic Stadium rises like a giant crown. To the north lies Camden Lock, where teenage tourists and ageing punks shop, and just across the Thames there’s a bigger market, for everyone except teenagers and punks: the London Stock Exchange. Squint through the telescope and you can make out the eagle that flies above the US Embassy on Grosvenor Square. A mile to the west, the lights of Harrods are reflected in the bulletproof glass of the £1 billion One Hyde Park, the most expensive apartment building in the world. In the distance, you can make out the glow of Heathrow’s new Terminal 2.

But while God might have provided the inspiration for the new glittering monuments to London’s prosperity, he didn’t pay the bill. A single investor has stumped up for almost all of it. This man has bought up the Shard, part of the Olympics site and Canary Wharf, a chunk of Camden Lock, One Hyde Park (in conjunction with his cousin), Harrods and ten per cent of Heathrow. He also owns Chelsea Barracks, the W Hotel in Leicester Square, and has big stakes in companies whose names are emblazoned across the capital: Barclays Bank, the London Stock Exchange, Sainsbury’s, Santander bank, even luxury handbag brand Anya Hindmarch.

The new landlord of London is the emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, who rules a scalding, pancake-flat Arabian peninsula the size of Yorkshire, with a native population smaller than Bradford. Londoners are used to oil- and gas-rich gazillionaires and their wives flocking to London to party and to buy things in Harrods, but not the entire store. Why is the emir playing real-life Monopoly?

The answer is, in part, because he can. He rules the richest country on the planet: Qatar has the world’s third-largest natural gas reserves and supplies around half of the natural gas Britain uses. Thanks to these pennies from heaven, Al Thani and his family are worth tens of billions of pounds and his country’s sovereign wealth fund exceeds £60 billion. If the emir or his wife, Sheikha Mozah, want something, they buy it. As the emir boasted to the FT: ‘Your Harrods. We took it!’

The bill for the emir’s London investments nudges £10 billion. This is such an epic, some say profane, amount of money that it would be tempting to cast him as the latest in a long line of petro-dollar plutocrats squandering their carbon dividend on baubles and bling. But he has different designs. First, he wants to diversify his country’s economy. More than half of Qatar’s GDP, and 70 per cent of government revenue, comes from gas exports. These should last a long time but there are risks. Even before the gas runs out, the US shale gas revolution and Australia’s growing gas exports could bring down the price. Qatar has learned from the experience of other Gulf states, which have seen growth slump — and dissent rise — when oil prices have fallen. Buying up assets in established Western markets, such as London, will generate long-term revenue from the non-oil sector. Elsewhere, the emir’s interests include David Beckham’s new team Paris Saint-Germain and the 2022 World Cup. He also bankrolls the news channel Al Jazeera. ‘We’re investing on behalf of future generations,’ says Ahmad Al-Sayed, CEO of Qatar Holding, Qatar Inc’s investment arm. Investments abroad will also help to attract talented people to develop Qatar’s economy and train its nationals. The Qatar Foundation, an educational trust run by Sheikha Mozah, has lured top UK universities, such as University College London, to establish local campuses in Doha.

Second, the emir wants to present himself and Qatar as the modern face of an open, cultured Arabia. Al Thani, 61, and his wife, 53, are among the most pro-Western of Arab leaders. The emir was educated at Sandhurst and enjoys close relations with the British Royal Family. Sheikha Mozah is a role model for modern Arab women. Not only does she — unusually for a female member of a Middle Eastern royal family — have a public role in running the Qatar Foundation, she pushes the boundaries of how Muslim women should dress, usually only covering up with a headscarf. The couple’s daughter, Sheikha Mayassa, is following in her footsteps. She studied in the US and worked with Robert De Niro at his New York-based Tribeca Film Company, and now runs Qatar’s burgeoning museums and art galleries, including Doha’s Museum of Islamic Art.

Sheikha Mayassa acknowledges that, thanks to recent history, some see Muslims as violent people. By investing abroad and at home Qatar wants ‘to showcase that Islam is a peaceful religion at the heart of the most intellectually and culturally sophisticated societies throughout history. That’s our message.’

But Qatar also has another, bigger aim. It may have all the money in the world but it is a tiny speck of a nation in the roughest neighbourhood on Earth, sandwiched between two giant regional super-powers, Saudi Arabia and Iran. Qataris don’t have to look far or have very long memories to worry about what can happen to small states in unstable regions. It is a little over 20 years since the Iraqi dictator Saddam Hussein invaded Kuwait, prompting the first Gulf War. Following a $100m donation to the US in the aftermath of Hurricane Katrina, Hamad bin Jassim Al Thani, Qatar’s prime minister, told a US official: ‘We may have our own Katrina one day.’ He meant another Gulf War, or a US or Israeli attack on Iran’s nuclear installations, which could shut the Strait of Hormuz and stop Qatar’s vital gas exports.

Qatar needs friends. By investing in Britain, the Qataris are buying influence. The deal is simple. Qatar provides much-needed investment at a time of low-to-no growth and, in return, Britain comes to regard Qatar as important for its own economic future. It’s working. When the emir comes to town he visits Downing Street as well as Buckingham Palace.

Qatar is frank about its ‘cash for clout’ foreign investment policy. Looking out of the 14th-floor windows of the Shard, over the House of Commons, the governor of the Qatar Central Bank and chairman of the Shard, Sheikh Abdullah bin Saud Al Thani, brushes aside suggestions that the skyscraper is an architectural triumph but a commercial flop. Only a handful of tenants have rented space. ‘What’s special about this building is not so much its design or its height but the solid relationship between Qatar and Britain,’ he says. ‘Recouping our initial investment is a minor thing for us at this moment.’

That’s a luxury you have when you have money to burn. But why is the emir only going for trophy assets? Trophy assets are expensive. The Qataris have been accused of vastly overpaying in London. The Shard cost £1.5 billion and the emir paid £1 billion for Chelsea Barracks, twice what many analysts say it was worth. Trophy assets also attract unwelcome attention. Vanity Fair magazine this month points out that One Hyde Park has become a refuge for oligarchs who want a safe place to park their cash, little or no tax paid and no questions asked. Chelsea Barracks is still a wasteland, six years after the emir bought it. Qatar scrapped the original redevelopment scheme for the site, designed by Richard Rogers, after Prince Charles objected to its modern design. ‘It made my heart sink,’ he wrote in a letter to Hamad bin Jassim. Further embarrassment followed when the developers, Nick and Christian Candy, sued Qatar for breach of contract over the decision to scrap Rogers’ scheme and won a partial victory and a multimillion-pound payout. The £3 billion redevelopment has now been put on hold amid fears that it is no longer viable in the deteriorating economic climate.

Observers say the emir and those who run his country’s investment funds are drawn to high-profile developments and brands because it bolsters their image as the world’s new financial power brokers — as well as men of taste. But critics say they can get carried away. ‘Qatar has no brakes,’ says a former British diplomat in the Middle East. ‘Its leaders are very intelligent and probably well-intentioned but they suffer from the dual handicap of being inconceivably rich and largely unaccountable. They don’t seem to know when to stop.’

Rita Clifton, branding expert and chairman of the market research firm Populus, says it is understandable that Qatar is making big investments in big names. ‘If you are a country that few have heard of and even fewer can find on the map and you want to make yourself into a global brand, you have to be bold. Getting involved with skyscrapers, luxury brands, the world’s most famous sportsmen and sports teams, the World Cup, and the biggest names in the City and on the high street gets you noticed. You’re judged by the company you keep — and, of course, the companies you buy.’

If the latest reports are correct, Qatar is going to become even more noticed. Gulf sources say the emir is bidding to become purveyor of pants to the nation. The QIA has approached private equity houses to explore financing an offer for Marks & Spencer. If the Qataris succeed, it would be the largest private takeover of a FTSE 100 company since 2007 when KKR, the American buyout giant, paid £11 billion to take Alliance Boots off the Stock Exchange. It would also mean the emir owns Britain’s best-known luxury retailer, Harrods, and its most storied high street retailer. In the UK’s ‘Wimbledon’ economy — we provide the venue for the world’s biggest financial players — that would make the landlord of London the Grand Slam champion. ES

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