Qatar fund checks into the Savoy

DUBAI // Qatar's spending spree on London property is gathering pace with a fresh acquisition of a prime West End development site and reports that its sovereign wealth fund may acquire part of the Savoy Hotel. Barwa Real Estate, a Qatari property developer, has acquired Park House, a commercial and residential project under construction in London's West End, for £250 million (Dh1.35 billion).

Barwa has taken over the project from Land Securities, the UK's largest property developer, although the company will still manage the delivery of the development in London's Oxford Street. "Qatar is doing something very commercial here, it is not just a trophy asset. They are effectively calling the bottom of the UK property market," said Amanda Staveley, the UK entrepreneur who has advised Gulf investors on high-profile deals.

Ms Staveley's investment company, PCP Capital Partners, will be joint manager of the project. "We've already had lots of interest from potential tenants," she said. "There is a short supply of premium space with high specification in good locations and Oxford Street is one of the best in Europe. This is the first new building on the street in 50 years." Ms Staveley declined to comment on UK reports that she would earn a £5m fee for helping negotiate the deal.

The price tag covers the cost of the site and all construction costs. In addition, Barwa will pay a profit share estimated at Dh178m within a year of the project's completion. Construction of the project, which includes residential, office and retail space, began last month and is expected to be completed by the end of 2012. The acquisition is the first wholly owned investment made by Barwa in the UK and follows last month's purchase by Qatar Holding, the investment unit of the Qatari Investment Authority, of the UK department store Harrods in a landmark deal worth Dh8.15bn.

"The investment demonstrates our commitment to Europe as part of our growth strategy and signals our interest in strengthening our portfolio interests in London," said Ghanim bin Saad al Saad, the chairman and managing director of Barwa. Qatari investments have helped to buoy the market for prime property in the UK's capital, driven mainly by the weakness of the pound and a steep fall in property prices.

Barwa's acquisition brings recent investment by Qatari companies in London to more than Dh17bn. Qatar Holding also has a 24 per cent stake in Songbird Estates, which owns more than half of the buildings in London's Canary Wharf development. Qatari Diar, which is part-owned by the government of Qatar and holds 45 per cent of Barwa, has stakes in two of London's largest development projects, Chelsea Barracks and the Shard tower.

A report in the UK newspaper The Times said yesterday Qatari investors were in talks to buy a third of the Savoy Hotel. Meanwhile, the investments are helping UK developers to recycle cash for other property ventures. Robert Noel, the managing director of Land Securities's London portfolio, said Park House "is the largest speculative development in Mayfair for a generation and this sale enables us to realise the majority of our profit ahead of schedule, with significantly reduced risk and with no capital employed".

JP Grobbelaar, a director at the property company Colliers International, said Gulf investors are seeing opportunities in London "across a spectrum of assets". "They're seeing good opportunities and they're availing themselves of those," Mr Grobbelaar said. "The [London] property market was badly hit and if you're investing in assets then now is the time to buy them at prices you wouldn't find for some period of time."

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