Qatar was the top sovereign wealth buyer of European property in the last 12 months, spending 3.5 billion euros ($4.3 billion) on eight deals including the London Olympic athlete’s village and a mall on Paris’ Champs Elysees, data from a research firm showed.
Qatar Investment Authority (QIA), the Gulf state’s sovereign wealth fund, has more than $30 billion to spend on investments this year and sees commodities as a key target.
“We like commodities, we like to invest in commodities. Since 2002, the commodity price trend keeps going up,” Hussain Al-Abdulla, QIA’s executive board member said recently.
“Also, because of the financial crisis, people are not investing enough in commodities. Maybe in 2016 and 2017 that might create a gap between supply and demand that might push the price even higher up.”
QIA has been the most active of the region’s sovereign wealth funds in recent years, deploying the Gulf nation’s plentiful natural gas riches in assets ranging from German sports car maker Porsche to British bank Barclays.
For Qatar, the world’s biggest exporter of liquefied natural gas (LNG), that spending during the year to mid-August equals only about six weeks of revenue from its LNG exports, according to Reuters calculations.
Sovereign wealth funds view top-quality property in the best locations as a safe bet in the global financial crisis.
“For sovereign wealth funds like the Qatar Investment Authority (QIA), property deals are about wealth preservation, not returns,” said Joseph Kelly, director of market analysis at Real Capital Analytics (RCA).
“They have a lot of money to spend, so deals tend to be big and in the cities they know well.”
Gas market traders estimate that Qatar, with a native population of about 250,000, earned $36 billion in LNG revenue in 2011, though an exact figure is hard to obtain from available data.
Qatar was beaten into second place as the biggest overall property investor in Europe by private equity giant Blackstone, which spent 4 billion euros on 19 deals, which included office blocks and industrial units, the RCA data showed.
The QIA, the most active Middle East sovereign wealth fund in recent years, has spent 5.7 billion euros on real estate since 2007, almost 80 percent of it in London and Paris, RCA said.
Qatar funded development of the European Union’s tallest skyscraper, the Shard, which opened in London recently.
It also owns Harrods department store and a 27 percent stake in Songbird Estates, the majority owner of London’s Canary Wharf financial district.
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