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Qatar holdings buys Harrods 10, May 2010

Posted by thegulfblog.com in Qatar, UK.
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Harrods, London’s largest and most venerable of department stores, has been bought by Qatar’s sovereign wealth fund for $2.2 billion. The crazy eccentric former owner Muhammal Al Fayed owned the store since the mid-1980s and had swornn as late as last week that he would never sell the store.

This is but the latest investment by Qatar in Western blue-chip institutions. In the past few years Qatar has bought all or large parts of Sainsbury’s supermarket, Porsche, Volkswagen, Barclay’s bank, the London Stock Exchange, the former US Embassy in central London, Canary Wharf, Credit Suisse and a French shipyard, to name but a few acquisitions.

First and foremost, Qatar wants returns for these investments. Although $2.2 billion may seem rather expensive for a shop, Harrods is situated, it must not be forgotten, in Kensington central London and sprawls over a massive 11,000 square meters. It also makes a profit. A second but still important consideration for Qataris is in the symbolism of their acquisitions. They typically only buy the very best brands in strategically important countries. This increases the country’s profile, publicises Qatar’s name as a financial powerhouse and ties Qatar ever more into the economies of some of the strongest nations on earth. So that – essentially – if something should happen to Qatar someday, they might be more inclined, motivated or willing to help out.

I also think that Qatar’s investments are so frequently in banks, hotels, property and high-end stores that perhaps decision makers are keeping the Qatari public in mind too so that they can see ‘where their money is being spent’. Qataris can identify will all these institutions and will no doubt be pleased that when they spend their next £10,000 in the outrageously expensive Harrods they are, effectively, giving the money back to Qatar.

Plans have been mentioned to open a Harrods in Shanghai. This would not surprise me at all. There will doubtless be one opening in Doha too within a few years. The last ‘bright side’ to this deal is that it presumably removes the chance for Al Fayed to entomb himself in a sarcophagus somewhere in Harrods as he had previously sworn.


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