Land Sec takes £250m for prime London site

Published on Thursday 17 June 2010 21:20

PROPERTY giant Land Securities has agreed to sell of one London's most significant development projects to Qatari firm Barwa Real Estate for £250 million as foreign demand for prime UK property soars.

Barwa, which is part owned by Qatar's sovereign wealth fund, will pay to complete the development of Park House on London's Oxford Street while the project will continue to be managed by Land Sec.

Work on the mixed retail, housing and office development in Europe's busiest shopping district started in May and is due to be completed in 2012.

This week, a report by property agents Jones Lang LaSalle said that Qatari funds would be the "powerhouse" of global property investment this year.

Barwa is 45 per cent owned by Qatari Diar, the property unit of country's sovereign wealth fund, the Qatar Investment Authority (QIA).

The sovereign fund is also in talks to buy a stake in London's Savoy Hotel and is a bidder for the Grosvenor House Hotel.

QIA also has a 24 per cent holding in Songbird Estates, which owns most of Canary Wharf.

Qatar Holding, another unit of the Qatar wealth fund, last month acquired London department store Harrods in a deal reported to be worth about 1.5bn.

Ghanim Bin Saad Al Saad, the chairman and managing director of Barwa, said: "The investment demonstrates our commitment to Europe as part of our growth strategy and signals our interest in strengthening our portfolio interests in London."

Barwa will pay a share of the profits, expected to be 33m, to Land Securities.

Robert Noel, managing director of Land Securities' London portfolio, said the deal would allow the firm to bring profits on the development in early.

"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," Noel said.

Shares in Land Sec, Britain's largest real estate investment trust, fell 2 per cent to 615p.