Qatari sovereign fund planning further German acquisitions

We reported some months ago in REFIRE about the first real estate investments made by the Al Faisal Holding Group, a subsidiary of the huge sovereign wealth fund of Qatar. The group was thought to have paid over €200m for two of Berlin’s more upmarket hotels - the Grand Hyatt on Potsdamer Platz, and the Maritim Hotel in the city’s diplomatic quarter of Tiergarten.

At a recent investment conference in Berlin, Hussein Al Abdullah, the vice-chairman of the €150bn Qatar Investment Authority (QIA), said that his authority planned investments this year of €23bn (in total, worldwide), and gave a strong indication that his group planned several more imminent property investments in Germany. “Prices in Germany are still clearly below the level they were at in the years of the bubble following reunification”, he commented.

In Germany and Switzerland the QIA has been active in industrial circles for some time. It holds shareholdings in Siemens and car maker Volkswagen, on whose supervisory board QIA chairman Khalifa Jassim Al Kuwari and his deputy Al Abdullah are also sitting. QIA also took a chunk of Deutsche Bank’s recent €2.8bn capital-raising. In Switzerland QIA has a shareholding in Credit Suisse and commodities giant Xstrata, in the UK it owns 7% of Barclays Bank as its largest shareholder, as well as replacing Mohammed Al-Fayed as the owner of the Harrods retail emporium. Other European holdings include French football club Paris Saint-Germain and a stake in luxury goods producer LVMH.

In real estate, it looks like the QIA is just getting going in Europe. Major acquisitions include the $517m paid for the Credit Suisse headquarters and in Milan, the €800m for 40% of the Porta Nuova mixed-use complex in Milan. It also seems to have achieved sparkling yields over the past five years, averaging 13% since 2008, according to several bankers. Last year it is thought to have been 17%. The strategy of being “both active and conservative”, according to Al Abdullah, generally precludes getting involved in any bidding wars but rather dealing directly with sellers.

Many of the German open-ended property funds in liquidation – like SEB, who sold the Berlin hotels to the Qatari group – would be delighted to have a few more of those one-on-one discussions with the Qataris, we’re pretty certain.