Qatari riches pour into property market

Large swathes of London are set to be transformed by the wealth of Qatar as figures reveal that money from the Middle East and Far East is dominating the capital's property market.

The tiny oil and gas-rich emirate is likely to be largest overseas property investor in the world this year, according to a report by estate agent consultancy Jones Lang LaSalle.

Attracted by the weak pound, Qatar is buying Harrods for £1.5 billion and has become the largest shareholder in Songbord, which controls more than half the buildings in Canary Wharf. It also owns the Chelsea Barracks site.

The report by Jones Lang LaSalle says: "Cash-rich and with a strong appetite for splashy overseas assets, Qatari [investment] vehicles have lately outshone their counterparts from the region and are projected to carry on with their rapid expansion across the real estate world."

The report comes as figures from estate agent Knight Frank show that almost half of all newbuild property in central London bought for investment last year was sold to Asian investors, and only 36 per cent to UK investors.

The total volume of Asian investment in this market was £761 million over the 12 months until March, compared with mainland European investment of £64million and Russian investment of £48million. Chinese and Hong Kong investors secured 11 per cent of the market, Singaporeans 10 per cent, Malaysians seven per cent, and Russians 3.1 per cent.

Liam Bailey, who works in residential research at Knight Frank, said the rise in Far Eastern investment was driven by the exchange rate. However, he said the effective ban on third home ownership in China also encouraged investors overseas as did fears that the Chinese housing market may be about to face a downturn.

"London holds particular appeal because investors often buy property for their children to live in while studying at university here, and later hold onto it as an investment," he added.