LONDON: Land Securities is selling one of its largest London development projects to Qatari property company Barwa Real Estate for £250 million (US$371 million) as overseas demand for prime UK real estate spirals.
The acquisition of the Park House development on London's Oxford Street is the first major wholly-owned investment made by Barwa in the UK.
"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 Chairman and Managing Director Ghanim bin Saad Al Saad said.
Barwa will pay a share of the profits to Land Securities within 12 months of completion. Based on current office and retail rental value growth expectations, this profit share is estimated to be around £33 million, Barwa said.
The development, comprising a total of 330,000 square feet, includes 163,000 square feet for offices, 88,000 square feet of retail space and 70,000 square feet of residential accommodation. It is due for completion by November 2012.
Robert Noel, managing director of Land Securities' London portfolio, said the company would recycle proceeds from the sale in its growing speculative development pipeline, one of the largest in the UK quoted property sector.
"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.
Amanda Staveley's PCP Capital Partners and CB Richard Ellis advised Barwa on the deal.
News of Barwa's acquisition of Park House comes just days after global real estate adviser Jones Lang LaSalle said Qatar was likely to be the largest source of capital to global real estate markets in 2010.
Barwa, which is in the process of taking over Qatar Real Estate Investment Co, is 45% owned by Qatari Diar, the property unit of country's sovereign wealth fund, the Qatar Investment Authority.
Qatar Holding, another unit of the Qatar wealth fund last month acquired the world-famous London department store Harrods in a deal reported to be worth around £1.5 billion. — Reuters
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