(MENAFN- Khaleej Times) With a population of only 2,338,610 people, according to a United Nations estimate, Qatar is renowned for being the world's richest country per capita with an insatiable appetite for investment. Since its inception in 2005, the Qatar Investment Authority (QIA), created with the purpose to administer the country's fortune from liquified natural gas sales, has acquired $335 billion in assets around the globe, making its sovereign wealth fund the 14th largest in the world, according to the Sovereign Wealth Fund Institute.
With an investment of more than $35 billion in the UK only, Qataris own more of London than the Queen of England herself. Canary Wharf Group Investment Holdings, which is co-owned by Qatar Holdings, part of the QIA, owns 21.5 million square feet of space, making it the largest property owner in London. Over the years, Europe has been a favourite destination for Qatari cash with major investments in top brands such as Barclays and Credit Suisse Group, Volkswagen, Valentino and in the French football club Paris Saint-Germain, with star players including David Beckham, in 2011.
According to a Cluttons study, the Dubai property market was set to overtake other international markets such as London, Singapore or New York as a top choice for Qatari investors in 2016, due to the Expo 2020's potential for capital growth and higher market yields.
In 2016, Qataris pumped $544 million into Dubai's real estate, with the Dubai Land Department confirming that 770 Qatari citizens have invested in the property market, being the second GCC subsidising nation after Saudi Arabia.
2017, however, has proven to be a challenging year so far, following a diplomatic rift between several Arab countries, comprising Saudi Arabia, the UAE, Bahrain and Egypt which decided to cut off all ties with Qatar, threatening to disrupt 36 years of unity. Qatari banks are already noticing the first signs of strain, as Saudi and UAE banks are delaying any Qatar deals, putting the riyal under tremendous pressure.
Despite the fact that Qatar is the 18th most competitive country in the world, according to the World Economic Forum and its macroeconomic environment is so stable, that it is only upstaged by Norway, the immediate social and economic impact on the small state might be devastating. Qatar is a huge import country and has received a massive blow across at least five key sectors, such as shipping, food, banking, airline and stocks.
Panic has risen among Qatari nationals who are reported to be keen to get rid of their assets in the UAE at all costs. Some went to the extent of selling their properties 20 per cent below the market price, while others have adopted lucrative strategies to attract buyers and tenants. For those who are not currently present in the UAE and who wish to sell their assets, the arrangement of signing a deal is even more complicated, as they will be compelled to give a power of attorney to a non-Qatari citizen to sell the property on their behalf.
While it might be too early to assess how this unprecedented diplomatic rift will unfold and what the long-term consequences will be, one thing is for sure: Qataris are in a frenzy to take their cash away from the Middle East. And as the crisis deepens, we are going to notice a significant shift in capital inflow and investments in the property markets in both Dubai and Doha, with a sole winner: London.
Property brokers in London have divulged that they are witnessing an increase in demand from Qataris willing to move their assets away from the Middle East and into the UK capital. The London property market will surely benefit from the current geopolitical situation in the Gulf as Qatari investment in the region is likely to surge in the upcoming months.
The writer is the CEO of Al Ruwad Real Estate. Views expressed are his own and do not reflect the newspaper's policies.
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