Qataris snap up Harrods for bargain £1.5bn

Al-Fayed sells the landmark store to 'have more time with his family' as the Gulf state goes on another spending spree in London

His life-size waxwork statue greets shoppers at the famous department store, but that could soon be the nearest Mohamed al-Fayed comes to a physical link with Harrods after his £1.5bn deal to sell the Knightsbridge shop to the Qatari royal family.

The sale brings the curtain down on a colourful 25 years for Harrods, which the Egyptian tycoon acquired in 1985. Despite recently insisting the business was not on the market, Mr Fayed revealed yesterday that, at 77 years old, it was time to spend more time with his four children, including Camilla al-Fayed, and three grandchildren. He will become Harrods' honorary chairman but will not have a direct hand in running the store.

The new owners are buying the store through Qatar Holding, the investment arm of Qatar Investment Authority, which trades on behalf of the oil-rich Gulf state. Sheikh Hamad al-Thani, the Qatari prime minister (pictured right with Mr Fayed), who chairs Qatar Holding, pledged to make Harrods "even greater and better". He said the responsibility of owning "a very important monument [was a] heavy burden", adding: "It's a historical place. I know it's important, not only for the British people but it is important for the tourism."

Mr Fayed's volte-face comes barely weeks after he claimed he had put "two fingers up" to potential Harrods suitors. He had previously said he planned to own the business for the rest of his life – and maintain his link with the store for even longer by being first mummified and then buried in a mausoleum on the store's roof when he died. But it emerged yesterday that the Egyptian, who was snubbed in his quest for British citizenship, had spent the past few months touting around the business, which is being sold along with its property arm, Harrods Estates, and its charter aircraft service, Air Harrods.

The store's customers, who include some of the world's richest people, were shocked at the news. Colin Bell, 42, said: "Wow, I'm really surprised. Harrods is like his statement in London. Maybe he's selling it in protest; he's tried to get citizenship for so long now, it's really shocking that he still hasn't."

The west London landmark is a major tourist destination; visitors flock as much to marvel at its ornate façade and leave with one of its green-and-gold carrier bags as to do a serious shop. It also attracts celebrities: Amanda Holden opened the Harrods sale last Christmas, and Jennifer Aniston is launching her new perfume line there next month.

Ken Costa, the chairman of the investment bank Lazard International, which advised on the deal, said Mr Fayed had plumped for the Qataris, who are thought to have invested more than £10bn in Britain in recent years, because they would "maintain the legacy and traditions of Harrods". But it was unclear whether this extended to maintaining the many personal touches Mr Fayed has added to the 160-year-old store during his ownership, which include a shrine to his late son Dodi and Princess Diana, and having his features imposed on the sphinxes in the store's Egyptian Room.

Qatar Holding said it would retain Harrods' existing staff, including Michael Ward, its managing director. Its decision to buy a trophy asset is a big departure from the investment fund's usual strategy, but Sheikh Hamad said the store's "good and stable" cashflow made it a good purchase.

Despite Mr Fayed's wish for more family time, he is not looking to sell Fulham, the football club he has owned since 1997. Qatar Holding has yet to add football to its sprawling portfolio, but reports have linked the Gulf state's royal family with Everton.

The Qataris are only Harrods' fifth owners since Charles Henry Harrod opened his shop in 1849. Mr Fayed and his brother Ali acquired Harrods for £615m in 1985, but only after a vicious public feud with Tiny Rowland, who asked the Department of Trade to probe the deal. The subsequent inquiry found that the Fayeds had lied about their background and their wealth to support their takeover bid. A report in 1990 said: "We are satisfied that the image they created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus."

The big spenders

The £1.5bn the Qataris have paid for Harrods isn't quite pocket change for them, but not far from it. The store is the latest in a series of eye-watering deals that have seen the Gulf state become a major investor in the UK.

Buoyed by high gas prices – Qatar is said to possess up to one-third of the world's known gas reserves – it has gone on a spending spree to diversify its economy. Qatar continued to snap up foreign assets, particularly big stakes in European banks, throughout the global economic crisis.

Last year alone, the Qatar Investment Authority (QIA) invested more than $30bn (£20bn) in deals around the globe. In Britain it has a significant stake in Sainsbury's and Barclays Bank, and is the biggest shareholder in the company that owns the Canary Wharf office complex. Other high-profile deals include a stake in VW-Porsche and the luxury hotel chain Fairmont, which includes the famous Raffles hotel in Singapore.

Lucy Chamberlin

Suggested Topics
The Banksy image in Folkestone before it was vandalised
Life and Style

Sales of the tablet are set to fall again, say analysts

Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister

Met Police confirm that there was a 'minor disturbance'

Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010

George Lucas criticises the major Hollywood film studios

football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'

Does Chris Grayling realise what a vague concept he is dealing with?

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style

I Am Bread could actually be a challenging and nuanced title

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Primary Teacher Cornwall

£21500 - £40000 per annum: Randstad Education Plymouth: ***KS1 & KS2 Teachers ...

Year 5 Teacher

£80 - £140 per day: Randstad Education Leeds: Year 5 Teacher KS2 teaching job...

Software Developer

£35000 - £45000 Per Annum Pensions Scheme After 6 Months: Clearwater People So...

Systems Analyst / Business Analyst - Central London

£35000 - £37000 per annum + Benefits: Ashdown Group: Systems Analyst / Busines...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album