When The Shard opened last July in a lavish ceremony accompanied by flashing lasers and a symphony orchestra, the glass spire instantly became a London landmark and the tallest building in Western Europe.
But now, nearly eight months later, the 72-storey tower is largely empty. Not a single commercial tenant has signed a lease for the 25 floors of office space and there have been no takers for the 10 luxury apartments at the top that go for around $75-million each.
So are the building's owners worried? Not really. The Shard is controlled by Qatar's sovereign wealth fund, which financed the $2.3-billion project and is more than happy to wait for the right tenants.
"I think you have to understand that unlike most buildings around the world really, but certainly within London, we're not under the same pressures that most buildings are under," said Shard spokesman Baron Phillips. "The state of Qatar is the majority shareholder in the development and it adopts a slightly different view."
With its burgeoning oil-and-gas wealth – and money to burn – tiny Qatar has become a massive and increasingly controversial investor in London, willing to sink vast amounts of money into a wide variety of holdings and then wait. In just a few years, the former British protectorate with less than two million people has built up an impressive portfolio of London holdings with much more to come.
Helped largely by the falling value of the British pound, Qatar's state-backed investment funds have snapped up an interest in everything from the Olympic Park to Harrods department store, Canary Wharf, Sainsbury grocery stores, the United States embassy building, Barclays Plc., the London Stock Exchange, Heathrow Airport and Camden Market.
Investors from Qatar have also recently made a pitch to buy the Arsenal soccer team for $2.3-billion, more than twice the record price for an English football team (Qatar is hosting soccer's World Cup in 2022). Last year alone, Qatar bought more than $4-billion worth of real estate across Europe, much of it in London.
London real estate has long been an attractive purchase for Arab Gulf investors, many of whom have ties to the United Kingdom, but Qatar is going further and attempting to become more of a regional power by exerting its influence in Britain and elsewhere. The state's real-estate arm, Qatari Diar, makes that point clear on its website, noting that its many British projects "further enhances Qatari Diar's sphere of influence in London."
The Qatari buying spree rankles some Londoners, who are becoming increasingly wary of wealthy oil sheiks buying up prized assets and landmarks.
A $300-million Qatar-backed project to build nearly 600 mainly luxury homes in the London borough of Lambeth, for instance, has run into fierce local opposition and been turned down by the area council. The developer is appealing that decision, sparking a heated debate with neighbourhood organizers.
"When these flats come to be sold, it is most likely that they will be bought as investment properties by foreign owners who have little intention of occupying them," said the Waterloo Community Development Action Group in a statement.
Another Qatar-financed real-estate project has also run into problems and been put on hold because of criticism and the weak U.K. economy. It involves a $4-billion redevelopment of a former military base in Westminster called the Chelsea Barracks that would include 448 luxury homes. The project, dubbed "a Gucci ghetto" because it would become an enclave for super-rich oligarchs, drew the ire of Prince Charles, who complained to the Qatar royal family about the design when it was unveiled in 2009.
The architect, London's Richard Rogers, was subsequently fired and the plans redrawn. Local opposition is building as well. "This is a Qatari development and there are concerns that there is no limitation to their purchase of London," says the Chelsea Barracks Action Group, which opposes the development. "This would not be so unacceptable if they were not having a drastic effect on the skyline of our capital city."
But it is The Shard that has become the most visible, and ostentatious, example of Qatar's move into London. Located near London Bridge, the gleaming structure dominates the city's skyline and thrusts upward like a shard of glass.
So far the only occupants are the five-star Shangri-La Hotel, which takes up 18 floors, and a group of restaurants that make up three floors. The remainder is vacant although there are reports Qatar-based broadcaster Al Jazeera will lease some space along with financial firm Duff & Phelps. The top floors, 53 to 72, are reserved for 10 apartments and a public viewing platform, which opened last month and costs around $46 to access.
"It's quite clear that the market has got wind that we've got a number of lettings in the pipeline," said Mr. Phillips, who added that no leasing announcements have been made. "It's about getting the right tenant mix."
So when would the owners like to have the building leased? "By the end of 2014," he said.