Complex Made Simple

Qatar’s love affair with France

The oil-rich Gulf state is buying up France’s most cherished architectural and cultural icons.

It all started in 1974, three years after Qatar’s independence, when Sheikh Khalifa bin Hamad Al Thani, the country’s then ruler, started visiting the south of France, buying several luxury properties along the way. He quickly befriended key political figures and started investing in the French soil, extracting savoir-faire.

Ever since, France has been selling out to the Gulf country, which has spent $12 billion over the past five years through different investment funds, such as the Qatar Sports Investments (QSI) and the Qatar Investment Authority (QIA), to acquire many of its highly revered national symbols.

Prime real estate. The QIA is spending tremendous amounts on luxury real estate in the heart of the French capital.

In June 2012, it bought the Groupama building, featuring a surface area of 27,000 square meters located on 52-60, Avenue des Champs-Elysées in Paris, which is home to the Virgin and Monoprix stores, for a whopping EUR500 million. Ten investment funds competed to acquire the building at the time, but the QIA trumped. Qatar, after all, already owns 35,000 square meters on the Champs-Elysées, including Elysée 26, a large mall located on the famous avenue. This enthusiasm for luxury real estate is down to a favourable tax status for the country, as voted in 2008 by the French government.

The south of France is also a popular destination for Middle Eastern elites and Qatar owns several hotels there, including the Grand Hyatt Cannes Hotel Martinez and Hyatt Regency Nice Palais de la Mediterrannée, which was bought from Starwood Capital in 2012. An anonymous Qatari investor also acquired the famous InterContinental Hotels Carlton Cannes in the same year, increasing the country’s presence in the most luxurious spot of the Côte d’Azur.

Talking business. From the corporate sphere, Qatar owns shares in many French companies, such as Lagardère (12 percent), EADS (six percent), Veolia Environment (five percent), Vinci (five percent), The Total Group (four percent), Vivendi (three percent) and LVMH (one percent), along with investments in the energy, defence and media domains, reaching a total value of EUR6bn.

The Arab nation also entered the French audiovisual scene by rebranding Al Jazeera Sport into Bein Sport and now owns 100 percent of the French football league broadcasting rights, along with 80 percent of the rights of other major sports events. More recently, Qatar won a case against Canal+, a French private pay TV channel, which accused it of enforcing a monopoly concerning broadcasting rights.

Canal+ was the previous owner of the Paris Saint Germain FC, which was bought by the QSI three years ago and now belongs to His Highness Sheikh Tamim Ibn Hamad Al Thani, Emir of the State of Qatar. “It is bad news for us, economic strategy is irrational and we will not follow it in its spending spree. It works towards increasing its cultural influence outside of its borders and it makes that its top priority,” Bertrand Méheut CEO of Canal+ reportedly told French news channel, La Chaîne Info (LCI).

Since June 2011, the QSI has invested $340m in transfers. The club was able to provide for the biggest names in football, such as Zlatan Ibrahimovic and David Beckham. And Paris Saint Germain FC isn’t slowing down and is showing its ambition to win the UEFA Champions League in 2015.

Financing culture. France’s history is one of the richest in the world, whether it is in the fields of architecture and design or arts and music. In the latter domain, however, Qatar is not the only Arab player on the pitch.

The UAE and Morocco are also strengthening their ties with France by investing in arts and culture. The Emirates, after all, is financing the restoration of the Imperial Theatre at Château de Fontainebleau. The project, which aims to save the theatre after 150 years of inactivity, was commissioned by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi. A renewable budget of $6.7m has been allocated for its reinstatement, which includes a host of enhancements, and is part of an agreement between the UAE and French governments, which also sees the creation of The Louvre Abu Dhabi museum, scheduled to open in December 2015. In the same spirit, the Kingdom of Morocco has been covering the operating cost of the Islamic art aisle at The Louvre since 2011.

Now, back to Qatar. “The Qatari government invested $2.6m in the Great Mosque of Paris at the request of the French government,” revealed the ambassador of Qatar, Mohammed Jaham Al Kuwari, in 2012, while speaking at a Francophonie event about the country’s cultural involvement in France.

But, it’s not just in the cultural domain that Qatar is involved in at the moment, it’s working towards fixing social issues that the French government has been struggling with for decades. For example, it created a sovereign fund, with the help of the French government, aimed at helping entrepreneurs from poor neighbourhoods to kick-start
their businesses.

Qatar also bought the rights to one of the most prestigious and iconic horse races, Le Grand Prix de L’Arc de Triomphe, in 2008 and renamed it, Qatar Prix de L’Arc
de Triomphe.

What’s going on? Meanwhile, critics have been quick to point fingers at the French government for allowing what, they say, is a ‘takeover’ of the land and symbols of national identity, but they are now paying more attention than ever.

During president François Hollande’s visit to Qatar in June last year, the French government’s will to supervise Qatari investments in the country was emphasised: “We are not against Qatari investments, but there are rules and conditions that should be respected, along with domains that should be prioritised. The service industry, such as hospitality, should be prioritised.”

At the GCC level, this “privileged” relationship between France and Qatar is slowly starting to hurt France’s economic interest in the Middle East. The Dassault Rafale, the flagship French air fighter, did not sell well in the Middle East. Also, the Saudi government cancelled a train deal with the country; for undisclosed reasons, Spanish company Renfe has been chosen for the project, although French multinational Alstom has more experience in the region, having worked on the Dubai Metro and the Dubai Tram.

Private companies, on the other hand, are benefiting from this relationship. French concessions and construction company Vinci signed a $2bn contract for the construction of the Doha Metro last year, while France-based Airbus is also thriving in the Middle East, with A380 sales soaring after record orders from UAE-based Emirates Airlines and Etihad Airways. With the 2022 FIFA World Cup also being hosted by Qatar, the need for better infrastructure is also rising, which is, once again, a good opportunity for French companies.

Looking at the facts, meanwhile, one could say that France is Qatar’s top investment destination, but that is not the case.

“QIA and its various companies – Qatar Holding, Qatari Diar and Katara Hospitality – have invested $12bn in France, which is ten per cent of their total investments and that is three times less than in the UK. The European countries where Qatar invests the most are Germany, followed by Switzerland and the UK, while France is fourth,” reveals Guy Delbès, CEO of Elypont SA, a 100 per cent French subsidiary of QIA.

QIA also has significant stakes in Sainsbury’s, the London Stock Exchange and the Chelsea Barracks site, and has spent more than $7bn on real estate since 2007 in London. It also bought stakes in German solar panel company SolarWorld, which expects to achieve more than $1.35bn in profits by 2016.

While it’s clear that France might not be the first country of choice for investments for Qatar, it appears to be a nation that is seemingly happy to sell its strongest symbols to the highest bidder.

 

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