Qatar buys up real estate with eye on coming loss of energy profits

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Qatar must diversify if it is to counter the rise of renewables and the potential loss of energy profits in the future, a Middle East analyst said recently.

Such concerns might explain the country's recent aggressiveness in the global real estate market, which includes the purchase of 10 percent of Empire State Realty Trust, which owns the iconic New York City building as well as other commercial properties.

In fact, the Qatar Investment Authority, the vehicle used to invest profits from Qatar's natural gas industry, pledged in 2015 to pour $35 billion into investments in the United States over the following five years.

“It’s anywhere they can buy up,” Bobby Darvish, an American-Iranian business consultant and risk analyst, told Gulf News Journal. “If they want to keep making money, they have to diversify.”

But Darvish, who characterizes Qatar as an “extremely scary” conservative Salafist state, sees danger in the purchase of a chunk of the company that owns the Empire State Building.

“Any time a foreign country makes such a purchase it is a concern,” said Darvish. "And if it is Qatar, I would be even more concerned.”

The Qatar Investment Authority paid $622 million for a share of the real estate investment trust, which also owns other offices and retail properties across Manhattan and the New York region.

Empire State Realty Trust went public in October of 2013 with the aim of expanding its presence in the Manhattan market, according to a Bloomberg report, which said it was focusing on overhauling the company’s Manhattan properties, especially the Empire State Building, and efforts to lease its commercial space at higher market-rate rents.

The Qatar Investment Authority opened an office in New York in late 2015, stating at the time that it would help the global expansion of the wealth fund.

The authority has global interests that include many properties in London, such as the Harrods department store and some of the city's most expensive real estate -- which is also some of the most expensive real estate in the world.

Qatar also recently agreed to buy BlackRock’s Asia Square Tower 1 in Singapore for $2.5 billion, the biggest office transaction in Singapore history.

Concerns about Qatar include possible links to Islamic militants. A leaked email, part of a cache sent to and from Hillary Clinton’s campaign chairman, John Podesta, underscored American concerns. One email, sent by then-Secretary of State Clinton in 2014, quotes information based on Western intelligence sources and sources in the Middle East.

“We need to use our diplomatic and more traditional intelligence assets to bring pressure on the governments of Qatar and Saudi Arabia, which are providing clandestine financial and logistic support to ISIL and other radical Sunni groups in the region,” the email states.

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