Chelsfield co-chairman reflects on long-standing partnership with Qatar

By Denise MarrayGulf Times CorrespondentLondonIf you want to know what is happening in the property market in prime European locations such as London and Paris, it helps to talk to people who walk the walk as well as talk the talk. People who, to put it bluntly, put their money where their mouth is and literally pay the price for the decisions they take. Such people can be found at Chelsfield Group, the leading real estate company and asset manager, which has a long-established partnership with Qatar. Qatar has a 20% stake in Chelsfield Partners, and three Qatari representatives sit on the board.Chelsfield’s success in Europe is apparent in its high-end assets; these include the Knightsbridge Estate, the ‘Golden Triangle’ Parisian assets, predominantly in the 8th arrondissement in the prestigious area of Avenue Montaigne, major residential/retail developments on London’s South Bank and Holland Green, a residential development which will also be home to London’s new Design Museum. The new residential buildings will be adjacent to the museum being designed by the acclaimed architect Rem Koolhaas, well-known for his 234 metre high CCTV Tower in Beijing and Seattle public library.Gulf Times spoke to Robert P Burrow, co-chairman of Chelsfield Group Limited and chief executive of Chelsfield Partners, to learn more about the company’s long-standing association with Qatar and to get his perspective on the London and international property market.He commented on the philosophy of the company which is shaped by its active participation in the market.“One of the things about being principals in this business and having our own money in play so that we put our money where our mouth is — is that we are not driven in the way some are to make investments with their clients’ money just because they have the clients’ money to invest. If the moment is wrong then we will say ‘we shouldn’t be investing — we should hold back — we mustn’t put the clients’ capital at risk’,” he said.The strong relations with their partners in the Gulf, including QIA, QH and QInvest, showed in the global financial crisis in 2008.Burrow explained that in 2011, Qatar Holding (QH) and the Saudi Olayan Group funded the buyout of the Bank of Scotland stake in Chelsfield Partners in the aftermath of the Bank’s financial difficulties.  “The reason we have enjoyed working with Qatar is that when people give their word they get on and do something. Qatar Inc does abide by its word and stick by its friends. When they bought into us in the autumn of 2008 it was at the worst period when the Bank of Scotland’s problems really surfaced. QIA did not flinch. They didn’t renegotiate or renege — they just closed the deal and got on with it. It was first rate — the way they behaved,” he said. This kind of support, through good times and bad, is something the company puts great value on.“The other thing Elliott Bernerd, my co-chairman and I have done — through thick and thin — because things have not always been good to put it mildly — is to have said: ‘we asked our friends and clients and investors to come into this — we may have lost money now but we will work really hard with them and we will recapture the values’. They have seen a near doubling of net assets values compared to the low spot,” he said.He noted that the Qatari partners took a very important role in the funding of the Commonwealth Institute redevelopment (Holland Green) which, he said, “has been a very happy and successful outcome for everybody.”Burrow says that trust is at the heart of the relationship with Qatar. It is the knowledge that their partners at Chelsfield can be sounded out on potential investments in a full and frank discussion that will remain private that makes the relationship work for Qatar, in his view.The trust works in both directions. “We value their discretion, thoughtfulness and their ability to move quickly when they like something. They have always demonstrated to us the utmost integrity in their dealings,” he said.Today the relationship with Qatar has evolved as Qatar has reorganised; Qatari Diar handles major direct real estate developments and QH tends to focus on investments such as in luxury hotels such as the Berkeley and major corporate assets. But the bonds remain strong as they were forged over several years.Asked for his views on the London property market, Burrow commented:“The growth has been sustained; if there is a bubble, the bubble hasn’t quite burst but it has certainly been subdued at the ultra-high end of the residential market. The government has tinkered — it doesn’t always seem to know what it is doing — it didn’t understand the stamp duty position at all. It didn’t understand why people put properties in companies; there was nothing wrong with people putting properties into companies, and they paid the stamp duty going in — the real reasons were not tax evasion — but it was done for personal security reasons and confidentiality. 12% stamp duty and taxing putting properties into companies has absolutely frozen that market.”The potential at the moment is in the “middle market”, he added.“The market is very strong in the £1-3mn range. We see that area as having a long way still to go. It will be very interesting to see what happens with the Ballymore scheme, Embassy Gardens; the second phase comes onto the market any time now, and it will be interesting to see if that flies off the shelves as it did in Phase 1.”Looking at the global picture, particularly with reference to Asia, he said:“The Chinese market may draw breath — a lot of people have come from Hongkong, Singapore and Malaysia and they have bought their houses here just because they saw their own markets being more risky and they wanted a safe home for their funds, taking a long-term view. “At the moment the capital flows are towards Europe — people have been saying this is a good moment. One of our directors is based in Hong Kong and we have been quietly looking for a correction in the market there and this may be it. We are not going to rush into it — we are not going to say the market is going to crack — I hope it doesn’t crack here. Interest rates will eventually rise and that will have a dampening effect on the market. Hong Kong is driven internationally and very largely these days by Mainland China. If there is a slowing down and a devaluation, bearing in mind that the Hong Kong dollar is linked to the US dollar rather than the Yuan — and therefore, if you devalue by ten to fifteen per cent it makes Hong Kong suddenly 15% more expensive, then that may counter the enthusiasm,” he pointed out.As for Qatar, he notes considerable interest from it in developing its portfolio of assets in the US, with QIA about to open its own office very soon in New York.