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Boris Johnson may regret portraying London as the 'eighth emirate' Boris Johnson may regret portraying London as the 'eighth emirate'
(6 months later)
The London mayor Boris Johnson has been in the Gulf looking for that most valuable of commodities in these times of tough credit and public spending: hard cash. Development finance, as with domestic mortgages, has been hard to come by in the last few years, even on the biggest projects, and the oil and trading wealth of the city states of Dubai and Abu Dhabi promises a gush of otherwise unattainable finance. Hence Johnson was reported to have jokingly described himself as the "mayor of the eighth emirate". Such obvious bending over backwards raises a question about how good a deal he can get for London.The London mayor Boris Johnson has been in the Gulf looking for that most valuable of commodities in these times of tough credit and public spending: hard cash. Development finance, as with domestic mortgages, has been hard to come by in the last few years, even on the biggest projects, and the oil and trading wealth of the city states of Dubai and Abu Dhabi promises a gush of otherwise unattainable finance. Hence Johnson was reported to have jokingly described himself as the "mayor of the eighth emirate". Such obvious bending over backwards raises a question about how good a deal he can get for London.
Projects so far have illustrated the range of usefulness of money from the Gulf. Dubai has invested in a £1.5bn major new deep-water port at London Gateway which will allow the largest deep sea container ships to dock in London. On the other hand, just up the river is the Emirates Airline, a £60m cross-Thames cable car sponsored with £36m from Dubai's flag carrier, and while it makes a great billboard for the Gulf state, passenger numbers have been running at less than half of capacity.Projects so far have illustrated the range of usefulness of money from the Gulf. Dubai has invested in a £1.5bn major new deep-water port at London Gateway which will allow the largest deep sea container ships to dock in London. On the other hand, just up the river is the Emirates Airline, a £60m cross-Thames cable car sponsored with £36m from Dubai's flag carrier, and while it makes a great billboard for the Gulf state, passenger numbers have been running at less than half of capacity.
Big projects with Qatar, not part of the UAE, but next stop on Johnson's Gulf tour, have had patchy success. Qatar's overflowing investment funds inflated by the gas that bubbles up from under the desert of the Gulf peninsula, have set up shop in Mayfair and have poured billions of pounds into London, buying up the Shard, the Olympic Village, the Chelsea Barracks site and Harrods among other assets. The Shard would not have been built without their cash, but a £1bn investment in Chelsea Barracks, including a promised 123 affordable homes, has so far failed to bear fruit.Big projects with Qatar, not part of the UAE, but next stop on Johnson's Gulf tour, have had patchy success. Qatar's overflowing investment funds inflated by the gas that bubbles up from under the desert of the Gulf peninsula, have set up shop in Mayfair and have poured billions of pounds into London, buying up the Shard, the Olympic Village, the Chelsea Barracks site and Harrods among other assets. The Shard would not have been built without their cash, but a £1bn investment in Chelsea Barracks, including a promised 123 affordable homes, has so far failed to bear fruit.
Saudi investment in the tallest tower in the City of London – the Pinnacle, also known as the Helter Skelter – has also stalled. Work was stopped when just eight storeys of the core 66-storey tower was complete, and has yet to restart.Saudi investment in the tallest tower in the City of London – the Pinnacle, also known as the Helter Skelter – has also stalled. Work was stopped when just eight storeys of the core 66-storey tower was complete, and has yet to restart.
These are the difficult cases, and the deflation in property markets is a major contributing factor, but so too is the distinct way in which Gulf money operates. A large part of the fascination in investing in London is its status as a safe haven for money that flows out of the ground in one of the least stable parts of the world. Investing for a return is not the priority in many cases, advisers to the Gulf states say. Security is king.These are the difficult cases, and the deflation in property markets is a major contributing factor, but so too is the distinct way in which Gulf money operates. A large part of the fascination in investing in London is its status as a safe haven for money that flows out of the ground in one of the least stable parts of the world. Investing for a return is not the priority in many cases, advisers to the Gulf states say. Security is king.
More investment is to come from the UAE, promises Johnson, and while the UAE maintains a discrete diplomatic presence in London, the state visit of Sheikh Khalifa bin Zayed al-Nahyan, the emir of Abu Dhabi and president of the UAE, could be the moment for announcements. Sheikh Khalifa is a huge figure in the Gulf and the wealth of his home emirate of Abu Dhabi is such that Dubai's tallest building, originally called Burj Dubai, was renamed Burj Khalifa, after Dubai was bailed out by its neighbour.More investment is to come from the UAE, promises Johnson, and while the UAE maintains a discrete diplomatic presence in London, the state visit of Sheikh Khalifa bin Zayed al-Nahyan, the emir of Abu Dhabi and president of the UAE, could be the moment for announcements. Sheikh Khalifa is a huge figure in the Gulf and the wealth of his home emirate of Abu Dhabi is such that Dubai's tallest building, originally called Burj Dubai, was renamed Burj Khalifa, after Dubai was bailed out by its neighbour.
Not everyone will appreciate the eighth emirate line. It will raise eyebrows among voters in London who might think the mayor has enough to do representing their interests, never mind those of the sheikhs. The electorate will expect Johnson to ensure the Gulf states do more than simply use London as a savings bank.Not everyone will appreciate the eighth emirate line. It will raise eyebrows among voters in London who might think the mayor has enough to do representing their interests, never mind those of the sheikhs. The electorate will expect Johnson to ensure the Gulf states do more than simply use London as a savings bank.
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