Harrods no bargain for Qatar Holdings as UK economy turns bad

Everybody in London knows that Harrods is not the shop to pick up a bargain. Indeed, the mark-ups are always among the highest, except perhaps during one of its famous sales.

Qatar Holdings is unlikely to have walked away with a bargain when it shelled out $2.25 billion for the entire store last week. Egyptian tycoon Mohamad Al Fayed is cleverly cashing in before the UK economy enters a downward spin.

Retiring owner

After 25 years of ownership his remark that he wants to spend more time with his children and grand children has to be some sort of joke. Mr Al Fayed is a very shrewd businessman who knows his market timing.

Exiting the UK at a moment when political instability is about to compound an economic crisis and produce probably the worst business conditions since the mid-1970s is indeed a good time to retire. He is selling out before asset prices plunge.

So what is in it for Qatar Holding, the sovereign wealth fund? They are not idiots and surely know that they are overpaying in the great Harrods’ tradition.

But then that has always been a part of the Harrods’ mystique. People go there to buy for prestige and not for a bargain. And so it is with the sale of the world’s greatest department store itself.

Ownership rights

The new owner proudly declared: ‘It is a privilege for us to acquire Harrods, a unique company that combines an iconic luxury brand and one of the most prestigious retail properties in the world with best-in class financial metrics’.

This is also the end of a remarkable business career for Mr Al Fayed, unless he makes a comeback and reinvests after the UK markets have crashed. He made his first $50 million as a commission agent in Dubai in the oil boom of the late 1970s, and bought Harrods in 1985 for less than half the current selling price.

Owning Harrods has brought him fame and fortune but also considerable controversy. He is still not a UK passport holder. Strangely under UK law he is welcome as an investor and resident but not as a citizen, rather like UK citizens in the UAE. Still he has just made another billion out of UK property.