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Mon 9 Apr 2007 09:55 AM

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Qatar buys Chelsea Barracks in London

Deal - worth around $1.18bn - could see Qatar build luxury apartments in the UK capital.

A state-owned Qatari company has bought the Chelsea Barracks in London from Britain's Ministry of Defence, a newspaper reported on Sunday, citing the Gulf Arab firm's chief executive.

Qatar's The Peninsular newspaper did not say how much Qatari Diar Real Estate & Investment Co. paid for the 13-acre (5.2 hectare) property located in the heart of London.

London' Financial Times reported on Saturday that Diar was part of consortium that won the bid, thought to be about 600 million pounds ($1.18 billion).

The CPC Group, the Guernsey-based investment vehicle of London developer Christian Candy, joined Diar in the bid, the Financial Times said.

A Ministry of Defence spokeswoman said she had no information on the sale. Diar officials did not return calls for comment.

Diar is one of the vehicles used by the government of Qatar, which has the world's third largest gas reserves, to invest windfall revenues from energy exports.

In November Diar told Reuters it was in talks to buy the barracks after Westminster City Council approved plans to raze its tower blocks to make way for some 1,500 homes, shops and offices.

Diar will build a mixed-use development, turning the concrete parade ground and military buildings into luxury and other apartments, the Peninsular said.

"This project is very important to us as it represents our first major investment in Europe," the paper quoted Nasser al-Ansari, chief executive of Diar, as saying.

Other Qatari government-controlled investors are looking to buy assets in Europe.

The state-owned fund Qatar Investment Authority, which owns Diar, is in talks to buy as much as 10% of Airbus parent EADS, the government said last month.

The government-backed Delta 2 fund lost out last year on a 8-billion pound bid for Britain's Thames Water.

Diar has investments in Oman, Morocco, Egypt, Sudan and Cuba, according to its Web site.

Diar views investments in Europe as a means of balancing an asset portfolio that until now has centred on emerging markets, the Web site said.

Diar is the owner and developer of Qatar's $5.5 billion Lusail project, a 35-square km (13.5 square mile) development that will include an entertainment district modelled on London's Piccadilly Circus.

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