26 March 2016 – by Amber Rolt

The new Qatari owners of the Maybourne Hotel Group are considering the sale of The Berkeley hotel in Knightsbridge, SW1, for £750m.

Constellation Hotels Holding, an arm of Qatar Holdings, is offering the hotel directly to select parties on an off-market basis.

The hotel is the least prestigious of the trio within Maybourne, acquired through Constellation in April last year, and forms part of Qatar Holdings’ strategy of divesting some assets to diversify its concentration of European property holdings.

Prospective buyers would have three options were a deal to take place for the 1970s-built 214-bedroom hotel.

The most dramatic is a full-scale demolition and rebuilding, taking six years, for which preliminary plans have already been drawn up by Sir Terry Farrell. This would see it almost double in size, with a gross internal area of 600,000 sq ft.

Half of the property could be designated as 70 luxury flats of 3,000 sq ft, which could be sold for as much as £15m each. The hotel element would include 131 bedrooms with suites of 600 sq ft.

The property is not listed, and Westminster City Council has shown initial support.

Alternatively, a scheme designed by Farrell, which makes minor amendments to a Richard Rogers-designed plan granted consent in 2007, could be implemented. This would involve adding 27 rooms as well as 80,000 sq ft of flats and 20,000 sq ft of retail and leisure space.

The most straightforward option is to undertake a minor refurbishment.

The directors of Constellation – including Hamad bin Jassim bin Jaber al Thani, the former prime minister and foreign minister of Qatar – will only sell the hotel if the desired pricing is achieved.

Constellation Hotel Group won control of The Berkeley when it acquired Maybourne holding company Coroin, buying out the Barclay brothers, who owned a 64% stake in the hotel group, and Irish businessman Paddy McKillen, who held a 36% stake.

Constellation’s Maybourne strategy

When Constellation made its bid for the Maybourne Hotel Group in April last year, its main motivation was to acquire trophy asset Claridge’s, which it intends to hold for the very long term. As a result the group has already turned down a £1bn bid for the hotel and a £1.8bn bid for the group.

Middle Eastern royalty have been known to book entire floors at the hotel, sometimes for months at a time, both for business and personal privacy.

It has also become a trend for Middle Eastern investors to buy their preferred hotels – The Sultan of Brunei owns The Dorchester, W1, and Saudi prince Al-Waleed bin Talal co-owns The Savoy, WC2.

Alongside a potential sale of The Berkeley, the £350m Connaught in Mayfair, W1, is understood to not be seen as a long-term investment. It is expected that the fund will assess its ownership in the short to medium term.