State capitalism, capitalist statism: Sovereign wealth funds and the geopolitics of London’s real estate market

Abstract

We respond to the special issue’s call for a multiscalar, historicised approach to state capitalism through an exploration of Sovereign Wealth Fund investment into London real estate. We point to how the UK’s ostensibly market-led recovery since the 2008 financial crisis has relied in part on attracting ‘patient’ state capitalist investments. In this, we contextualise the relational regulation of real estate markets as the outcome of intersecting state projects by considering the investment motivations of the single largest owner of London real estate, the Qatari Investment Authority, and the utilisation of their investment by UK governance actors. Focusing on Qatari Investment Authority’s involvement in London’s Olympic Village, we highlight how this strategic coupling in the real estate market realised domestic and geopolitical aims for the Qataris while facilitating the UK government's strategy to ameliorate London’s housing shortage by fostering a ‘build to rent’ asset class. In doing so, we contribute to readings of state capitalism as an ‘uneven and combined’ process beyond the traditional state/market binary by placing sovereign wealth fund investment into the context of city governance, the geopolitics of real estate and resultant relational forms of regulation.

Making space for the new state capitalism, part II: Relationality, spatiotemporality and uneven development

“…Some of the socio-spatial relations that have been investigated – and will undoubtedly continue to yield fresh insights into the polymorphous geographies of contemporary state capitalism – include Sperber's (2022) complex relational geographies of social class undergirding state capitalism; political connections between state and business elites ( Wood et al, 2023 ); geopolitics ( Kinossian and Morgan, 2023 ; Ward et al, 2023 ); social relations of production and labor transformations ( Alami and Dixon, 2023 ); relations of empire ( Eagleton-Pierce, 2023 ; Silverwood and Berry, 2023 ; Whiteside, 2023 ); territorial relations at a range of scales ( Su and Lim, 2023 ); networks of production ( McGregor and Coe, 2023 ); corporate ownership ( Babić, 2023 ; Babic et al, 2020 ; Haberly and Wójcik, 2017 ); and finance ( Hall, 2023 ; Petry et al, 2023 ; Sokol, 2023 ). There is also considerable scope for further expanding the socio-spatial relations under consideration in state capitalism research, as some recent contributions have creatively shown (e.g.…”

“…As such, these infrastructure projects enable an interscalar re-articulation of state-capital relations. Ward et al (2023) provide another insightful example of multi-scalar state capitalism in their article on Qatari sovereign fund investment in London where property markets and the built environment are shaped by: Qatar's attempt to project power transnationally (which is itself inseparable from domestic policy objectives and regional politics, notably fraught relations with its neighbor Saudi Arabia); the British state's post-imperial global ambition of retaining its centrality in global finance; and London government authorities seeking to address the city's housing crisis by creating investment vehicles to attract ‘patient’ state-capitalist investment. State capitalism, as foreign state-owned capital flows, does not neatly touch down in urban centres – urban space is materially and socially (re)ordered by multi-scalar state projects strategically coupled through investment.…”

“…Indeed, the system of 'hybrid public-private governance' that results (in both corporate and network terms) allow the state to influence domestic outcomes as well as global production network configurations beyond its borders. Ward et al (2023) offer a study of sovereign wealth fund investment into London real estate, which they position in the context of city governance, the geopolitics of real estate and resultant relational forms of regulation. Focusing on Qatari Investment Authority's involvement in London's Olympic Village, they demonstrate that configurations of state capitalism in this case result from the strategic coupling of intersecting state spatial projects, notably those of the Qatari state and of UK governance actors.…”

Sovereign wealth funds in the post-pandemic era

“…For infrastructure, 32% of commitments are to value-added strategies while 10% are to opportunistic strategies (Preqin, May 2021). Ward, Brill, and Raco (2022) investigate the investment decisions of the Qatari Investment Authority in London's Olympic Village. Through case study methodology, the paper traces out the geopolitics of real estate in a global city, London.…”

Making space for the new state capitalism, part I: Working with a troublesome category

“…The papers of the theme issue equally highlight the temporal attributes of the new state capitalism by offering distinctive case-study periodizations, each with their own time frames (Palcic et al, 2023; Silverwood and Berry, 2023), by emphasizing extraterritorial dimensions (Jensen, 2023; McGregor and Coe, 2023) and by making connections with neoliberalization (Paul and Cumbers, 2023) and financialization (Petry et al, 2023; Ward et al, 2023). Rather than taking the ‘new’ state capitalism moniker for granted, the concept of novelty itself is also critically assessed (e.g., Alami and Dixon, 2023 on global capitalism; Eagleton-Pierce, 2023 on temporal fluidity; Su and Lim, 2023 on China).…”