GLOBAL - A joint venture involving the Qatari sovereign wealth fund's $1bn (€690m) property subsidiary has acquired London's Olympic Village for £557m, defeating a rival £1bn bid headed by the UK's Wellcome Trust to buy the freehold of the Olympics site.

The deal will give Qatari Diar and joint-venture partner UK developer Delancey an equal stake in 1,439 residential units next to the Olympics site, as well as six plots with development potential for 2,000 additional units.

The existing units have been identified for long-term rental. The deal also includes a future public-sector profit-share.

Triathlon Homes, a social housing joint venture between a financial investor and two housing associations, has already acquired 1,379 units earmarked for low-cost housing on the site.

Delancey chief executive Jamie Ritblat described the UK's fragmented residential market as a "huge opportunity".

In an email, he said leasing units to individual tenants on shorthold tenancies, simultaneously enabling the JV partners to satisfy demand for high-quality, long-term rental properties and generate long-term revenue streams for the investors.

"There is potential for strong earnings growth, as a result of the macro market outperforming, but also because we are aiming to offer a new standard of rental accommodation and service in a first-class, highly accessible location," he said.

Asked whether the UK's home-owning culture presented a risk to the rental model, he said: "There are risks in any business model, but a combination of lack of supply of quality new homes, an ever-growing number of households in London, a constrained mortgage market and perhaps an emerging cultural change that home-owning isn't the only way to enjoy a long-term home all point to the likely success of a long-term rental model for an asset such as the Olympic Village."
In a statement, The Wellcome Trust, which had bid for the entire post-Olympics site, but with few specific proposals for the residential element, said it was disappointed the national and municipal governments had rejected its "holistic vision" for the site.

Qatari Diar already owns significant assets in the UK capital, including trophy asset the Shard and the US Embassy. It is also a joint-venture partner with Canary Wharf Group to redevelop the South Bank's Shell Centre.

However, the property subsidiary withdrew its development plan for the decommissioned Chelsea Barracks following alleged intervention by members of the British royal family that was exposed when developers on the project lodged a claim in the High Court.

Qatari Diar did not respond to requests to comment today. Local papers reported last month that it had replaced its chairman and cut 30 staff.