U.K. Property Brokers Shun Brunei Fund Over Anti-Gay Laws
(Bloomberg) -- Brunei is facing unexpected hurdles on a prestigious London property project as the kingdom comes under fire for introducing laws persecuting homosexuals.
Major real estate advisory firms that had been invited by the Asian nation’s sovereign wealth fund to consult on the redevelopment of Lansdowne House on London’s prized Berkeley Square have either declined the invitation or sought clarification on the legislative changes before agreeing to participate, people with knowledge of the process said. A spokesman for the Brunei fund declined to comment.
The property firms’ reluctance to engage with Brunei is reminiscent of the reprisals faced by Saudi Arabia last year from the global investment community following the brutal murder of columnist Jamal Khashoggi by government agents in Turkey. Those ultimately proved to be fleeting, with business interests prevailing as money managers and financial firms resumed looking for new opportunities in the oil-rich Middle Eastern kingdom.
Brunei in early April put into effect laws that penalize homosexuality, anal sex, extramarital affairs and rape with death by stoning in some instances, prompting an outcry from celebrities such as George Clooney. Since then, banks including JPMorgan Chase & Co. and Deutsche Bank AG have barred employees from staying at London’s luxurious Brunei-owned Dorchester Hotel, while Knight Frank is one of several real estate firms to cancel events at the venue.
Property broker Jones Lang LaSalle Inc. has withdrawn from a contract to manage some of Brunei’s hotels, according to people with knowledge of the matter, who confirmed an earlier report by Property Week magazine. A representative for JLL declined to comment.
The backlash against Brunei highlights the growing dilemma of an industry awash with cash from sovereign funds, much of which originates from countries with weak records on human rights.
“Only a few years ago, I don’t think the industry would have reacted so decisively,” according to David Mann, a partner at building consultancy Tuffin Ferraby Taylor, who’s also co-chair of Freehold, a support network for real estate professionals in the LGBT community. “It does beg the question, who will now accept these commissions?”
Several firms who considered advising on the Lansdowne project -- one of London’s most sought-after office addresses -- expressed reservation about the kingdom’s harsh new legislation, the people said, declining to be identified as the deliberations are confidential. Brokers invited to tender for the mandate include CBRE Group Inc., Colliers International Group Inc., Cushman & Wakefield Plc, and Knight Frank LLP. Representatives for the firms declined to comment.
The Brunei Investment Agency had already chosen a developer to oversee the project, but the status of that appointment is also now in question, two people with knowledge of the situation said.
Brunei, which owns some of London’s most-expensive real estate, is poised to appoint advisers for two other office projects in London’s upmarket Mayfair and St. James’s districts. That’s likely to create a further dilemma for developers and brokers who may be reluctant to forfeit fees and payments. CBRE has previously advised on Brunei’s 61 Curzon Street property, while Cushman & Wakefield has historically advised on Norfolk House, both of which have approvals for redevelopment.
Brunei’s investment fund owns luxury hotels around the world, including Rome’s Hotel Eden, Hotel Plaza Athenee in Paris and the Beverly Hills Hotel in California.
“I’ve learned over years of dealing with murderous regimes that you can’t shame them,” actor-and-activist Clooney wrote in a column for entertainment website Deadline as he called for a boycott of the kingdom. “But you can shame the banks, the financiers and the institutions that do business with them and choose to look the other way.”
Global leaders including a bipartisan group of U.S. senators blamed Saudi’s Crown Prince Mohammed bin Salman for orchestrating Khashoggi’s gruesome murder in October. Authorities in the Middle Eastern nation have denied that the heir to the throne had any involvement in the case, and have since tried 11 other suspects. While the kingdom initially experienced a backlash that saw many global financial institutions withdraw from its high-profile investment conference, the objections proved short lived.
Brunei has sought to defend its decision to impose the new laws, claiming in a letter to the European Parliament that they safeguard the sanctity of family lineage and marriage and asking for tolerance of its values.
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