What's the link between Sainsbury's and the swanky One Hyde Park apartment complex currently under development in London's Knightsbridge? Not much, you might think. With apartment prices starting at £84m, One Hyde Park's well-heeled future residents probably don't spend much time shopping for groceries—although, arguably, their housekeepers might. The link is that both have recently received major investments from the tiny (but oil-rich) gulf state of Qatar, and both deals were led by the same person: Sheikh Hamad bin Jassim bin Jaber al-Thani, the Qatari foreign minister.

In the case of One Hyde Park, Sheikh Hamad has used his own cash as the sole backer of the Richard Rogers-designed project. For the Sainsbury's deal, the Sheikh recently upped his stake in the supermarket chain from 17 to 25 per cent via Three Delta, an investment fund backed by the Qatar Investment Authority, of which he is head.

These are just two of the many raids on UK property by petrodollar-rich states in the Middle East on the look-out for smart, safe targets. In recent years, Dubai International Capital (DIC) has acquired UK companies, including the Tussauds Group (of which it has since sold 80 per cent), industrial manufacturer Doncasters and the Travelodge hotel chain. It recently picked up a $1bn stake in HSBC and made a bold (but ultimately unsuccessful) bid for Liverpool Football Club in late 2006.

DIC grew out of the private investment office of Dubai ruler Sheikh Mohammed bin Rashid al Maktoum in 2004 and now has assets totalling more than $6bn. The Bahrain-based Arcapita fund, meanwhile, owns Viridian, the Northern Irish electricity utility, and South Staffordshire Water, a water utility. The fund, which structures all its investments to comply with Islamic law and is backed by Saudi, Kuwaiti and Qatari investors, also holds about 20 per cent of its real estate assets in the UK, with a particular emphasis on high-end nursing homes and industrial warehousing spaces.

The size of some individual investments has been quite staggering, says Richard Portes, professor of economics at the London Business School. But it's impossible to estimate the overall flows of Middle East capital to the UK, he adds. "Funds are routed in different, clever ways. They are shrouded in secrecy and much of the money is held in nominee accounts. It isn't realistic to even try to do the maths."

But as a rough estimate, researchers at UK bank Standard Chartered reckon that, overall, the net foreign assets of the Gulf States total between $1.2trn and $1.5trn—a pool of cash roughly equal to the GDP of Russia. A large chunk of the available capital flows towards the UK, for the simple reason that few other markets, apart from the US, possess the liquidity necessary to absorb the huge sums involved, says Brad Bourland, chief economist at Samba Financial Group, based in Riyadh, Saudi Arabia's capital.

With the introduction of the Patriot Act in the US, he adds, there is concern in the Middle East that US investments might be subjected to "an undue amount of scrutiny" by the US government.

Even so, Portes isn't so sure that political issues have more than a "marginal" influence on Arabic investment decisions. Instead, he suggests, the relative strengths of the US and UK currencies are more important. "It simply doesn't make a lot of sense to put all your assets into US dollars right now," he says.

Meanwhile, the flood of petrodollars shows no sign of slowing, as other Arabic investors scramble to take advantage of the UK's low-key legislative framework. Bahrain investment bank Gulf Finance House, for example, recently appointed Joe McGrane, former managing director of Royal Bank of Scotland Development Capital, to head its new European equities business.

The strategy is clear, says McGrane, a former venture capitalist at 3i and Charterhouse: to enable Gulf Finance House to expand beyond its traditional business of financing large infrastructure projects in the Middle East and take advantage of international investment opportunities. "The bank spotted a real appetite for European equities among the high-worth individuals and institutions that make up its customer base and is looking to fill that gap," he explains. McGrane is now scouting for offices, staff and investment opportunities from a temporary London base in Marble Arch.

So what kinds of deals is he looking for? "We're looking for transactions between £50m and £250m that offer a good fit with Islamic principles," he says. "Generally, I'd say that our investors tend not to be enamoured of clever financial engineering. We'll be staying clear, for example, of highly geared businesses and hostile takeovers, in favour of straightforward deals based on healthy growth and good forward prospects."

For now, then, the influx seems set to continue. Recent moves by the UK government to establish London as a centre for the trading of Shari'a- compliant bonds—known as sukuk—are broadly welcomed by market watchers.

"It's a positive development," says Bourland of Samba Financial. "A build-up of advisers in London with expertise in converting debt to Islamic debt can only make the City a more hospitable place for Islamic investors and give it a distinct advantage over New York."