LONDON (Bloomberg) — Qatar is well versed in turning unused land into blocks of skyscrapers at home. Now it wants to do the same in London.

Qatar Investment Authority and Bermuda-based global property firm Brookfield Property Partners on Thursday offered to buy Songbird Estates, which controls the Canary Wharf financial district. Songbird said on Friday that the offer, which values the company at £2.6 billion ($4 billion), is too low.

Qatar, a Persian Gulf state that transformed itself from a desert trading post into a gleaming cityscape, would gain a chunk of undeveloped land twice the size of the World Trade Center site in New York if its joint bid for Songbird is successful. It would also get a business district, dominated by a cluster of steel-and-glass towers around the UK's second-tallest building.

Songbird “has a virtual monopoly on all of the land on the estate that can be developed,” said Hemant Kotak, an analyst at Green Street Advisors. Kotak estimates that buildings with 10 million square feet (930,000 square metres) of space could be constructed on the site.

With Qatar already holding 28.6 per cent of Songbird, it could gain a majority stake in the company without winning over all of the company's main investors. Third Avenue Management, which owns 3.5 per cent of Songbird, agreed to accept the offer.

Describing why they consider the offer fair, the bidding companies said about 14 per cent of Songbird's portfolio value is based on development projects that will take many years to complete and require substantial funding. Canary Wharf Group plans to construct more than 3,600 homes and other projects at Wood Wharf adjacent to the office district and that will cost about £2.5 billion. Other developments are expected to cost at least £1.2 billion.

Songbird's debt has an average cost of 5.5 per cent, at least one percentage point higher than Land Securities and British Land Co, and it is not a real estate investment trust, so it may face “significant capital gains tax on future asset disposals,” the companies said.

Buying Songbird would extend a Qatar London property portfolio that includes stakes in the Shard skyscraper, Harrods department store and the Olympic Village. It would also allow Qatar to construct thousands of homes in London, the best-performing part of the UK residential market in the past five years.

Qatar's natural gas reserves have made it the world's richest country per capita and Qatar Investment Authority, its sovereign wealth fund, is one of the biggest. Brookfield is a property investor with about $50 billion in assets. Qatar on Thursday agreed to buy as much as nine per cent of Brookfield via $1.8 billion in exchangeable preferred equity shares.

Paul Reichmann created Canary Wharf in the 1980s, anticipating a boom in Wall Street-style trading in the wake of impending financial market reforms. The late Canadian developer chose the Isle of Dogs, a derelict site on the north bank of the River Thames, as the site of a new office cluster to rival the City of London financial district.

The first tenants, State Street, arrived in 1991. Now, more than 100,000 people work in the 35 office buildings and four shopping malls on the estate, which is home to companies ranging from JPMorgan Chase & Co to Gap. The district is best known for the 50-story tower at One Canada Square, the UK's tallest building until the Shard was completed in 2010.

Canary Wharf Group, 69 per cent owned by Songbird, was formed in 1993. Since then, it has built more office space in London than any other developer, according to a July report by the two companies.

Canary Wharf Group won approval to construct residential and commercial buildings at Wood Wharf, east of the financial district, in July. The working population of the district will double by 2025, once the project is completed, according to Songbird and Canary Wharf Group.

The arrival of the Crossrail train network, which will add 10 per cent capacity to London's rail network from 2018, is expected to lift office rents at Canary Wharf, which have lagged behind the City of London.

The best-quality offices in Docklands, the district that includes the Canary Wharf estate, cost an average of £48.50 per square foot to rent, compared with £80 in the City of London, according to Savills. That gap is narrowing, according to Mat Oakley, director of commercial research at the property brokerage.

“There is a general eastwards drift of tenants across London at the moment,” he said. “Some tenants are considering Docklands at the moment, looking to do a good deal expecting that rental gap to narrow.”

Qatar Investment Authority and Brookfield said they would seek to simplify the shareholding structure of Songbird, which they described as an “illiquid investment.”

Songbird's biggest owners are Glick Entities with 25.93 per cent, China Investment, with 15.8 per cent and Morgan Stanley with 8.53 per cent as of September 18, according to a company fact sheet. Publicly traded shares account for 21.14 per cent of the company. Brookfield owns 22 per cent of Canary Wharf Group after attempting to buy the company in 2004.