London department store Harrods has been sold to Qatar Holding, the Qatari royal family's investment company, in a deal reported to be worth £1.5bn.

The deal will see current owner Mohammed al-Fayed retire, although he will continue to promote the store as its honorary chairman.

Mr al-Fayed acquired the Knightsbridge business, which has over 90,000sq m of selling space and 330 departments, following a £615m takeover in 1985.

Qatar Holding managing director and ceo Ahmad Mohamed al-Sayed said Harrods was "a unique company that combines an iconic luxury brand and one of the most prestigious retail properties in the world."

The new owners are reported to be considering launching a flagship outlet in Shanghai.

Qatar Holding chairman and Qatari prime minister Sheikh Hamad Bin Jassim Bin Jabr al-Thani said Harrods would add "much value" to the sovereign wealth fund's portfolio of investments and generate "good and stable returns as a business".

He added: "It's a historical place. I know it's important, not only for the British people but it is important for the tourism."