Harrods, the luxury London-based department store which was recently acquired by the investment vehicle Qatar Holdings, is understood to be in talks with the Shanghai Municipal Government about opening its first store outside of the UK.

Harrods is thought to be interested in opening a store in one of the buildings that previously housed a British bank in the Bund area, according to China Daily, which cites a local estate agent as a source. The newspaper added that locations are limited because few buildings are big enough to house a department store.

Qatar Holdings, which is the investment arm of the Qatari government and bought Harrods for £1.5bn in May and also has a stake in supermarket chain Sainsbury’s, has made no secret of its plans to develop Harrods overseas and Shanghai has already been mooted as a potential first location.

According to China Daily, a Harrods executive said it had not confirmed plans to open in Shanghai, adding that even if plans go ahead, it could take a long time for a lease agreement to be agreed.

Harrods is not the only retailer interested in Shanghai. Marks & Spencer opened its second store in the Chinese city last month and it is seeking a location for a third outlet; while Hong Kong department store Lifestyle International is also in talks to build a high-end store in the city.

A spokeswoman for Harrods said: “[Harrods managing director] Michael Ward has cited China as a probable country to internationalise the business. However no plans have been confirmed to open a store in Shanghai.”