The Guggenheim of the Persian Gulf

The 17th-century Iranian pottery tile was in the catalogue for Christie's auction of Islamic art with an estimated price tag of between £1,000 and £5,000. It went for £94,850. A second tile, also dating back to the Persian Safavid dynasty, had the same list value but sold for £31,070. The buyers in both cases were agents representing Sheikh Saud al-Thani, first cousin of the emir of the pocket-sized, oil-rich, Gulf state of Qatar, and a collector with an extraordinary project that is currently setting the art market alight.

The 17th-century Iranian pottery tile was in the catalogue for Christie's auction of Islamic art with an estimated price tag of between £1,000 and £5,000. It went for £94,850. A second tile, also dating back to the Persian Safavid dynasty, had the same list value but sold for £31,070. The buyers in both cases were agents representing Sheikh Saud al-Thani, first cousin of the emir of the pocket-sized, oil-rich, Gulf state of Qatar, and a collector with an extraordinary project that is currently setting the art market alight.

Sheikh Saud heads Art News's current list of the world's leading art collectors, his outlay dwarfing that of other auction-room shopaholics such as Bill Gates, the Sultan of Brunei, Andrew Lloyd Webber, Elton John, the Lauder family (of the Estée Lauder cosmetics fortune) and Doris and Donald Fisher, founders of Gap. No one seems quite sure of how much he has actually spent because of his habit of avoiding all publicity and using a variety of agents to cover his tracks, but the bill undoubtedly runs into hundreds of millions of pounds. Comparisons with some of history's most prolific collectors - the Gettys, the Guggenheims and the Fricks - are being made.

As news has spread of this global spending-spree - any sighting at art fairs of the 39-year-old slender, bespectacled sheikh has generated an almost hysterical buzz of excitement. "For the past decade," says the trade bible, The Art Newspaper, "he has moved through the market like a whirlwind, collecting voraciously in a huge range of fields. Dealers are unanimous: despite his lack of formal training, the sheikh has an extraordinary visual memory and considerable knowledge as well as an excellent 'eye'.''

His diverse targets have included textiles, natural-history prints, jewellery, antique bicycles and photographic prints, but his abiding focus has been on the hitherto slightly fusty, specialist world of Islamic art.

The sales that usually attract the headlines and world-record prices are those of Impressionist and modern paintings. Yet in a series of recent London auctions of Islamic art, Sheikh Saud's agents caused even hardened buyers to gasp when they spent well in excess of £15m on his behalf.

As well as the two tiles, Sheikh Saud bought a 17th-century Mughal dagger, from the collection of Sir Charles Boughton, for £632,450. It had been estimated at £40,000. He also spent just a touch under £3m for a 17th-century Mughal jade wine-flask, from the collection of Lord Clive of India. The flask has spent the last 40 years on display at the Victoria and Albert Museum in London. And at £901,250, he increased 113-fold the auctioneers' estimate for a later Mughal agate-and-garnet fly-whisk handle from the same collection. "Currently there is no other market in the world comparable to it," concludes The Art Newspaper.

It is not simply the depth of his wallet that has upped the sheikh's profile. This is not just a very rich man indulging his whims and lining the walls of his many houses. Sheikh Saud does buy for himself - and commission. Bridget Riley is doing something for his villa in Doha, and David Hockney has been approached to design a swimming-pool. But Sheikh Saud's main purpose is a public, educative and philanthropic one that recalls the first Lord Leverhulme and Sir Henry Tate.

As the president of Qatar's National Council for Culture, Arts and Heritage, Sheikh Saud has plans to open not one but five international museums in the emirate's capital, Doha. The Museum of Islamic Art is scheduled to open its doors in 2006. A resident curator has been appointed - the V&A's Oliver Watson - and the distinguished Chinese-American architect IM Pei, creator of the glass pyramid at the Louvre, has been tempted out of retirement in his eighties to design the building which will stand on an artificial island at the end of the Corniche, Doha's broad, palm-lined avenue that runs beside the Persian Gulf.

Joining it on the seafront eventually will be the Japanese architect Arata Isozaki's combined Qatar National Library and Natural History Museum - a futuristic structure standing on three mammoth pillars, and, to judge from computer-generated images, looking like an aircraft-control tower with a flying saucer on top. There will also be the Museum of Photography which will be the work of the Spanish architect Santiago Calatrava, and is promised as "an ultra-light structure consisting of two immense curved wings which will open and close with the light". And finally, standing back from the Corniche, an existing castle is to be refitted as a Museum of Traditional Clothes and Textiles.

This visionary project has few historical parallels. The Victorian oligarchs of Liverpool used the millions they had made through trade in the second city of the British Empire to erect and fill a succession of breathtaking public buildings and galleries which they hoped would turn their city into the "Athens of the North". But even their grand design looks like a miniature next to the plans for the Qatari peninsula.

So far, visitors report, while the individual sites have been earmarked, building has not begun. Sheikh Saud is, however, adopting an increasingly high profile as he prepares the ground. In March he joined his cousin, Emir Hamad bin Khalifa al-Thani, to open the third annual Doha Cultural Festival with a fraction of the thousands of objects bought in the salerooms on display.

In his speech, Sheikh Saud spoke of their shared ambition to make this tiny territory and its 120,000 people "the crossroad of cultures and civilisations of all brotherly and friendly states". A series of educational programmes - headed by the emir's wife, Sheikha Mouzah - are being run to enthuse Qataris about both Islamic and other cultures. Several American universities have been wooed to open up local offshoots in the country.

"He really does hope to trigger a wider interest in his own people in Islamic art in particular," says Georgina Adam, a writer who was recently granted a rare interview with Sheikh Saud for The Art Newspaper. "He is keenly aware that there is little tradition of art history in his country but wants to fire local people to take it up. Popular participation is part of his vision."

It is a goal that the sheikh himself has outlined. "His Highness the Emir is changing many things," he has said. "He wants his people to understand, when they go to a museum, what is good and bad, what is old and new. He does not want a museum to be academic, but a place to enjoy. Here in Qatar, we are poor in history. We don't have our own Islamic pieces like Egypt or Turkey, so we collect Islamic art across the board. For the government the target is to improve culture. Step by step, we want to become a very cultivated city."

While respecting the expertise in Islamic art to be found in Western institutions such as the V&A and the Louvre, Sheikh Saud believes that a more natural home for such centres would be within the Islamic world. He has set himself the goal of making Qatar a storehouse of Islamic knowledge and treasures. In so doing he will send out an important message to the world - that Islam is not, as it is often portrayed, a narrow or fundamentalist religion, but a faith with a strong tradition of using art as a way of lifting minds to God. "In today's world," says the religious historian Karen Armstrong, "such an effort to connect Islam in the eyes of the world with beauty rather than with terrorism and violence must be a very positive thing."

There are also much more pragmatic motivations at play. All the Gulf states have been looking to their future in an uncertain region. Qatar needs a role that is not just about oil and being an American base (it was the coalition centre of operations for the war on Iraq). It has been seeking a purpose that may endure once the oil wells and their revenues run dry, and which has the potential to link the ruling family with their people - rather than exacerbate the divisions already seen in Saudi Arabia.

Neighbouring Bahrain has taken up this challenge by making itself into a centre for offshore banking. Dubai is now aiming to be a tourist destination, with hotels and luxury holiday homes built on palm tree-shaped artificial sand spits in the Persian Gulf. Qatar shares the urge to modernise. Since the current emir deposed his father in a bloodless coup in 1995, there has been a concerted effort to join the 21st century. Its chosen path to achieving this is by becoming a latter-day Florence.

There are, of course, other collections of traditional art within the Islamic world. The Aga Khan, one of the world's wealthiest men and spiritual head of the Ismaili Muslim sect, has priceless treasures. And just up the coast from Qatar, Sheikh Nasser al-Sabah has spent the past 20 years building up a collection of 20,000 objects of Islamic art in the Kuwait National Museum. It was torched and looted by Saddam Hussein during the Gulf War and is gradually beingrestored.

It is the existence of other Arab bidders - Nasser and Saud are said to enjoy a friendly rivalry - that has been driving up the prices of Islamic art in the salerooms. The bidding on the 17th-century tile did not reach £95,000 without someone going head to head with the Qatari sheikh. As well as Sheikh Nasser, there are half-a-dozen immensely wealthy Saudi private individuals in the market, and as one dealer who did not want to be named puts it, "you only need a handful of rich collectors around the world to keep any area of the art market in a state of high excitement. These people are, by their very nature, egomaniacs, and that is what the auction houses play upon."

Among dealers, Sheikh Saud currently enjoys a reputation akin to that of Roman Abramovich of Chelsea in the football world. If either man wants something, they will pay whatever it takes to get it. "I don't feel I have to compete for every object," he says, "but when a great work of art comes up for sale, it's never too expensive. I lost one object in terms of price and now it has gone somewhere else and I shall never get it."

Such an attitude has inevitably led to talk of inflated values and unconfirmed rumours that Sheikh Saud has become disillusioned with Parisian salerooms after suspicions were aired that a dummy bidder had been used to drive prices up in a recent auction. But Georgina Adam, of The Art Newspaper, is sanguine about talk of a distorted market. "You have to put it in context. He has recently spent £15m in London and for it got 350 treasures, many of them marvellous. You could hardly get a single Van Gogh for that."

Sheikh Saud has gone on the record about his lack of interest in Impressionism and Old Masters. Islam does not have a strong tradition in figurative painting, but for him the reasons are more personal. "I am more interested in objects," he said. "I am not excited by huge things. I love smaller pieces. I need to feel a piece, to be able to handle it."

The almost seamless join between his private passions and his public project again recalls the great collectors of the past. And it is the judgement of history that matters most to Sheikh Saud, for he realises that Qatar's city of culture will not be built in a day or even a decade. "I want visitors to see the very best, or nothing at all. This is a way of ensuring that my successor will have to collect at the same level. I will set the standard."