'Significant' oversupply of Qatar homes by 2012

Qatar may face a significant oversupply of real estate in 2012 as the expatriate workforce that built the country’s infrastructure begins to leave, according to a report by Bank of America Securities-Merrill Lynch (BAS-ML).

From a short to medium term perspective, the Qatari market can be seen as a safe haven due to its expanding gas industry, government cash reserves and economic reform, the investment bank said.

But by 2012, when the country’s gas driven expansion plans come to an end, there will be limited need for labour in the country’s non-oil economy, where growth has focused on the hydrocarbon sector.

This could lead to a “significant overhang” of real estate, a team of analysts wrote in a note to investors.

“While expatriates constitute 90 percent of the workforce, which is similar to Dubai, a much bigger portion of those are blue collar workers who are more likely to leave post 2012,” the bank said.

“Though the long-term gas contracts secure a healthy cash flow, Qatar may end up being the Luxembourg of the Middle East, a wealthy state that enjoys low and stable growth with its small population, where companies are looking to expand abroad.”

Qatar has said it plans to double its LNG production capacity by 2012.

The country has established Dubai-style free zones for finance, science and technology, education and sports as part of its efforts to diversify the economy away from oil.

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