Although Qatar has currently been less affected by the global financial crisis than some other Gulf states, recent reports show the country may not be as immune as previously thought. Figures issued in a report by Kuwait investment bank Markaz, show 38% of Qatar's population work in real estate and construction, which is cited as "a possibility for over-dependence in the sector," compared with 12% in Saudi Arabia and 7.85% in the US.
However, despite the prevalence of doom-mongering in the Gulf, the attitudes of industry figures in Qatar appear decidedly positive.
It’s written in the contract the master developer will apply for residency, but it’s not guaranteed, certain criteria must be fulfilled by the customer. - David Oayda, General Manager of Asteco Qatar.
"Nobody is immune. If you live on the planet, you've been affected, there's no question about it, but I think Qatar is extremely well placed for two reasons," says Brian Meilleur, president and COO of Al Wa'ab City, a US$3.2bn mixed-use development underway in Doha.
"One, the underlying economy here is based on gas and, to some extent, oil, and therefore it's got a fundamentally real economy.
"The second thing is that Qatar is at the beginning of the growth phase, a major growth phase, as opposed to Dubai, which is well along in the growth cycle. Real estate here is very much a catch-up industry, and therefore the real estate industry is responding to demand which is already there, as opposed to trying to create demand," he explains.
Indeed, a report by Global Investment House estimated Qatar's real estate industry contributed 10.7% of GDP in 2008, up 0.3% on the previous year, while the report by Markaz also concluded a heavy growth in the country's expatriate population has created a huge gap between supply-and-demand.
Al Wa'ab City is expected to reach completion in 2011, and will cover an area of approximately 1.25 million sq m. Around 600 villas and 1,500 apartments will house the project's population, which is anticipated to be around 8,000. According to Meilleur, roughly 300 of the villas will be sold freehold to Qatari and GCC nationals. In addition, there will be 100,000 sq m of retail space, 200,000 sq m of office space and a hotel.
The future of Qatar
Another project currently underway in Qatar is The Pearl, a US$2.5bn man-made island with 985 acres of reclaimed land. Developed by Qatar's United Development Company, the project was the first in the country able to offer freehold property to international investors, and is expected to house in excess of 35,000 residents when it reaches completion.
Lusail is another mixed-use development, currently under construction near The Pearl. The ‘city' project is being developed by Qatari Diar, a real estate investment company wholly -owned by the Qatar Investment Authority and charged with the task of creating projects to attract both tourism and new residents to the region. Covering 35 sq km, the waterfront project is to be complete in phases, with the first expected to open in 2010, and will house an estimated 200,000 people.
Where to invest
While Qatari nationals are free to own properties anywhere in the country, there are limitations on where other GCC nationals may own, and fewer areas where non-GCC nationals are allowed to buy, according to Anani, who states foreign and GCC nationals can have freehold ownership in The Pearl, The West Bay Lagoon and Al Khor Resort, while GCC nationals may also buy freehold property in Lusail, Al Kharayej and Jebel Thuaileb. When non-Qatari investors purchase property in the country, the issue of a residency visa is supposedly less complex as in some other parts of the world,
"The way it's written in the contract is that the master developer will apply for residency, but it's not guaranteed, based on certain criteria that must be fulfilled by the customer," explains David Oayda, general manger of Asteco Qatar. The criteria alluded to by Oayda largely concerns whether the buyer has a criminal record.
Ahmed Anani, commercial partner and head of law firm, Al Tamimi & Company's Qatar office suggests the country is better insulated against the global economic situation than most, in part due to the pace of development taking place and the way in which the sector is governed.
"They have, I would say, intentionally developed projects slowly. There are very few master developers here in Qatar that are allowed to build such projects, and the process has generally been controlled, which alleviated some of the pressure on this sector when the crisis came over," he says.
Oayda, also views the rate of construction as an important factor in the industry's stability.
"Many of the developers we're dealing with, we're actually recommending they slow down.
"I think the developers are playing cautiously and the construction that is taking place has handovers scattered across a five- year period," he says. Apparently, these decisions are being made in the interest of the individual buyers who, Oayda claims "are not looking forward to handing over with the insecurities taking place." Perhaps, with land prices in certain areas of Doha having dropped 30% in November 2008, now is not the right time to flood the market with new residential units.
Prices in projects which are open to expatriate markets appear to have performed best to date, according Oayda.
"These are the places that have actually held up. The areas that we specifically focus on are the areas that are open to expatriates to purchase in, and I can tell you now we have not seen a drop in prices whatsoever for freehold prices," he explains. His views are perhaps supported by Asteco's Q4 report for Qatar, which states The Pearl, Lusail and West Bay Lagoon continue to dominate apartment sales in Qatar, and while the number of sales has dropped, average sales prices remain similar to those seen in the Q3 of 2008.
These prices range from US$4,628 to US$6,533 per sq m in The Pearl development, while Lusail and West Bay Lagoon show an average sale price of US$5,444 and US$3,539 per sq m respectively.
Interestingly enough, Anani believes the lack of movement in sales prices is due to something rather more unconventional than continued demand alone.
"I think there is a principle that landlords have in Qatar; they would rather see some of their property empty than lower the rents," he says. Though with an apparently rapidly expanding population, there may be no need to listen to the market.
"I don't think they want to compromise, because eventually people have to rent and there's demand for rental units in Qatar because the population is growing fast," Anani explains.
The Dubai mortgage market declined in value by around a fifth year-on-year during the third quarter of 2010, and saw little growth in the nine months to September 30, 2010, official figures from the Dubai Land Department have showed.