Qatar's real estate market is in the midst of a dramatic correction, and it is expected that prices will continue to fall as liquidity remains tight. However, analysts argue that continued population growth and spending on infrastructure projects mean Qatar is better placed to deal with the downturn than some other Gulf nations.
In the global economic turmoil, few countries are without their problems. However, some analysts argue that few countries are better prepared to bounce back than Qatar. As its neighbours across the Gulf struggle amid the downturn, Qatar remains on track to post double-digit GDP growth in 2009 - a remarkable feat when set against the global economic slowdown and its impact on the GCC.
The emirate's economy is forecast to grow 10.8 percent this year on the back of strong exports of liquefied natural gas (LNG), according to the Economist Intelligence Unit (EIU) in London. And despite the ongoing credit crisis the government is pressing ahead with infrastructure projects and is pouring investment into the gas industry - so much so that Qatar is now the largest exporter of LNG in the world.
"There is a chance that Qatar will buck the global trend this year through the growth of its energy exports," says Justin Alexander of the EIU.
"Qatar has got substantial reserves [of capital] and the government has said they are going to press ahead with projects; they're claiming they are going to have a budget surplus this year," he continues. "There is still strong population growth and for the real estate market that is a major factor."
Population growth is forecast for the next two years as the government's massive economic diversification strategy - including a 45km causeway linking Qatar to Bahrain - is implemented. According to figures compiled by the EIU, Qatar's population is set to rise 10.9 percent this year and 9.5 percent in 2010 to 1.89 million.
Although the property market is cooling, there is strong evidence to suggest that real estate demand will be healthy in the long term, even if it has ebbed marginally in the last few months.
Reg Barichievy, general manager of property consultant Colliers International in Qatar, agrees that sustained population growth due to the government's commitment to infrastructure development is supporting the property market.
"Fundamental demand is still very strong," he says. "You have long term oil and gas projects, so you've got people being brought in. Just because there is financial turmoil now they are not going to stop the projects.
As one of the richest nations in the world, with a GDP per capita of nearly $60,000 (this is projected to increase to $66,000 in 2010 on the back of higher energy prices), Alexander calculates that the country will post a budget surplus of $7bn for the financial year 2009-10 with oil at $40 a barrel.
By contrast, the Gulf's largest economy Saudi Arabia, said in December it expects to post its first budget deficit since 2002, of $16bn. Economists at Standard Chartered Bank in January said it was highly likely the UAE would also fall into the red this year.
In addition to the $4.2bn bridge to Bahrain, other major Qatari projects include the 35 sq km Lusail City on the outskirts of Doha, and the $10bn Energy City, the GCC's first hydrocarbons business centre which is due for completion next year.
"Last year there were 457,000 new people who came to Doha and those increases are still filtering through," notes Barichievy. "There is still an undersupply in almost every sector of the property market - residential and offices - and it's taking time for prices to come down and adjust."