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Recovery position
In a report last month, Colliers said that house prices in Qatar would ease 10 percent in 2009 due to lack of financing from banks. In Dubai, by comparison, anecdotal evidence suggests that some valuations have slipped by as much as 50 percent since their peak last summer.
"We haven't had the same turmoil that Dubai has suffered, and we haven't had the same number of projects stopped. In fact we have no records of any projects being stopped under construction," says Barichievy.
"There have been some retrenchments but they have been minor compared to Dubai," he continues. "There is a lack of liquidity but certainly the banks are starting to talk about lending again. There is progress on the lending front, and at this stage the situation is manageable."
Indeed there are signs that the government is taking decisive action to address the liquidity drought. Last week the country asked its sovereign wealth fund, the Qatar Investment Authority, which controls an estimated $60bn worth of assets, to buy the investment portfolios of local banks to kick-start lending.
Kuwaiti investment bank Markaz said at the start of February that although the Qatar property warranted "a need for close watch" and that there was a risk of contagion from the more depressed markets in the Gulf, bank lending in the country during the boom had been less risky than some other GCC markets.
Banks' loan-to-value ratios in Qatar during 2007 and the first half of 2008 were generally lower than they had been in other places like Oman, Bahrain and Dubai, where lenders were prepared to finance 90 percent to 95 percent of the property's value. As a result, the extra amount of equity demanded by banks for loans in Qatar had made speculation more expensive.
Not all analysts, however, are upbeat on Qatar's prospects. Markaz analyst Raghu Mandagolathur remains bearish on the outlook for the real estate market and warns prices will drop more than 10 percent this year. Not only that, but banks' exposure to the sector has been increasing, leading to a fall in those companies' share prices.
Qatar Islamic Bank is 37 percent down this year, and Qatar National Bank has slipped 40 percent in the same period - that compared to a 1.5 percent drop in 2008.
"Projects are getting cancelled. That would bring back the question of reduced demand and increased supply which will definitely put huge pressure on prices and the quality of earnings for the sector," Raghu says. "That will get translated into stress for the banking sector because [the banks] are directly exposed."
As well as property prices, rents are also expected to drop 10 percent this year, prompted by a major easing of supply in the form of 9,000 new apartments that are due to be completed early next year. Kuwaiti investment bank Global Investment House published research last month which stressed that the major influx of expatriates in 2008 would prevent rental rates from slipping by much more than 10 percent.
Despite the uncertainty in the current market, investors are still willing to buy, albeit their mood is more cautious, Barichievy points out.
"They still see a potential to invest, and here the guys are still prepared to buy - it's just at what price. It's very price sensitive," he explains.
Price sensitivity is nothing unique in the current climate, and like all countries in the Gulf, Qatar cannot be complacent. For now, though, it's looking in better shape than many of its peers.
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