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Thu 5 Jun 2014 01:44 PM

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Doha housing shortage 'could create slums'

Senior investment executive warns that the city must address its affordable housing shortage

Doha housing shortage 'could create slums'

Slums will form in Doha if the city does not immediately address its affordable housing shortage, a senior investment executive has warned.

Doha will be 100,000 homes short of demand by 2017 based on current population and construction projections, Al Argan Investment Company chief information officer Ramy Echo said.

"If we do not address this matter it will create an issue of potentially in the future having some kind of slums in the city (and) increasing the crime rate in the city," Echo said at Cityscape Qatar.

"As a relatively new city, Doha eventually has to address the affordable housing matter because later on it's going to have an influx of population."

Qatar's population of 2.1 million is expected to rise to 3 million before the end of the decade, with the majority of new people to be foreigners.

Echo said between now and 2017 about 250,000 homes would need to be built but only 150,000 were planned, leaving a gap of 100,000.

Head of research at Silatech, Tarek Coury, said of today's population about 15 percent were nationals, who either could afford their own homes or were given subsidies by the government.

Among the foreigners, about 600-700,000 were construction workers who lived in labour camps, leaving 1 million people, of which about 85 percent needed affordable housing.

But developers were reluctant to build at the lower price range because the high cost of land made it less financially viable than luxury products.

"If a developer wants to come in and get his rate of return, land prices are just too high to make (affordable housing) interesting and that's why there's a big focus on luxury property," Coury said.

Echo said, typically, affordable housing became unviable when land made up more than 50 percent of a project's overall cost, which was common across the Gulf.

"With current land prices it's practically impossible to create affordable homes," Echo said.

"Affordable housing is not like luxury whereby if you make a mistake or have some delays it's more forgiving."

The developers called on governments to provide subsidised land for affordable housing projects, which has been done in Oman and Saudi Arabia.

But those projects also were often located in outer-areas, where the affordability of the homes was off-set by the extra cost of transport to workplaces and the city centre.

Echo said Qatar's planned heavy rail network could help create development opportunities in outer-Doha.

"You cannot expect developments that are 50 kilometres away from the city and not provide transport for that because ... (residents) will be paying less to live there and much more to get to the city so this should be part of an integrated transport plan," he said.

Coury said the Qatari government also should produce regulations for house-sharing, which presently occurred in Doha without any official rules.

However, Echo said there were some pros to developing low-end housing.

"If you invested in affordable housing before the crisis you wouldn't have been affected as much as you would have been if you were in the luxury segment because there's a big case for affordable housing," he said.

"The demand is substantially higher than supply even if the market crashes or there's a recession the demand will still be there.

"What's the catch? It's the profitability. You will not get as much money for an affordable housing development in terms of margin compared to luxury."

At the end of the day, Coury said, the issue of affordable housing was not so pressing for the Qatari government compared to other countries because it generally only affected expats.

"It's different to other countries, because people choose to come here - and get a certain pay - it's a choice," he said.

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Yazdee 5 years ago

Apart from housing shortage in Doha, there are other issues also. The reality is totally different in Qatar.

Mohammed MHK 5 years ago

Doha is already a slum city.

Anon 5 years ago

And the Qatari's voted in the top ten fatties! It gets better day by day.

Anon 5 years ago

I wish them all the best in hosting the WC 2022.