Real estate is buoyant in oil-rich Qatar

The Qatari government's allocation of $130 billion (Dh477bn) to finance infrastructure and related real estate projects over the next six years will keep its property sector robust despite the present market correction, experts said.

Recent reports had suggested that house prices and rents in Qatar would see a slide of up to 10 per cent this year.

But with the demand continuing to surpass supply, Qatar's real estate market outlook is still shining bright, said Mounir Bensegueni, Country Manager for real estate firm Fine and Country in Qatar.

"Strong fiscal planning and surplus cash reserves from growing gas production has allowed the government to continue with its economic diversification plans and investment in the construction and real estate sectors.

"The fact that Qatar's GDP is incredibly strong, and all indicators point towards continued economic success, makes investing in Qatari real estate practically priceless," he said.

David Oayda, General Manager of Asteco Qatar, said a steady inflow of expatriates and international companies needing accommodation and office space had contributed to property demand.

"This flow of expatriates is expected over the next few years due to employment opportunities being provided as Qatar expands its economy; presently one of the fastest growing in the world," he said.

The construction boom in Qatar saw its real estate sector grow by almost 80 per cent between 2003 and 2007.

The opening of the property sector began in June 2004 with the passing of Law No 17 or The Foreign Ownership of Real Estate Law.

The law permits non-Qataris to invest and own real estate, defined in the legislation as 'lands, buildings and constructions thereof', in three designated projects in accordance with the terms and conditions issued by the resolution of the Cabinet. These are the Pearl Qatar, West Bay Lagoon and Al Khor Resort.

A subsequent Cabinet resolution said non-Qataris could own land, buildings and residential units in the above-mentioned projects, together with the right to dispose of, or exploit, those interests in accordance with the applicable laws.

However, the attractiveness of investing in property was improved by the enactment of Law No (2) of 2006 that sanctioned the Minister of the Interior in Qatar to issue an entry visa and residency permit to non-Qataris, subject to certain conditions, due to interests under the Foreign Investment Law and the Foreign Ownership of Real Estate Law.

"This law and its executive enactment, opened new vistas for freehold, leasehold and wider real estate brokerage activities, energising an already vibrant market," said Bensegueni.

In addition, the government launched Qatari Diar Real Estate Investment Company at the end of 2005, a vehicle to help invest Qatar's vast oil and gas-related wealth to further the country's growth. And like most countries in the region, it has identified real estate – both locally and globally – as a means to deploy wealth and see returns. Qatari Diar is the master developer for the local Lusail project, a 35 sq km metropolis under construction on Qatar's coast, which is designed to become home to 200,000 residents.

Potential projects for investors include the Pearl Qatar and Urjuan. Urjuan is an eco-friendly mega development, located 40 minutes from central Doha. It includes residential, leisure, commercial, sports and waterfront projects. The development also features luxury amenities, a five-star business hotel and an 18-hole golf course.

The QR35 billion (Dh35.3bn) Barwa Al Khor Urujun project by Barwa Real Estate is one development that has already generated interest.

Pearl Qatar is one of the few developments to allow foreign nationals, expatriates and international investors the chance to buy in and own outright. A waterfront development twice the size of Hong Kong Island, Pearl Qatar is a $14 billion (Dh51bn) luxury residential project.

When the Pearl project is completed, it will form a four million sq metre man-made island home to around 30,000 people in a range of luxury villas, town houses and apartments.

Pearl Qatar will also feature hotels, restaurants, shops and boutiques as well as a 700-berth international yachting hub. The first residents are expected to move in this summer. Upon purchase of a property at The Pearl or Urujan, owners can apply for a residency visa. Sales prices at the Pearl range on average from QR1.5 to two million for a two-bedroom apartment.

"Current resale prices for freehold properties at the Pearl and Lusail are estimated at 20 per cent to 25 per cent lower than when prices peaked in mid-2008. Although the market is expected to experience price correction, a steep fall in property prices is not anticipated to happen to Qatar due to its strong macro fundamentals," said Asteco's Oayda.

He said banks had reportedly become more cautious towards easy mortgage lending to the real estate market and the loan-to-value ratio offered by banks is currently not more than 85 per cent. Today, Qatar is the world's largest exporter of liquefied natural gas. While the world experiences a recession in 2009, Qatar's economy is forecast by the International Monetary Fund to expand at the fastest rate in more than a decade – 29 per cent. The nature of Qatar's economy will only drive the growth of its real estate market upward.


From Pearls to Hydrocarbons

Before the discovery of oil, the economy of Qatar focused on fishing and pearling. After the introduction of the Japanese cultured pearl onto the world market in the 1920s and 1930s, Qatar's pearling industry faltered. However, the discovery of oil in the 1940s completely transformed the state's economy. Now the country has a high standard of living, with many social services offered to its citizens and all the amenities of any modern state.

Qatar's national income primarily derives from oil and natural gas exports. The country has oil estimated at 15 billion barrels, while gas reserves in the giant north field, and are almost as large as the peninsula itself, are estimated to be between 800 trillion cubic feet and 80trn cubic feet.

The absolute monarchy, ruled by His Highness Sheikh Hamad bin Khalifa Al Thani, has a population estimated at around 1.5 million people. Its estimated GDP was $95.130 billion (Dh349bn) in 2008, with a per capital GDP of $86,668.

Follow Emirates 24|7 on Google News.