World Cup energises Qatar's real estate market (page 1 of 2)

While certain types of property are still in oversupply, there has been a general stabilisation and even some moderate growth across the office, residential, hotel and retail sectors. Much of the boost to the property market can be attributed to present and future government spending towards infrastructure and real estate. And while the World Cup is only a small piece of the larger picture of Qatar's growth - it is the part that has brought the world's attention to the Middle Eastern state.

Craig Mitchinson, managing director of Mirage International Property Consultants, said that, thanks to the successful World Cup bid, many of the mothballed construction projects in Qatar had restarted, after two or three years of stalling.

On the Pearl, the vast manmade island, Mitchinson asserted he knew of 10 towers "either restarted or about to start up again".
He added that Lusail, the 35 square kilometre city being built 15km north of Doha, was another example of the renewed application of construction.

"[The city's] infrastructure projects are in full force with many completed and companies like Damac doing ground works in readiness for their nine buildings in the Foxhills development. Huge infrastructure projects are underway and many hotel projects are underway or in planning stages," he told AMEInfo.com.

DTZ, the property services company, also believes the World Cup bid is already having an impact on Qatar's real estate sector. In a recent report by the company, it stated that the government's proposed investment had "created new employment opportunities, population growth and generated strong demand for all real estate assets".

Mark Proudley, the company's associate director in Qatar, explained that developing new infrastructure in the short to medium term would "create employment opportunities that will drive population growth and demand for all real estate asset classes".

"In the longer term the enhanced infrastructure and real estate environment will make Qatar a more attractive destination for international companies and foreign investment," he added.

Who's buying?

While the World Cup may be the obvious catalyst of the real estate boom, what hasn't been so clear is who exactly is fuelling it.
Mitchinson said that Western expats, who make up less than 30% of the state's 1.3million foreign nationals, are staying clear of buying property in Qatar because "they don't see any value in the market."

In fact, it is the native population "who see prices 30-40% down on what they were three to four years ago and are in it for the long term, mainly buying land for investment", he noted.

Affordability is also still an issue with property in Qatar, with prices down on their 2008 peak, but still high. In that year, house price inflation was 16%, but both purchase and rental prices have fallen 30-40% since then.

DTZ's most recent report, however, points out that in 2011 "rental levels were generally stable with rental growth recorded for one-bed apartments, which are in short supply".

The announcement in September 2011 that all public sector workers in Qatar would receive a 60% pay rise will also have a positive effect on the property market, Proudley said.

"One of the key reasons for the slowdown in the residential freehold market over 2009/2010 has been prohibitive availability and cost of financing for prospective investors/purchasers," he asserted.

"The 60% public sector salary rise creates greater liquidity by providing access to funds amongst a high number of Qataris with a keen interest in investing in the domestic market."

Arab Spring provides boost

As has been witnessed across the Middle East, the Arab Spring has had winners and losers with the final picture far from over.