Qatar Real Estate News
Banks opening up to real estate sector in a big way
Banks in Qatar are now open towards issuing credit for real estate investments in a big way. This is proving to be beneficial for real estate sector, which suffered a set-back owing to impact of global recession.
The figure by Qatar Central Bank (QCB) shows that loans by banks for property investment grew between January and May this year, touching QR14bn. This is, in contrast to QR5bn figure recorded in 2010, when the property sector took a massive plunge.
Experts are of the opinion that on maintaining the momentum of loan disbursal at the current levels, the volume of credit dispensed to the realty sector can cross the QR25bn mark by the end of this year.
The banks in Qatar had tightened their lending for real estate sector, following the onset of global recession since late 2008. Despite the state government coming ahead with its support, the banking industry had exercised caution in its lending.
At present, there is enough liquidity with the banks, and this, coupled with Qatar’s successful 2022 Olympic bid, has helped the sagging property sector to bounce back in anticipation of launch of mega projects. People have actually begun property transactions, including purchase of housing units, hoping that the prices would surge with increasing demand due to the 2022 bid.
Majority of individual investors are opting for bank loans to build housing and office stock for rental income. But, despite the banks getting liberal in real estate lending, the Central Bank’s regulation that each bank should not expose beyond 15 percent of total customer deposits to real estate sector continues to remain valid. The regulations also restricts banks not to lend more than 65 percent of total project cost, and emphasizes that the remaining sum be organized by the borrower.
Posted on 4/7/2011