Doha Property Market
Qatar's real estate sector is in a period of strong growth, with growing interest from domestic and foreign investors and homebuyers.
But the supply side remains tight, due to raw material costs, and new construction regulations and legislation which limit the scope of foreign property ownership.
However, large developments show that investors are eager, and have not been deterred by increasing costs.
Experts estimate that demand is currently exceeding supply by a factor of four to one, driven both by buy-to-let growth and homebuyers.
The former group is largely made up of Qataris, including increasing numbers of women as they become more independent, while many expatriates are looking to buy their own homes as mortgage rates are currently competitive in terms of the cost of leasing.
Current prices for a single-bedroom apartment are around $2,000 to $4,000 per month, with some large companies investing in entire apartment blocks in order to accommodate their employees at a discount.
The growth in the number of expatriate workers and their families moving to Qatar will keep demand high. One particular trend of late has been an increase in interest in Qatar from citizens of other countries in the GCC.
Regional interest in the Qatari real estate market was clear at the Q-REX property show in Qatar in May, with many interested investors flying in from Saudi Arabia, Kuwait and elsewhere.
Bana Ali al-Muftah, Marketing and Communications manager of Doha based real estate firm Alagaria, noted that "more and more people are willing to invest in the booming real estate market in Qatar".
Currently, property investment by foreigners in Qatar is limited by strict controls. Law 17, passed in 2004, permits foreigners to own outright residential property in three developments only: The Pearl-Qatar, Al Khor and Lusail.
The Pearl, perhaps the best known, is a $10 billion development on a four square kilometre island that will boast 7,600 high-quality residential units, three luxury hotels, four marinas and other leisure facilities.
The first stage of the complex is scheduled to be ready in the summer of 2008, and the project should be complete in 2010.Lusail is a 32 square kilometre development north of the capital which combines resort, residential and entertainment options.
It will include 10 resorts, two golf courses, 3,000 villas, 12,000 apartments, 300,000 square metres of retail shopping, and six million square metres of commercial space.
It is expected to be finished by 2010. Al Khor is a mix of industrial, residential and tourism elements built around in the north-eastern gas producing region, with an investment of around $5 billion.
Over the medium term, despite large-scale developments in the pipeline, experts predict that prices will continue to rise as interest in the Qatari real estate sector grows.
Following the recent change in construction standards legislation in Qatar, to be introduced by mid-June 2007, there are already questions as to whether such changes will be compatible with planned developments and the kind of building materials available in the country.
Businessmen in Qatar welcome the changes though express the view that the legislation should be studied at length before being enforced. Similar comment has been made by a member of board of Qatar Chamber of Commerce and Industry, Nasser Al Meer.
He commented that while he welcomes the move, it will require specialists to be recruited to check the quality of construction and materials used.
The new construction standards are based on UK and US construction codes and specifications. According to these new regulations violators will face one-year imprisonment and a fine ranging from 3,000 riyals ($830) to10,000 riyals ($2,750).
The new standards will be applicable to both the public and private sector, and cover buildings and infrastructure such as roads.
An improvement in minimum construction standards is still likely to be a positive move for Qatar’s dynamic real estate market despite the fact that it could increase construction costs for those parts of the market not currently complying with the new standards.
By forcing contractors to use modern construction technology, building materials and equipment, minimum investments will have to be larger.
This will add to the pressure coming from the increase in raw materials costs. Prices of sand, cement and aggregate have tripled over the past five years, and import costs have also increased significantly.
Aggregate, which last year cost $16 per tonne, now costs $26, while concrete prices increased from $165 per tonne o $330 per tonne according to local sources.
However, despite increasing costs, demand remains strong. The tight supply side is likely to keep prices relatively high, and could put pressure on the bottom line of constructors.
"Although many people are complaining about high prices in the real estate market, particularly for high-end units, it seems there will be no reduction in the near future," said Ahmed Al Shaer, President of ERA Real Estate.
"High-end units will not decrease in rent. In fact, we can expect a 5 per cent increase each year. Qatar is at a very exciting time for real estate and this is only the beginning."
[Source : Property Weekly]