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anybody be surprised to hear that the Middle East has become the
largest project finance market in the world? According to the
latest Global Investment House report, out of the global total
of $98.5bn in project finance debt raised in the first half of
2006, $33bn, or one dollar in every three, was raised for Middle
Eastern projects.Wherever you visit in the region, whatever newspaper you read and whoever you speak to these days, there is a real estate story being told. A new resort complex under construction in Khartoum made it into the newspapers this week. For sure it is targeting Sudanese nationals working in Qatar but the point is that every country within touching distance of the Middle East has got the real estate bug. Why has there been such a surge in demand for real estate in the region? In Qatar’s case it is a booming economy, driven by mesmeric growth in the country’s oil and gas exports, that is the overriding factor. As substantial as they are now, gas exports are expected to quadruple by 2013. Other facts also support the desire to modernise the property market too. Qatar is one of the richest countries in the world. Per capita income in 2005 was reportedly almost $53,000 and you could make a fairly safe assumption that it would rise above the $60,000 mark for 2006. The government has been pivotal in its support of the real estate market by committing massive financial resources to public spending. The Public Works Authority has infrastructure projects in the pipeline of more than QR25bn, all of which are scheduled to complete by 2009. |
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The decision to open up the market up to freehold ownership by
foreign nationals is another clear sign from the government that
it is looking to the future. The Pearl-Qatar, West Bay Lagoon
and the Al Khor beach resort are now household names here and
are already attracting interest from as far away as the Far
East. There are over 18 areas in and around Doha now where
ownership is possible on a leasehold basis too, the most
recognisable of these areas being in Lusail and Lagoon Plaza.
The population is growing too. Qatar is like a magnet to expatriates of all nationalities these days because of the attractive tax-free employment packages on offer. The same report suggests that the influx of families will increase to 200,000 in the next 2-3 years, rising to 500,000 by 2012. Importantly, Qatar has a much higher number of professional workers and technicians in comparison to the employment mixes of neighbouring states.
Proposed political reforms, in which the constitution will create a partially elected parliament, will strengthen the economy and as a direct result, the real estate sector. All of these points bode well for the future of the real estate market in Qatar and confidence in the development sector is naturally high.
We have frequently discussed where to buy freehold and leasehold
property in this column as well as who to contact to buy it. So,
if supply is so strong, what about demand? Who are the current
buyers and where are the buyers of the future going to come
from?The above statistics go some way towards answering these questions. Qatar is a nation of wealthy individuals who have considerable disposable income. Future income patterns suggest that they will become wealthier in the years to come too. The actual number of Qatari nationals is relatively small - about 200,000 out of a total population of 800,000 - and there may only be 30,000-40,000 who are eligible to buy, let alone want to buy. That said, if 15,000 want to invest in the new projects, it is a good audience for the marketing departments to target.
Highly-paid expatriates will reportedly make up a larger proportion of the population over the next 10 years. Global Investment House research again suggests that expatriates stay in Qatar between 8-10 years, certainly long enough to make house purchase a financially viable option. The issue in the past has been that expatriates have not been permitted to own real estate in Qatar but with that barrier now removed, the marketing departments have another potentially lucrative segment to target.
Of course, Qatar real estate is not just for sale to residents. It has a regional appeal despite there being a huge number of developments under construction elsewhere in the GCC. Qatar is a business hub and a recognised convention centre, and increasing numbers of businessmen will see the sense of owning an apartment here rather than staying in a bland hotel room. Commuting from here to the UAE may not be out of the question either. With the new airport fully functional, it could well take less time to fly from Doha to a business meeting in Dubai than it does to get into central London by train on a cold winter’s morning.
* Steve Flint is Head of Property Business at Commercialbank, contact 4490000 or email mortgage@cbq.com.qa