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Qatar pulls investors
“Financial crisis? $3.5bn residential project unveiled in Qatar” reads the headline of an article on The Peninsula. Here’s why.
November 24, 2008 1:39 by kippreport
Bahrain-based investment house Arcapita Bank and Kuwait’s Al Imtiaz Investment have joined hands to develop Al Sidra, a $3.5 billion golf residential project in Doha. The joint venture plans to develop 3,200 residential units built around a Greg Norman Championship golf course. The development is within the Lusail project in Qatar, which is owned by Qatari Diar.
“At a time of global economic uncertainty, the Qatar economy stands out with solid fundamentals and high growth prospects,” Atif Abdulmalik, CEO of Arcapita, said in a statement.
“In this volatile economic environment, the announcement of investments such as this in Qatar are noteworthy,” said Ghanim Al Saad, CEO of Qatari Diar.
What is also noteworthy is that the news comes alongside reports that the Majid Al Futtaim Group has entered into a joint venture agreement with Abu Dhabi Investment House to develop a project in the Entertainment City in Doha.
The project, called ‘Downtown Precinct’ is also located within the Lusail development. It will include a 150,000 square meter retail leisure and entertainment mall including a Carrefour hypermarket, a five-star boutique department store, a five star hotel comprising 210 rooms, a four star hotel comprising 250 rooms, two office buildings totaling 28,000 sq m of office space.
The project will also have a 167,000 square meter of residential living with approximately 1,100 apartments and 7,000 parking spaces.
At a time when most talk about investments, finance and real estate is generally negative, it is interesting to hear companies announce new, large-scale projects in Doha. So, what’s so special about Doha? Why is it attracting investors??
“Basically Qatar is moving forward like Dubai’s economy, its opening up sectors, and there are more proactive policies adopted by the government in terms of inviting investments from not only the region, but also across the world,” says Chandresh Bhatt, the assistant vice president, Research Group, Global Investment House. “They have evolved the financial system, monitory policy, the FDI’s, the regulations and are making the country more investor friendly to build it as a regional finance hub.”
According to the Qatar Economic and Strategic Outlook report released by Global Investment House in June this year, the Qatari government is offering several attractive incentives for joint ventures, which include:
• Natural gas priced at $0.60-0.75 per mn Btu;
• Electricity at $0.0178 per kilowatt-hour;
• Industrial land at a nominal rent starting at one Qatari Riyal per square meter per year; (can change depending on property)
• No custom duties on imports of machinery, equipment and spare parts;
• No export duties;
• No taxes on corporate profits for pre-determined periods.
Apart from offering incentives, the country is also undertaking huge scale infrastructure projects such as the $5.5 billion New Doha International Airport, a $5 billion tourist project in al-Khor, the $2.5 billion Energy City and the $3 billion, 40kilometer causeway linking Qatar and Bahrain. It is also building the New Doha Port, which will have a capacity of 1,100 big commercial ships, is estimated to cost $4.5 billion and be completed by 2025.
The world’s largest exporter of liquefied natural gas (LNG), Qatar has around 15 percent of the world’s total natural gas reserves, and has announced plans to more than double its gas production.
But are all these measures enough to combat the financial crisis and still attract investors?
“The consequences of the world crisis on the state of Qatar will be less than on many of the other developing countries, because the banks and monetary institutions in Qatar enjoy a high monetary cover,” said Qatar’s ruler Sheikh Hamad Bin Khalifa Al Thani earlier this month.
“In addition to that, the increase in the oil and gas production will compensate the fall in their prices, if that fall continues, and the monetary reserve of the government will help satisfy the needs of the country if necessary,” he added.
In the second week of October, the Qatar Investment Authority (QIA), the country’s sovereign wealth fund, bought up to 20 percent shares of Qatari banks to support the banks’ capitals and improve their financial situation.
With promises of high liquidity, a growing infrastructure and a vibrant economy, Qatar appears to be fighting the economic slowdown and pulling in investments.- AN