State spending seen lifting Qatar property
Positive outlook for sector for the remainder of the year.
October 21, 2010 8:41 by Reuters
Hefty government spending is expected to boost demand for real estate in Qatar despite a threat of oversupply, property consultant DTZ said in a report on Wednesday.
The tiny Gulf Arab state is pouring billions of dollars into civil infrastructure development to diversify the economy away from hydrocarbons and accommodate its expanding population.
Over the next five years, Qatar plans to build a $25 billion rail network, an $11 billion new airport, a $5.5 billion new deep-water seaport and a $1 billion crossing linking the new airport with mega-projects in the northern part of Doha. It will also spend an additional $20 billion on new roads.
“This spending will create a knock-on effect on the rest of the economy, contributing to increased consumption and demand for better quality housing, office and retail facilities,” said Mark Proudley, associate director at DTZ.
Qatar, the world’s largest exporter of liquefied natural gas, was one of the fastest growing economies worldwide in 2009. Its economy grew at an average pace of 17.4 percent over the past five years and it is set to largely outperform fellow Gulf oil producers in coming years.
“The retail market remains comparatively strong and does not suffer from the oversupply characteristics at this time, which prevail in the commercial office and residential markets. That market dynamic has led to increases in average rental levels,” the report said.
A Reuters poll in September showed that Qatar’s economy was likely to expand by 15.5 percent this year.
Some projects in Qatar have stalled recently due to the property market slump. In August, Barwa Real Estate Co said it delayed its Al Khor project due to market conditions.
But Qatar has largely escaped the storm that pummeled neighbouring Dubai, with only minor injury due to state moves to control development of new offices, shops and homes.
Signs of stabilisation in Qatar’s property market as well as renewed investor confidence has led to a positive outlook for the sector over the remainder of the year, the report said.
“Going forward we expect development to be more market-led and less speculative. Landlords and developers will need to focus on the core fundamentals of real estate; identifying their target market and delivering a product which meets the requirements of the end users,” it said.
(Reporting by Regan E. Doherty; Editing by Firouz Sedarat)