Qatar real estate hit hard ahead of World Cup

A general view of the Corniche Towers is seen in Doha, Qatar February 5, 2019. Picture taken February 5, 2019. (File/Reuters)
Updated 15 February 2019
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Qatar real estate hit hard ahead of World Cup

  • Qatar plans to increase residential space by about 50 percent and office space by 40 percent in the next three years
  • The lion’s share of construction underway is for high-end residential towers, white-collar office space, and luxury hotels and shopping malls

DOHA/DUBAI: Qatar’s Doha Tower, a spike-tipped cylinder that glows orange at night, won an award when finished in 2012 amid a Gulf-wide real estate boom, but today about half of its 46 floors are empty.
The office tower, now a familiar part of the capital’s high-rise skyline, has run foul of what real estate brokers, bankers and analysts say is an oversupplied Qatar property market ahead of the 2022 World Cup that mirrors a real estate downturn in the wider Gulf region after a drop in oil prices.
Qatar has the added challenge of a diplomatic, trade and transport boycott imposed on the Gulf Arab state by Saudi Arabia, the UAE, Bahrain and Egypt over allegations that Doha supports extremist militants, a charge Qatar denies.
The protracted row has made it tough to lure would-be foreign buyers of residential or commercial space.
Residential prices are down about 10 percent from June 2017, when the boycott began, and office prices have fallen by a similar rate, according to analysts and economists. Rents are down 20 percent from three years ago, they say.
“Qatar’s property sector has been one of the main casualties from the blockade that was imposed in mid-2017,” Jason Tuvey, an economist at Capital Economics, said.
The property downturn has so far not translated into bad loans, as bankers say borrowers holding sluggish real estate assets tend to be among the country’s wealthiest.
“They have capacity to withstand the market ... I don’t see a major threat,” Doha Bank CEO Raghavan Setharaman said, when asked about his view of the real estate market.
A banker at Al-Khalij Commercial Bank said banks like his have been restructuring many property loans in recent months, extending them to 20-year payment periods from 10 in some cases, to keep business moving for developers hit by slow demand.
But with the World Cup edging closer, real estate experts say long-planned projects are now set to flood the market, even as buildings in prime locations, like Doha Tower, sit idle.
“It’ll be interesting to see what happens when they (real estate prices) are really put under pressure in a year’s time, when a lot of new supply hits the market,” Johnny Archer, Associate Director of DTZ, a Doha-based real estate firm, said.
Tiny but wealthy Qatar plans to increase residential space by about 50 percent and office space by 40 percent in the next three years, partly on expected demand from the World Cup, according to a report published last week by real estate company DTZ.
The lion’s share of construction underway is for high-end residential towers, white-collar office space, and luxury hotels and shopping malls.
FIFA requires Qatar have at least 60,000 hotel rooms in place for the month-long World Cup tournament, which Qatar estimates will draw about 1.5 million fans — more than half of its roughly 2.6 million population.
Qatar has about 26,500 rooms and will add another 15,000 by 2022, DTZ’s report estimated. The rest will be met by rooms aboard cruise ships and in desert camps, according to the local World Cup organizing committee. These camps are expected to be bedouin-style accommodation to give visitors a taste of desert life.
Much of the building is in an entirely new city, Lusail, a 38-square kilometer stretch just north of Doha dotted by commercial towers, hotels, and shopping centers at various stages of construction.
Lusail is being developed by state-controlled Qatari Diar Real Estate Company, which envisions it hosting 200,000 residents and 170,000 employees. It is anchored by Qatar’s largest World Cup stadium, an 80,000 seat venue that will host the opening and closing matches.
Colliers International, whose office was an early entrant to Lusail, says getting companies to fill a rush of towers coming online ahead of 2022 will be a daunting task.
“There’s going to be massive structural oversupply for office infrastructure for the foreseeable future,” said Colliers’ Qatar country director Adrian Camps.
In a bid to spur activity, Qatar last month ratified an investment law allowing foreigners full ownership of companies, and for years Qatar has designated certain high-end areas like Lusail open to foreigners, but brokers say demand remains low.
Shopping malls, lacking the Saudi or Emirati shoppers who once flocked to them before the boycott, are among the most visibly affected, with some having to shutter shops in recent months.
New malls are being built anyway.
Total retail space has doubled in three years and will grow 50 percent more by 2021 with nine new malls, according to DTZ.
Beyond 2022, Qatar real estate faces an uncertain outlook. Aside from soccer stadiums, Qatar has not specified legacy plans for what happens to infrastructure developed for the World Cup after the tournament.
“There’s too much uncertainty as to where that demand specifically is going to come from,” Richard Rayner, who surveys property for DTZ said.


Palestinians in financial crisis after Israel, US moves

Updated 22 March 2019
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Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.