JEDDAH, 24 November 2004 — Similar to its Gulf Cooperation Council (GCC) counterparts, Qatar is witnessing an unprecedented boom in the real estate sector.
As the country prepares to stage the Asian Games in 2006, heavy construction activity is ongoing both by the government and the private sector, setting up huge gas projects and new housing developments, according to a report by Kuwait-based Global Investment House.
A wider dispersion of population and increase in housing and infrastructure is boosting the performance of Qatar’s real estate sector, visible from the increased activity in Al Wakra, Umm Slal and Al Khor areas of Qatar, in addition to Doha and Al Rayyan, the report said.
Qatar has several industrial cities which house a variety of industries, including oil and gas, petrochemicals and steel, fertilizer and LNG facilities. These are - Ras Laffan Industrial City, Messaieed Industrial City, Doha Industrial City and Dukhan Petroleum City among others. All play a vital role in stimulating economic and business growth, the GIH report said.
It also mentioned new projects and investments planned in industrial estates, including maintenance and infrastructure developments, such as roads and expressways; and residential and leisure facilities for employees and families of the companies housed there.
Qatar, due to its relatively small size, limited natural resources and a tight labor market, is facing crippling shortages of cement, aggregates, iron and steel. Most of the projects have slowed down, and some have almost halted since April, due to the scarcity of concrete and cement. The national supplier of these materials the Qatar National Cement Company (QNCC) is unable to match the rapid surge in demand for the government-driven work.
QNCC raised prices last year by 30 percent and again by 15 percent in June 2004. Cement prices had remained stable at around $2.50 per 50kg bag until last year.
As projects for stadiums, hotels, and other commercial and residential real estate started to ramp up last year, the cement shortages hit, and prices started to climb.
Cement prices now officially are at $3 per bag, though it retails at close to $6 per bag, the GIH report said.
However, the report added that these high prices are expected to settle down. QNCC is adding capacity by setting up a new cement plant and increasing cement imports.
On the whole, rising material prices will have an impact on the cost structure of new real estate projects. However, large projects, such as the Pearl-Qatar, are not expected to face any input shortages because of Qatar’s national priorities.
The government has issued a decree that allows non-Qataris to own real estate in three housing projects. The law allows Qatari’s and non-Qataris to buy and own real estate of any description in any of the three projects - proposed Pearl Island, West Bay Lagoon and Al Khor Resort.
Non-Qatari buyers could own real estate at the above three locations for 99 years, and that would be extendable for another 99 years. The “freehold property owner” not only receives permanent residency but gets a provision for inheritance.
More municipalities are pushing landowners to improve the landscape.
In Doha, landowners in the West Bay area have been given a deadline of 2007 either to begin construction of towers or start the process. Failing that, the government reserves the right to resell it to other investors. About 60 towers have been approved; construction on a few has already begun.
Pearl-Qatar, an island being built on reclaimed land offshore by United Development Company (UDC) of Qatar will offer freehold status and residential rights to international investors.
This is the first freehold property to be made available for sale in Qatar, based on the decree issued by the Emir of Qatar in June 2004. It guarantees that all purchasers of any nationality will be issued legal title certificates.
In conjunction with the Tourism Master Plan, Qatar also enacted a law regulating property ownership by non-Qataris. The plan should open the market to foreign investment and attract capital for additional development, the report said.