QATAR MARKET FACES REALITY CHECK
Residential prices fall 10pc after Saudi Arabia boycott
QATAR’S Doha Tower won an award when finished in 2012 amid a Gulf-wide real estate boom, but yesterday 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 United Arab Emirates, Bahrain and Egypt over allegations that Doha supports Islamist militants, a charge Qatar denies.
The protracted row has made it tough to woo would-be foreign buyers of residential or commercial space.
Residential prices are down about 10 per cent from June in 2017, when the boycott began, and office prices have fallen by a similar rate, according to analysts and economists. Rents are down 20 per cent 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,” said Jason Tuvey, an economist at Capital Economics.
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 chief executive officer 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,” said Doha-based real estate firm DTZ associate director Johnny Archer.