By Arvind Nair
EXPATRIATES planning to buy houses in Qatar, should wait for a while before committing themselves, according to an international property adviser.
Nick Witty, deputy managing director of DTZ Middle East Operations, said though no crash in prices was expected, a 10% “softening” could occur by the middle of next year.
Prices of plots, which had peaked in 2007, could drop by 10% to 15% in the coming months, said Witty, who advises clients on a variety of real-estate related issues, including investment, purchases and rentals.
Since Qatar has spread its risks, it can easily weather the current slowdown, he said. “Despite significant increases in both rental and sales prices across all asset classes over the last four years it is important to remember that the Qatar market started from a relatively low base. If a direct comparison with the Dubai market is made we have seen recent falls of up to 40% in residential prices, however, Qatar is still significantly lower at its current peak than Dubai is after the fall.”
Besides, he said, in Qatar “we are not experiencing the huge oversupply of certain types of property which is being experienced by again, for example, Dubai. As there is still demand and cheaper pricing relative to other countries in the region we can still see the potential for capital appreciation over the coming years although common sense dictates that it will not be at the rates we have experienced over the last few years which are unsustainable”.
Talking about the future scenario, Witty said, Qatar’s fundamentals were similar in many ways to those prevailing in Saudi Arabia and Abu Dhabi in that their economies did not rely upon real estate to form a significant part of their GDP. Nevertheless, all three markets are experiencing demand for a range of property types. For example, Saudi has a shortage of about 1mn middle income homes at the moment.
Similarly, while it has a pipeline of future supply Abu Dhabi has a dearth of quality housing available at the moment which leads to many office workers living in Dubai and commuting every day.
By comparison, Qatar is experiencing higher demand for retail accommodation especially in the low to mid mass market ranges. He hoped that the additional retail currently under development would come to the market in the next two years.
Al Wa’ab City with its 44,000sq m piazza, Barahat Al Wa’ab offering over 100,000sq m of retail accommodation together with The Gate in West Bay and Lagoon Plaza close to the Pearl will all ease these pressures and meet demand.
In terms of residential and office accommodation in Qatar while we can see an oversupply in the next few years there will be a “flight to quality” and a two tier market will start to form. This will simply be a reflection of supply and demand where occupiers of both types of asset classes will be given a greater choice of buildings and will naturally move towards those offering higher quality build, finishes, car parking location and of course, price, Witty said.
Under the circumstances, he said, developers could defer projects. Where this is not possible, they will perhaps slow construction and start renegotiating with their suppliers and contractors given that commodity prices have now started to drop. Those who are unable to do either will try to renegotiate finance but with the squeeze on the availability of debt this will prove difficult to achieve.
The smaller developers are likely to go bust. However, this is not seen as a major issue in Qatar given the quality and backing of the major developers here and “we are unlikely to see widespread problems”. |
