Property Futures

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Real-estate investment in Qatar has the potential for triple digit returns

Article: Capital appreciation and rents make residential property investment in Qatar attractive.

Thanks to a booming economy based on hydrocarbon revenues and the forthcoming FIFA World Cup in 2022, prospects for the real-estate market in Qatar look bright.

Qatari real estate market analysis

Property market analysis in Qatar

The General Secretariat for Development Planning, in its recent publication on Qatar Economic Outlook for 2012-13, said that. “Construction activity is now accelerating and was a major contributor to growth in the second half of 2012. In 2013, construction will boost even further, expanding at a double-digit pace.”

The growth is driven by an expanding young population, and increasing number of households and enhanced business activity.

  • Though 2022 is some years away, the World Cup promises to be a bonanza for the real estate business – though a substantial part of the growth is going to be organic, domestic demand (tourists are more likely to do their shopping in Dubai).

There is limited information available, though it is already evident that there is an increase in demand and a growing pipeline of construction projects.

  • The political profile of political risk ranks as among the most stable in the area.
  • Despite the lack of democracy, the local citizens can boast of the highest per capita GDP in the world because the energy riches are distributed generously to them.
  • Qatar’s infrastructure development plans total USD $150 billion and there are major opportunities for the construction sector.

Reasons to invest in Qatari real estate

  • Great economic fundamentals because of the massive revenues from gas.
  • GDP is more than USD $130 billion and growing at 23% annually.
  • A shortage of around 100,000 housing units over the next few years.  The government predicts that demand would be 120,000 units while supply would be around 16,000 units over the next two years.  It is highly unlikely that supply would be enough to meet demand until 2015 at the earliest
  • Residential property is likely to appreciate at between 20% and 30% annually over the next 3 years.  Combined with higher rentals, there is the potential for triple digit returns on investment.
  • Rents have increased by 400% in the past few years and now stand at USD $4,500 a month for a 2-bedroom apartment (which is the highest figure for any country located in the GCC).
  • Population growth is likely to be around 7% per annum for the next 5 years, adding around 40,000 people every year. Growth is accelerating
  • Qataris presently number 8 people to 1 household because of large families—but the younger generation wants to acquire their own housing and have to money to buy or rent. Merrill Lynch estimates that the size of households will reduce by half that’s doubling the demand for residential property
  • Current real-estate prices are about 20% to 40% lower than Dubai and mortgages can be arranged quickly for non-residents (though they are not cheap).
  • Speculation is well regulated and controlled and there are few chances of a real-estate bubble.

The bottom line

 

Investments in real estate in Qatar have the potential to be highly profitable over the next few years.  The process of buying and selling property is relatively easy with a proper legal framework in place.

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