Qatar's real estate market is exceeding expectations.
| Qatar | Feb 07, 2023
While an overhaul of infrastructure is ramping up construction activities in the public sector, private real estate developers are capitalizing on liberalized property ownership laws in Qatar to sell to foreigners.
The construction market in Qatar managed to grow around 1.5% in 2021 despite unfavorable conditions caused by a prolonged stagnation which led to decline in many Asian and Middle Eastern real estate markets. In 2022, the Qatari market is performing even better, raising the expectations for a growth of over 3% by the end of the year.
The wave of construction for FIFA World Cup in 2022 is certainly one contributing factor—and one which has been discussed thoroughly; however, it is not the only factor. Much of the current spending in the sector is made under Qatar National Vision 2030 and the Qatari national budget, which have little to do with the forthcoming sporting event.
Government spending in public infrastructure projects is the main driving factor in 2021-2022. The country’s national budget has set aside some QAR60 billion (USD15 billion) for construction projects this year. Coupled with this is another QAR60 billion (USD16.5 billion) which will be directed to infrastructure construction gradually by 2025.
For the time being, the public works authority (Ashghal) has embarked on a series of road renovation, public arena development, and infrastructure upgrading projects for 2021-2023, which will come with a price tag of QAR7.5 billion (USD2 billion).
Ashghal will have a number of projects up for grabs between 2022 and 2023, with a major one being awarded at least every other month.
In May 2022, the structural renovation of 14 aging school buildings were awarded to qualified contractors. Fortunately, the public works authority is making sure that the large number of its ongoing projects will not undermine sustainability, as in keeping with its Corporate Strategy 2018-2022 to promote sustainability and recycling.
This is important for the sector because a large number of renovation projects may soon be commissioned, while the government tries to rebuild the infrastructure in a more eco-friendly way. “Since the 1970s, the country has improved in all metrics of well-being, economic growth, and GDP per capita. The challenge now is the operability of those assets and their long-term sustainability,” Alaa Abusiam, CEO of Egis Group for the Middle East, told TBY recently.
The shift toward sustainability, especially in projects commissioned by Ashghal, is changing the business structure of many construction companies, creating niche specialties such as environmental engineering and urban development. There are companies active in the public sector which focus on the design of eco-friendly structures. For example, “ECG is a green building registered company in the US and Qatar at the GCS as a service provider for design and supervision,” says Omar Bahgat, regional manager of ECG Engineering Consultant Group.
As always in Qatar, the private sector is also a huge driving force. Although a surge in supply is visible in the sector as the opening day of the World Cup approaches, World Cup-related supply does not form the majority of real estate construction activities—and certainly not now in 2022, when most projects have already been completed. The demand in the market is generated locally and not likely to go away soon. This is reflected in the increase of demand for rentals for the first time since 2015.
Part of the demand is caused by the arrival of new expats, who make up 88% of the peninsular country’s population. The passage of a new law in 2018 facilitated property ownership for non-citizens in freehold zones of Qatar, which motivates expats to buy property both for personal use and as a form of investment.
In 2020, the rules were further liberalized, letting foreign nationals to buy property in nine additional areas. Under the new ownership law, non-Qataris may even receive full residency rights after buying long-term real estate leases. This has become a big selling point in Lusail, where the growth in demand is quite tangible.
In 1Q2022, Lusail and Al Wakrah saw the highest supply of residential units compared to other parts of Qatar. “Two residential projects in The Pearl including a tower, and seven apartment buildings in Lusail, were completed adding 600 apartments. Also, Ezdan Real Estate has announced the launch of 4,000 units across eight compounds in Al Wakrah municipality during 2022,” according to a new report released by ValuStrat, a real estate market intelligence provider in the Gulf region.
Even in the private sector, where contractors do not have to follow the same strict sustainability standard as the public sector, property developers are keen on sustainability, as it is an important selling point in the market. Msheireb Properties recently completed the fourth phase of Msheireb Downtown Doha (MDD), which is said to be among the smartest and most sustainable residential complexes in the Gulf region.
MDD has a “consistent architectural language with the city buildings,” according to The Peninsula. Given the success of MDD and its popularity with the buyers, other developers are likely to follow suit as they try to grab a piece of action in Doha’s revitalized real estate market.