Qatar property market recovery seen in 2011

23/02/2010 00:00 AST

Qatar will have to endure at least another 12 months of falling property prices before a recovery in 2011, when the benefits of a prudent approach towards real estate development begin to pay off.

Industry experts said Qatar is learning lessons from Dubai's flawed speculative building model, which imploded during the global financial crisis and saw residential prices plunge some 60 percent from their 2008 peak.

Qatar escaped from that storm with minor injury and state moves to control development of new offices, shops and homes mean its fledgling market may heal up to a year before Dubai.

"You didn't have the same amount of supply and projects completed at the same time in Qatar, so I think the timing and phasing is to the advantage of the Qataris," said Ziad Makhzoumi, chief financial officer at Arabtec, the United Arab Emirates' largest contractor.

Analysts at investment bank The First Investor expect house prices in Qatar, down about 30 percent since the crisis, to fall a further 10-15 percent before bouncing back next year as the government's disciplined control on new building bears fruit.

Contractors in the United Arab Emirates are already beating a path to take advantage of Qatar's lucrative construction market, for all types of property, which is seen up 7 percent to about $5.6 billion in 2010, investment bank TFI said.

Commercial property prices in Qatar, down 20-30pc in 2009, are likely to stabilise in the second or third quarter of this year, property consultant DTZ told Reuters.

These projected growth and stabilisation stories mirror that of Qatar's economy, which is seen up 16.1 percent this year due to massive expansion at its natural gas facilities, compared with a 2.5 percent projection across the UAE.

This is likely to spur real estate demand across the Gulf state in sharp contrast to Dubai, where a shaky jobs market has forced expats to flee, delaying a turnaround in property prices until 2012, a Reuters poll showed in January.

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Reuters