Qatar house prices seen recovering in 2011
Dubai, September 1, 2010
Property developers in Qatar are learning lessons from Dubai's sharp real estate and development crash by slowing and rethinking projects, a move which will help property prices recover next year, analysts said.
Qatar developer Barwa Real Estate said on Tuesday it has delayed its QR30 billion ($8.3 billion) Al Khor project due to sluggish market conditions, the latest sign that the world's largest exporter of liquefied natural gas is grappling with oversupply.
The project, a mixed-use city north of Doha, was originally expected to be completed in 2015, but a company spokesman declined to give a new completion date.
'This, coupled with what they saw in Dubai, caused developers to put the brakes on certain developments,' said JP Grobbelaar, director of research and advisory at Colliers International, referring to oversupply in Doha's West Bay, the capital's new business city.
House prices in Qatar, down about 30 per cent since the crisis, are seen falling further by 10-15 per cent in 2010 before recovering next year as property companies better balance supply to the market, said Patrick Rahal, senior analyst at investment bank The First Investor in Doha.
In contrast to Dubai, Qatar did not witness the same flawed speculative building model which imploded and caused house prices to tumble some 55 per cent from their peaks.
Dubai, which overstretched itself building ambitious real estate such as islands in the shape of palms, was the Gulf Arab region's worst hit property market, with billions of dollars worth of projects put on hold or cancelled.
House prices in Dubai are set to fall a further 10 per cent this year, with prices recovering in 2012, a Reuters poll in July showed.
'There is oversupply in Qatar, especially in the commercial segment and so it is a sensible move to learn lessons from Dubai,' said an analyst who declined to be named.
'Delaying projects or rethinking them is not all that bad for Qatar,' the analyst said.
Barwa, Qatar's second largest developer by market capitalisation, is an affiliate of the country's sovereign wealth fund, the Qatar Investment Authority, which holds a 45 per cent stake in the company. – Reuters