Qatar Real Estate Report 2016 - New Report Available

From: Fast Market Research, Inc.
Published: Wed Apr 27 2016

We have a stable outlook for Qatar's economy in the medium term, reflecting the countries resilience to the collapse in oil prices over 2015. Rising consumer confidence and spending, alongside greater governmental investment, will present opportunities in the retail and office sub-sectors in 2016 and 2017, supported by improvements to infrastructure that will benefit the broader real estate market.

Qatar is an exporter of petroleum and LNG, which accounts for 70% of government revenues, 60% of GDP and around 85% of exports. The dramatic fall in oil prices to under USD30.0 per barrel, a 12-year low, detrimentally affected Qatar, with GDP per capita contracting by 14.6% in 2015 in US dollar terms. We have downgraded our forecast of average annual GDP growth between 2016 and 2020 from 5.8% to 5.2%, highlighting the need for greater economic diversification.

The government has announced reforms that should mitigate further damage to the economy. These include reductions in current government spending, which was cut by 9.5% over 2015 and is forecast to fall again in 2016, as slow developing projects are scrapped, subsidies removed and an increase in stamp duty is introduced. Capital spending will increase slightly as spending on infrastructure developments advance in order to boost business prospects. Projects include 'free zones' to benefit logistics and attract foreign investment. On top of this, the government is looking to offer more development projects to the private sector, which we forecast will channel funding into the most important and strategic investments. Overall, we see this as benefiting the commercial real estate market over the medium and long term, as greater investment into the private sector will create opportunities for foreign development. The commercial real estate market will also continue to benefit from Qatar's strong macroeconomic fundamentals, including low unemployment and a diversified labour market, which will support business sentiment.

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The office sector benefits from a strong development pipeline, with around 2mn sq m of space expected to enter the market by 2019, and higher levels of demand, on the back of greater government spending. Doha will be central for office developments. The city is the focus of most tenant interest and will see continued higher levels of demand leading up to the 2022 FIFA World Cup, with a particular appetite for premium grade units from international investors. On the other hand, Al Khor and Al Wakra are seeing little interest for higher-grade space, as developers are unwilling to build due to the economic focus on Doha.

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