Old dhows and Qatar’s new skyline

While most of the world has reeled from the economic downturn for the past year, the Middle Eastern peninsular state of Qatar, located halfway down the west coast of the Arabian Gulf next to Saudi Arabia, has only recently become affected.

Qatar was left largely untroubled by global financial woes for so long principally because it controls 5 per cent of the world’s proven natural gas reserves and sits upon the world’s largest single gas field. Topping the International Monetary Fund’s 2008 list of countries ranked by gross domestic product, the government’s response to the crisis was to further accelerate rather than downgrade its public investment policy, which in turn is increasingly diversifying and strengthening its economy.

Property ownership laws were relaxed for non-residents in 2004, triggering sizeable residential property development. This, coupled with a host of huge ongoing investments across the oil and gas, business, tourism, educational, leisure and sports sectors, means that Qatar’s presence on the world stage is increasing rapidly.

However, the relative infancy and small scale of the market for foreign buyers mean that house prices have been very susceptible to change of late.

“The market has been quite slow, especially in the past few months, but recently there has been more movement, especially with the end of Ramadan,” says Ab Sher of estate agency Mirage, based in the capital, Doha. “We can’t deny that the global crisis is affecting Qatar but it is nothing as bad as elsewhere. Prices have fallen around 15 to 20 per cent and one reason is that conditions have been more difficult for obtaining a mortgage in recent months.

“However, the last Qatar International Real Estate and Investment Exhibition in May, the fourth, was very positive and featured around 300 local, regional and international companies. It was very positive in terms of the number of participants and sales. The resale market has been doing well, especially at The Pearl.”

The Pearl, a huge development project, is one of three areas in Qatar where foreigners can hold property on a freehold basis. Comprised of man-made islands extending over 985 acres (400 hectares) of reclaimed land, it is on the outskirts of Doha, north of the centre and linked to the mainland by a causeway. Scheduled for completion in 2011 (though unlikely to be finished on time), the 16,000 villas, townhouses and apartments to house 41,000 will be located within 10 themed districts among parkland, 20km of beach, three five-star hotels, shops, restaurants, schools, three marinas and other facilities. Two-bedroom apartments start at about QR1.95m (£336,000).

The other areas where foreigners can buy freehold are West Bay Lagoon, a complex made up of residential towers, luxury hotels, a commercial centre and recreational facilities that is near The Pearl, and Barwa Al-Khor, a huge coastal city being built 57km north of Doha. Plots at West Bay Lagoon are now scarce.

There are also a number of areas in Qatar where foreigners can own property on a leasehold basis. They include Lusail, along the shoreline a bit further north from The Pearl. Essentially a new waterfront city, like The Pearl it will transform the shoreline through dredging and reclamation, creating new islands, access channels and beaches. The development will include residential housing for about 200,000 inhabitants as well as piazzas, business and mixed-use areas, hotels, schools, retail spaces, an entertainment district, a lagoon with two marinas and two golf courses. It is also scheduled for completion in 2011 but, like many projects in Qatar, is not running strictly to plan.

Electrical engineer Shibu Meeran bought a three-bedroom flat in Lusail off-plan a year ago as an investment and is still waiting for it to be completed. “My apartment is not built yet. It’s promised for completion next year,” says Meeran, who is asking QR2.4m for the property, which comes with a 99-year lease. However, he still believes Doha is a great place to buy. “I’ve been here four years and it is a very safe and comfortable place, a fast-growing place,” he says.

Qatar’s oldest bazaar

Karl Bishop at Doha-based estate agency Coreo is very upbeat about the property market: “We are getting a lot of interest from both expats and locals looking to invest. It is an exciting time to be working in real estate here, it is much smaller and self-contained than, say, the Dubai market. I do not think it will ever be another Dubai, where you saw catastrophic downfalls of prices, with developers with bad reputations producing bad-quality apartments that remain empty. It’s a great place for the long term. Fifty per cent of our clients are expats, looking to buy in places like The Pearl, and West Bay. Our website gets 10-15,000 hits per month and 80 per cent are from abroad.”

After a stint working in the City in London, Bishop, 33, moved with his wife, Holly, a management consultant, to Dubai three years ago before settling in Qatar in 2007.

“We left Dubai towards the end of the boom,” he says. “I saw crazy things there, like people queuing up to buy at developments and then immediately selling on again at a 10 per cent profit to [people at] the back of the queue. It was crazy but there was no sustainability. It wasn’t a case of whether it would collapse but when.

“This year prices have been levelling out and we are getting a different kind of investor, looking for the long-term benefits rather than ‘flipping’ properties to make a quick buck. If you are prepared to wait, to hold on to a property for five years, you will see considerable capital growth.

“Renting is very costly here – even a low-grade apartment will cost you around £1,500 per month – and mortgage payments are often the same as rental payments, so why not buy?”

High rental yields will be welcomed by many investors and a huge population increase will be an added assurance that the property market is set to grow healthily. Latest estimates put the country’s population at 1.5m (with about half residing in or near the capital), which is nearly double the figure recorded in the last census, in 2004.

Prices can vary dramatically at the same residential development as some agents and developers try to sell at well above the market rate. It pays to shop around.

Buyers can expect to pay about £350,000 for a two-bedroom apartment in a development such as The Pearl but, as Bishop says: “For that you are living in a mind-blowing development in the capital of the richest country per capita in the world.”

John Watts left the UK after working as special adviser to former prime minister Tony Blair in July 2007 to run international public relations company Brown Lloyd James’s Qatar office. “Having lived in Qatar for two years, I am continually amazed at the strength and the diversification of the economy, the standard of living and how welcome we are made to feel by Qataris,” he says. “It is a safe country, easy to navigate and with an increasing choice of cultural and leisure pursuits.”