Boston, MA -- (ReleaseWire) -- 03/13/2014 -- We believe that the real estate sector in Qatar will remain relatively stable, with small increases in rental rates found in Doha and Al Wakra. Rental rates and net yields remained mostly static in 2013 with little change from 2012, but we believe 2014 will flourish due to further international and government investment.
Qatar's commercial real estate and construction segments will be among the clear outperformers in the Middle East in the future, bolstered by the Vision 2030 and World Cup projects. The country is also going to be buttressed by a business environment that has drawn all the major engineering, services, banking and real estate Gulf and Middle East players to the market. As such, we believe that fundamentals for growth in the sub-sector remain strong, but as we have previously highlighted, development will likely be slower than previously expected.
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The 2022 World Cup presents an obvious bonanza for the sector, although it stands to reason that much growth will be organic Qatari demand, as flows of retail-minded tourists are more likely to be directed to the UAE (primarily Dubai). The prospects of significant growth have already led to major development, and have left Qatar oversupplied. This will change over time as demand remains steady, filling this space and increasing rental rates.
In spite of seeming overwhelming optimism for the market, it is not without its hurdles. In particular, the market dynamics of the office sector have the potential for oversupply to become a dominant trend as with other states in the region. In addition, Qatari dependence upon the hydrocarbons sector has the potential to result in an uninspiring industrial real estate sector without diversification.
The office sector in Qatar continues to benefit from the country's status as a locale for international conferences and sporting events, as well as the strength of the hydrocarbon industry. Many international investors see Doha as another Dubai-like city in the future, a status that will only increase demand for space in the capital city. This will also help the outer cities Al Khor and Al Wakra as Doha fills and becomes more expensive.
The retail sector will surely be boosted by the World Cup, but in the near term any office and tourism development will help this sector grow. With the highest GDP per capita in the world, there is plenty of money to go around in Qatar, and this fact is not unnoticed by major retailers - especially those in luxury goods. Immigration to Qatar remains high, and as this trend continues it will draw retailers that cater to the working class instead of the political and economic elite.
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