BMI View: 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.
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.
The retail sub-sector benefits from demand for premium malls space, from both domestic and international investors. This has seen an influx of supply in the pipeline for Doha to meet rising demand. Al Khor and Al Wakra will see a similar trend to the office sector, although the former is seeing interest for premium grade units, which will continue to support high rental rates.
Exports have fallen significantly owing to the importance of hydrocarbons in Doha's export profile. However, trade volumes should pick up in 2016. This will increase demand for industrial space, as demand for warehousing grows. The warehouse market is focused on Doha, and is controlled by owner-occupation, which has deterred some investment. However, a drive to improve transport infrastructure, including a rail and port links, should improve trade prospects and help diversify Qatar's trade, leading to increased demand for space.
Investor demand is likely to be from domestic and regional companies for 2016 and 2017, as foreign investor sentiment has fallen slightly due to regional political and security issues and collapsing oil prices. However, the 2022 FIFA World Cup is stimulating greater levels of overseas demand, and is seeing to rental rates increases, particularly in Doha. The markets of Al Khor and Al Wakra markets will likely remain subdued, with limited developments in the pipeline and similarly limited interest.
The Qatar Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's Qatar Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Qatar.
- Benchmark BMI's independent real estate industry forecasts for Qatar to test other views - a key input for successful budgeting and strategic business planning in the Qatari real estate market.
- Target business opportunities and risks in Qatar through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Industry Forecasts Outlook
Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.
- Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
- Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
- economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
BMI’s Real Estate Risk Reward Index
BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.