Qatari Real Estate: The coronavirus health emergency is straining the economies of all countries around the world. Following multiple reports denouncing Qatar’s falsification of the number of COVID-19 infections and deaths, Bloomberg published an article describing the troubling economic situation for the small Gulf country, isolated from its neighbors.
To date, Doha has officially registered more than 137,000 cases of the coronavirus and only 236 deaths. But as already mentioned, these numbers may be very high because they do not take into account the foreign workers who died in the overcrowded and dilapidated fields and facilities reserved for them.
Bloomberg, citing Pawel Banach, who runs the Qatar branch of real estate consultancy ValuStrat, points out that before the small emirate hosts the World Cup in two years, the leadership is spending its huge wealth from natural gas exports on the final phase of Doha. transformation into a global trade and transit hub. However, the COVID-19 pandemic has delayed what was supposed to be a pass after years of falling property prices. The manager explained that the population is also a problem, as the country is no longer attractive to foreign workers and visitors due to its alleged support for terrorism and lack of a human rights culture.
According to the financial newspaper, the number of citizens and residents in the Persian Gulf country decreased by 78,000 people from the end of March to October. Although this is only a 2.8% decrease, strict rules still prevent most travel. Earlier this year, Oxford Economics estimated that Qatar could experience a 10% decline. Only 12% of Qatar’s 2.7 million people and 5% of its workforce are locals, and citizenship is nearly impossible to obtain. Around 60% of Qatar’s population lived in communal facilities for low-income, mostly male migrant workers, as of the last census in 2015.
The economy grew by 9.3% between 2011 and 2019, although falling commodity prices kept energy growth on hold. Almost half of this expansion came from buildings and real estate, fueled by a wave of government spending to prepare for football’s quadrennial spectacle. Not only could the real estate market fail, but half a century will not be enough to recoup the crazy investments of the Qatari regime just for this opportunity. ValuStrat estimated a residential housing glut of 80,000 units in the first half of the year, with another 7,250 new properties expected to hit the market by the end of the year.
About 20% of the land on one of Lusail’s man-made islands sold at auction last year was bought by non-Qatari, according to the broker responsible for the sale, Just Real Estate chairman Nasser Al Ansari. A larger share of buyers at a similar auction next month could be foreigners, he told Bloomberg. The uncontrolled rush to build new buildings was a problem even before the outbreak of the Covid-19 pandemic. Before the pandemic, Cushman & Wakefield forecasts saw apartment occupancy falling to 80% in 2021 from a peak of 94% in 2015. Office rents were already falling and real estate values fell exponentially as a result.
With less money from energy sales on the way, the government is scrambling to cut spending in ways that could push more foreigners out. Qatar’s Ministry of Finance has forced ministries and government entities to cut foreigners’ wages by 30%, advocating an anti-democratic policy where either the employee accepts the wage cut or the employer is entitled to fire him. Qatar’s financial center in Doha has attracted some interest from foreign investors.
UBS Group AG announced plans for a wealth management business this month – Bloomberg reports – but the financial services sector remains less than half the size of the UAE. So there is a risk of a drastic worsening of the situation immediately after the World Cup, when visitors and foreign workers leave the country, probably never to return.