Doha's real estate sector stumbles

DOHA // A surplus of homes and the aftershocks of the global economic crisis are hammering prices for rental and residential properties across Doha.

In a recent survey from Century 21 Qatar, apartment rental prices in some areas of the city fell by 10 per cent last month. Rental and housing prices have dropped 20-60 per cent in the past 18 months, say several Doha property agents, even as similar scenarios play out in other GCC metros.

“The market is not good at all,” said P N Baburajan, a property agent who as worked in the sector in Doha for 20 years. “There used to be so many new companies coming in, from Dubai and UAE and Saudi Arabia, even the US and Europe, and bringing all those employees. But now companies have stopped coming – and some have reduced staff strength as well.”

Still, developments continue to rise. Work continues on The Pearl-Qatar, a series of high-end retail outlets and leafy residential neighbourhoods built on a man-made island twisting out into the Gulf like a string of pearls. Crowned with two luxury hotels, “smart” housing for more than 40,000 and a dozen kilometres of pristine beaches, it is the grandest property development in the history of Qatar and is set for completion in 2013.

In addition to The Pearl, Doha developers are building Al Wa’ab City, a US$3.2 billion (Dh11.75bn) family-oriented community development from Nasser Bin Khaled Holding; Lusail, a $5.5bn luxury waterfront city from Qatari Diar, with housing for 200,000, not far from The Pearl; and Barwa Village, a $500 million housing project to be completed in the coming months.

All this new housing will enter an already crowded market. In a report released last September, the Qatar Oman Investment Company found some 15,000 unoccupied apartments across Doha. More recently, Bank of America Securities-Merrill Lynch warned that by 2012, when Qatar’s gas-driven expansion has been completed, there will be limited need for labour in the non-oil economy. Expatriates may then leave Qatar in large numbers, resulting in a “significant overhang” of property.

Troubles in the property sector are not unique to Doha. Kuwait’s City of Silk has been halted in the planning stages, and Aldar Properties, Abu Dhabi’s largest developer, has put its plans for the project on hold. In style and scale, The Pearl is reminiscent of Dubai developments such as the Palm islands and The World, both of which were built by Nakheel. Nakheel is under the umbrella of the government-owned Dubai World, which recently began talks to restructure its debt repayments – due in part to an unstable property market.

Yet United Development, the company behind The Pearl, is fortunate to be building in Qatar, where abundant gas revenues have allowed the government to support developers and financial services firms in the downturn, buying portfolios and backing up loans. The Qatari economy is expected to grow nearly 15 per cent this year, among the world’s fastest.

This may explain The Pearl’s target demographic. One-bedroom homes – which include remote-controlled lighting and cooling, high-speed wireless internet, maid service, security and reception, and a health club with gym, jacuzzi and juice bar – retail for 1.5m Qatari rials (Dh1.5m). The Pearl says it has sold nearly two-thirds of its available properties, including all 450 villas.

“We have some interest,” said Georges Bou Abdallah, the sales and leasing team leader in Doha for the brokerage firm Asteco, referring to flats at The Pearl. “But there’s more interest in the secondary market, in resale.” Resale properties at The Pearl were going for about 1mn rials, he said, 25-30 per cent off their initial price.

Rental prices for apartments at The Pearl have dropped further. Units initially budgeted at 20,000 rials have come down to 10,000-11,000 rials. “We are getting inquiries, but mainly people are viewing and not renting,” said Mr Baburajan, who remained optimistic. “The market is slowly coming up. By the middle of 2010, the situation will be changed.”

United Development has faced delays in delivering some units, but after cutting costs and curbing expansion plans, expects to meet its deadlines. “Everything is more or less on schedule,” a representative said.

In Porto Arabia, residents have begun moving in to The Pearl’s first completed apartment building, while some 40 luxury outlets – including Armani, Coach, Balenciaga and Hermes – have opened on the promenade. In late afternoons and evenings, couples, families and friends stroll the boardwalk, stopping to chat over coffee, watch sidewalk performers and window shop.

“It’s been pretty slow,” said Amin Derriche, assistant manager of the Giorgio Armani store, which opened last February. “But we expected it to be like this. Business here won’t be like our European stores for another two to three years.”


--- originally appeared in The National, www.thenational.ae

Dubai is Good

The Burj Dubai sticks out from the city's skyline like a raised middle finger. Head, shoulders, torso and waist above all comers, the tower tells off legions of Dubai doubters. Indeed the building, which opens in January, is so tall as to be ludicrous. I first saw it from the plane as we prepared to land, and more than anything it looked like a creation beyond human capability, it rose so high, so sharply, piercing the sky like something out of a sci-fi movie. That the tower is stunning, a feat of both imagination and engineering, awe-inspiring and a wonder to behold is without question. But now that Dubai World has defaulted on its debt, the narrative of this Gulf city's glorious rise to global prominence -- as a financial center, a playground for the rich and adventurous, a laboratory for new ideas on architecture and urban planning -- and the meaning of the Burj have taken a darker turn.

A writer friend of mine, responding to mostly unfounded rumors that the foundation of the Burj had long since cracked, called the tower "the height of hypocrisy -- a most apt symbol for the city." Of course the Burj is a metaphor, but of what is as yet unclear. It's unlikely to become the Titanic, for one. Westerners seeking high salaries, ideal weather and the good life will continue to wash up on these shores.

Abu Dhabi will most likely bolster its economy and Dubai the dream will move on - and thank god for that. For Dubai is both a positive force in an unsettled Muslim world and a much-needed poverty reduction machine. Its economy is about as liberal and market-friendly as they get. Its government, although monarchic, is more laissez faire than any from Pakistan to Morocco -- and Muslims are all too aware of this. Ask any non-radical across the Muslim World where he'd like to go on holiday, or for the duration, and you'll likely hear "Dubai" within the first few options. Perhaps more importantly, there are few better places for developing world poor to go looking for work and success. The majority of Dubai's population is not Emirati, nor is it predominantly Western-expats splashing out for pads in Jumeirah beach. This city is comprised of mostly Indians and Bangladeshis, Nepalis, Pakistanis and Fillipinos -- people from poor countries who've come looking for a better life, and mostly found it.

Still, with its reputation tarnished, its leadership chastened in the wake of the debt default, Dubai must now move out of its adolescence. Most likely, the opening of the Burj Dubai will represent the end of an era, and an awakening -- the moment Dubai accepted its mortality, stepped back from the brink and steadied itself.