- Real estate values have fallen
- Government considering tokenisation
- REITs are also an option
Qatar is seeking to revive investor interest in its lacklustre real estate market by offering residency with properties over $200,000 and developing new investment tools such as fractional ownership and tokenisation.
Local property values have fallen in real terms since Qatar hosted the Fifa World Cup in 2022, increasing just 2.7 percent in nominal terms, less than the inflation rate last year.
In the run-up to the football tournament, the gas-rich emirate added about 15,000 homes – a 4 percent increase on its 350,000 housing units – while population growth has hovered around 2 percent annually since, standing at 3.1 million, according to consultancy ValuStrat.
Geopolitical tensions are likely to have hit sentiment. Qatar has come under direct fire twice in recent months: in June during Iran’s retaliatory strikes against Israel and the US, and in September, when Israel fired missiles at a meeting of Hamas leaders in Doha.
In September, Qatar’s Real Estate Sales Index set aside concerns with a 57 percent month-on-month gain in the number of properties sold, the Transaction Value Index rose 65 percent, and the Traded Area Index soared 89 percent, according to the official news agency.
The Traded Area Index is a measure of the square footage of real estate bought and sold in a given period.
Lighter restrictions on foreigners
Two years ago, the authorities eased mandatory loan-to-value ratios and made tenure limits more favourable. Like the UAE, Qatar has also moved to make foreign ownership easier. Designated areas for expats offer leaseholds of up to 99 years and freehold zones.
An apartment in Doha’s Pearl area – an upmarket, manmade island offering freehold ownership – will cost buyers QAR1,500 ($410) per square foot, says Aqarat, the government’s real estate authority. That is similar pricing to Dubai’s Jumeirah Village Circle, seen as an affordable zone favoured by families.
Last week, authorities announced plans to provide residency visas within days to buyers of property worth $200,000 or more.
The Qatari government is also considering whether to allow property tokenisation – which lets buyers purchase small, tradable shares of real estate using digital tokens – according to participants at this week’s Cityscape and the Real Estate Forum, two government-run property events in Doha.
Khalid bin Ahmad Al-Obaidli, president of Aqarat, said tokens could sell for as little as QAR500. “It is possible that a person invests a very small amount in real estate. This will increase liquidity,” he said on stage.
“For the future of real estate, our most significant contribution lies in digital innovation,” Yousuf Mohamed Al-Jaida, CEO of the Qatar Financial Centre Authority (QFC), said.
REITs are less reliable
The Gulf state is also working on listing its own real estate investment trust (REIT), which would allow people to invest in income-generating housing without having to buy or manage properties.
“Qatar has been trying to do a REIT for a while,” Richard Rayner, head of valuation and advisory at Cushman & Wakefield Qatar, said at the Real Estate Forum.
Rayner noted that REITs had experienced “growing pains” in the Middle East. Emirates REIT and ENBD REIT, which are listed on Nasdaq Dubai, are trading at about half their IPO prices. In Saudi Arabia, listed REITs consistently underperform on the Tadawul index, partly due to low liquidity and exposure to rate volatility.
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QFC senior adviser Diego P Iribarren told AGBI the plan had stalled. “A REIT [for Qatar] — the legislation, the promotions, the regulations — is all in place. But the fundamentals of real estate, particularly around demographics, are not in place yet,” he said. “We need to attract more people.”
Qatar planned to launch a REIT following the 2022 World Cup, but that idea appears to have been mothballed. In a sponsored article with Bloomberg in 2021, the QFC said it expected REITs to “flourish in Qatar’s market”, adding that it had opened an office to support the potential launch of such an instrument.
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