Interview: Hamad bin Ali Al Hedfa
What will be the effect of retail developments on the local retail sector? Looking at current demand and foot traffic, do you see a risk of oversupply?
HAMAD BIN ALI AL HEDFA: Most of the projects now being developed in Qatar are set for a long-term return on investment, hence real estate developers are very optimistic about prospects in the retail sector. The dramatic increase in population and in the number of development projects in Qatar is a clear indication that the retail sector must grow to keep up with consumer demand. Even as their number increases, shopping malls remain popular with locals, expatriates and tourists alike, so retail offerings must still be needed. Qatar’s economy is one of the fastest growing in the GCC and the world, and personal income is one of the highest in the world. This drives high consumption and demand for retail space.
Given the amount of shopping malls and retail space already in the state, how are upcoming retail offerings pursuing market differentiation?
AL HEDFA: Differentiation in retail outlets is most often described as in an early stage of conceptual design. When designing malls, engineers are clearly competing to create masterpieces, making them more than mere concrete buildings packed with retail shops. Shopping these days is not just about buying what one needs; it is a whole experience that includes spending the day out at the mall. Hence a mall’s design, and the special atmosphere it provides, draw people to visit one outlet over another, even if both have shops in common.
What will the recent shift of real estate development northward of Doha mean for both residential and commercial rental rates?
AL HEDFA: As with every major city in the world, prices will always vary between residential and commercial units in the heart of the city versus those outside it. Thus we do not expect that the northward expansion of real estate projects will have a huge effect on pricing. Doha is a very busy city, and since commutes in and out of the city centre are congested, there will always be an interest in living close to the centre and paying the commensurate high rent. The same “city centre” factor that stabilises residential prices will stabilise, if not increase, rental prices for commercial units as well.
Given the recent increase in rental rates, how will inflationary pressures affect prices as the country hits a construction boom over the next few years?
AL HEDFA: Qatar is seeing rental prices rise even as the number of units grows, since the population (both local and expat) is also growing, and with it the demand for dwellings. This is noticeable if you look at how long apartments are on the market before finding tenants.
These periods are still very short, a clear sign that Qatar will be in constant need of new housing for some time.
Given how much land is being acquired for large-scale developments, are developers concerned about upward pressure on the price of land?
AL HEDFA: Land prices are a core component of a development’s cost, and the developer must ensure that overheated, speculation-driven land prices do not become an unsustainable element in a project’s costs.
It is true large tracts of land are being acquired, but land price inflation will not continue indefinitely. Like all responsible developers we are well aware of the past, present and potential future price of land and factor this into all our projections and models.
Remember, too, that Doha is surrounded by lots of undeveloped land, much of it neither suitable for agriculture nor of the kind of scenery which speculative developers prize. This means there is no demand-supply imbalance of the sort that usually underpins runaway price increases and bubbles. There is plenty of land to go around, and the large-scale projects currently buying up vast tracts of land will not affect the availability of smaller-scale plots. As supply will continue, so will demand for our projects, and this will keep prices of land and units within the ideal and projected bands.
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