This week Abu Dhabi Investment House (ADIH) announced a new project to build the first integrated family destination in Qatar, providing places to live, work and play in one location. This comes amid a slew of projects currently under development in Qatar, where construction currently accounts for 5.2% of the country's total GDP.
As new projects are continually being announced, many developers have begun looking into ways to ensure their projects stand out from the crowd. Several developments are now being created under a mixed-use model, with the residential component combined with retail, hospitality and entertainment services, as well as office space, to create a dynamic neighbourhood. Doha is attracting increasing attention from developers the world over as a viable market for these 'cities within a city'.
Tarfeeh City is one such project using this concept. The development in the centre of Doha's Lusail neighbourhood is being created as a part of Qatar Entertainment City, a themed 'city within a city' being produced by ADIH. The master plan for Tarfeeh City's 1m square metre waterfront area was developed by US-based design firm RTKL and approved by Entertainment City's main development group Qatari Diar.
Construction will begin in early 2008. Mahmood Naib, ADIH's chief development officer, told OBG, "The construction process will be completed in phases, beginning with infrastructure and continually overlapping construction packages."
Rashad Janahi, chairman of Qatar Entertainment City and CEO of ADIH, told OBG, "We have chosen Qatar as the venue for this project as a testament to Qatar's advancing real estate market, which is forecast to remain very bullish. Projects like Tarfeeh City, owned by Qatar Entertainment City, will continue to show investors that there remains high potential for investment and growth for many years to come."
Real estate is a key development area in Qatar, as demand currently outpaces supply, with limited availability of residential units. Approximately 20% of the towers in Doha's West Bay are slated for residential use and will be ready for occupancy by 2010. However more units will be needed over the medium term, with an expected influx of 70,000 new inhabitants to Doha by 2010, according to data available by the ministry of planning.
One aspect fuelling further growth in real estate is continued government involvement via incentives to encourage economic diversification. Qatar's 2004 law allowing for foreign freehold on renewable 99-year leases within several large developments has been seen as a progressive move and many analysts are looking for similar policies to further stimulate real estate investment activities.
Growth in Qatar remains robust, buoyed by strong growth in energy with favourable prices in oil and gas. GDP is estimated to grow from $46.3bn in 2006 to $65bn by 2011 and GDP per capita is expected to exceed $65,000 by next year.
Inflation has been an area of concern, with data from Qatar's Planning Council estimating average inflation for 2007 at 12%. However, this rate is expected to see a progressive decline as large-scale projects come online and world non-oil commodity prices decrease.
Overall real estate outlooks for Qatar continue to remain strong, with Global Investment House of Kuwait reporting a regional shortage of housing and no ease in the gap between supply and demand before 2011. Office vacancy rates remain at one of the lowest in the world and there is continued high performance in the hospitality industry, with occupancy rates in Qatar being the highest in the region at 85%. Retail also shows strong potential with only 5% market saturation, compared to 20% in the US.
In terms of impact on the local economy, mixed-use developments offer high potential benefit as they cover several market segments at once. The opportunities present across such a diverse range are enabling investors and developers to combine multiple aspects into single developments for maximum portfolio diversification.