At the moment, demand is still outstripping supply. Industry experts put the figure at four to one, leading many tenants to purchase new property in some of the upcoming real estate projects instead of renting. Buyers range from people looking for a new home, to investors looking for "buy to rent" properties.
The majority of the demand is coming from the professional expatriate community and Qatari residents. Ahmed al-Shaer, president of ERA Real Estate told OBG, there has been a shift in home-purchasing trends. Facing such high rents, expatriates and their families are now looking to purchase homes. Mortgages rates are much lower than current monthly rental costs.
Meanwhile, Qatari investors are looking to buy properties in the new developments with plans to rent out their purchases. Al-Shaer said he has seen an interesting trend in the number of Qatari women now investing in property as they become more independent.
Qatar has seen a flurry of investment in the development of new real estate. The most prominent being the $10bn development called The Pearl, a four sq km island that will hold 7600 high quality dwellings, three luxury hotels with more than 900 rooms, four marinas with spaces for more than 700 boats, and a variety of community and entertainment areas. It is being brought on line in phases; the first will be ready next summer, with full completion expected in 2010.
The construction of the 32 sq km Lusail development just north of Doha is also offering further investment opportunities. It will include ten resort hotels, two golf courses, 3000 villas, 12,000 apartments, 300,000 sq m of retail shopping, and 6,000,000 sq m of commercial space. It is expected to be finished by 2010.
However, with Qatar's huge influx of foreign workers, along with their families, the expectation is that the population growth rate will mean even further development will be required. Sheikh Nawaf Al Thani, chairman, Qatar National Hotels Company told OBG, "The official population last year was around 963,000, and I personally believe that this year we are up 1.3mn. So the growth of the population is at a very good level and set to continue."
With $130bn in investment over the next five years, Qatar's growth is expected to be strong. Another development, Al Waab City, which will cover more than 1.2m sq metres, will go toward meeting the demands of this growth. It will provide housing for over 10,000 people with over 2,200 residential units, commercial space and a top-end 300-room hotel.
Sheikha Hanadi Al Thani, chief executive of Al Waab City, told OBG, "It is important that Qatar develops both economically and socially. Al Waab City will provide homes for the people who are important for the development of the country, while also building a real community for them to live in."
Qatar is witnessing significant asset price inflation, and inflation in general continues to surge, largely due to the increase in real estate prices. Real estate development is also having an impact on the costs of raw materials. The cost of sand, cement and aggregate have increased threefold over the last five years. Ali Mustawi, business manager of Qatar Building Company, told OBG that it is not just prices that have increased, but import costs, mainly from transportation. "Aggregate last year cost $16 per tonne, now it is $26 per tonne. With concrete it was $165 per tonne, now its $330 per tonne. So its bad news for the industry," said Mustawi.
High demand for real estate means good news for the banks, both on financing of projects and mortgage products. Many of the big banks such as Qatar National Bank, Commercial Bank of Qatar and International Bank of Qatar have launched home loans for nationals and expatriates.
Although many people are complaining about high prices in the real estate market, particularly for high-end units, it seems there will be no reduction in the near future. Al Shaer, of ERA Real Estate, told OBG, "High-end units will not decrease in rent. In fact, we can expect a 5% increase each year. Qatar is at a very exciting time for real estate and this is only the beginning. There is no bubble looming, that's for sure."