Qatar’s construction and real estate sectors have grown rapidly in recent years, owing primarily to the significant investment made leading up to the 2022 FIFA World Cup. The government invested heavily in infrastructure related to the sports event, including accommodation, stadiums, transport and logistics facilities, and tourist attractions.
After setbacks caused by the 2017-21 economic blockade imposed on Qatar by several neighbouring countries and by the Covid-19 pandemic, the construction and real estate sectors have rebounded well and are expected to continue growing in the coming years. While sectoral investment may be somewhat lower in the period immediately following the 2022 FIFA World Cup, the government’s economic diversification drive is set to support infrastructure development across a wide range of sectors. Furthermore, the establishment of the Real Estate Regulatory Authority (RERA) and favourable legislation are expected to spur sectoral growth, supported by higher levels of private investment.
Structure & Oversight
There are several actors overseeing Qatar’s construction and real estate sectors. The Ministry of Municipality (MoM) issues building permits and construction certificates, and oversees land and building regulations. The MoM’s Land Acquisition Department oversees land transactions for both permanent and temporary use, whereas the Infrastructure Planning Department determines the appropriate location for service developments, including roads, water and electricity distribution and transmission systems, and drainage systems. The Urban Planning Department works to integrate urban planning best practices in the sector.
The Public Works Authority (Ashghal), established in 2004, oversees the planning, construction and management of all infrastructure and public buildings in the country. Thanks to its wide remit, Ashghal is the largest client of contractors in Qatar and its policies drive market trends. In recent years it has fostered partnerships with private companies to encourage greater private investment in the sector. In 2023 it tendered 22 projects with a total value of QR4.1bn ($1.1bn). An additional 10 ongoing projects – including the Hamad General Hospital, the Madinat Khalifa Health Centre, the Qatar Academy Sidra and the renovation of the veterinary laboratory building of the MoM – rounded out the 2023 pipeline.
The Ministry of Justice (MoJ) registers property transactions, and oversees the implementation of licensing and accreditation procedures through its Real Estate Brokerage Affairs Department. In October 2020 the MoJ established the Office for Non-Qatari Real Estate Ownership following a change in regulations on foreign ownership of property.
Evolving Regulations
A further positive regulatory development took place in May 2023, when the government established RERA to improve transparency and the clarity of information, encourage investment and resolve disputes. The authority is in charge of introducing new sectoral policies and issuing licences. It is also tasked with creating a platform to provide real estate data and investor information, connect government agencies, provide various real estate services and encourage investment.
Following its formation, RERA set up a Real Estate Development Licensing Committee. It also introduced Article 7 under the real estate law to hold developers responsible for delivering units on time and in line with contracts, and restrict them to working on a maximum of three projects at a time. Future reforms in the pipeline include the Urban Planning Bill, the Owners Union Bill, and the Public and Private State Property Bill, all aimed at closing gaps in regulation.
The government has introduced a wide range of legislation focused on developing the country’s infrastructure since the early 2000s. Its commitment to achieving the objectives of Qatar National Vision 2030 (QNV) has resulted in significant investment in infrastructure and the growth of the construction industry. While government entities traditionally provide the bulk of infrastructure investment in the country, the 2020 Public-Private Partnership (PPP) Law was enacted with the aim of attracting greater levels of private investment. Under the law, PPP contracts can last up to 30 years, with the possibility of extension if approved by the prime minister. The government debuted a $1bn PPP pilot project in 2020 for the construction of 45 new public schools for 34,000 students. Then, in March 2022 Ashghal launched a PPP for a $1.4bn sewage treatment works project for the Al Wakrah and Al Wukair areas.
Size & Performance
Both the construction and real estate sectors have experienced strong growth in the aftermath of the pandemic. Measured at current prices, the construction sector’s contribution to GDP in 2022 equalled QR96bn ($26.3bn), which represented a 9.2% increase from the previous year. That same year, the real estate sector’s contribution to GDP was QR44bn ($12.1bn), up 15.3% on the previous year. Both sectors carried their positive momentum into 2023, with construction growing 11.2% quarter-on-quarter in the second quarter, and the real estate sector growing 2.7% over the same period. According to UK data analytics firm Global Data, the construction sector is projected to record an average annual growth rate of more than 3% between 2024 and 2027, aided by investment in transport, renewable energy, education, health care, and oil and gas infrastructure.
The Ministry of Finance announced a 2024 general budget of QR202bn ($55.4bn) in December 2023. While overall expenditure is set to rise by 1% year-onyear (y-o-y), major capital expenditure is expected to fall by almost 8.3% following the completion of several major infrastructure projects, with private financing expected to play a greater role.
Domestic banks are the construction sector’s main source of financing, providing around 56% of funds for projects in the pipeline in 2021. Qatari companies accounted for some 37% of the project pipeline at that time, followed by South Korean, Turkish and UAE companies, at approximately 10% each.
A total of 8883 building permits were awarded in 2022. Commercial buildings constituted the majority, at 64% of the non-residential building permits awarded, followed by warehouses and factories, at 15%; mosques, at 9.5%; public buildings, at 8%; and other buildings, at 4%. In terms of residential buildings, villas constituted 79% of permits, followed by dwellings developed through housing loans, at 11%; multi-story buildings, at 8%; and others, at 2%.
Several major industry events are held annually to amplify the global positioning of Qatar’s construction and real estate sectors, and raise awareness of opportunities within the country. For example, Project Qatar attracted 18,000 visitors and over 325 companies to its 19th edition in 2023, while the three-day Cityscape Qatar event attracts over 10,000 visitors each year to explore opportunities and trends in the country’s real estate sector.
Construction Workforce
Qatar’s workforce is dominated by foreign workers, around 1m of whom work in the construction sector. Approximately 35% of Qatar’s total labour force worked in the construction sector in 2020, according to that year’s Labour Force Sample Survey conducted by the Planning and Statistics Authority. This included some 42.4% of non-Qatari males, while just 1.7% of Qatari males worked in the sector. Female representation is minimal in the sector, with 1.1% of non-Qatari females and 0.5% of Qatari females working in construction.
The reliance on foreign workers in the construction sector drew international scrutiny of Qatar’s labour practices in the lead-up to the 2022 FIFA World Cup. In response, the government introduced several labour reforms to improve workers rights. For example, in 2021 the government introduced a minimum wage of QR1000 ($274), with an additional allowance of QR300 ($82) for food and QR500 ($137) for accommodation per month. It stipulates that workers can change employment freely without being required to obtain a No-Objection Certificate from their previous employer. Measures are also in place to prevent employers from confiscating workers’ passports and to allow workers to leave the country without an exit permit.
Construction Trends
Since 2010, when Qatar was selected to host the 2022 FIFA World Cup, most infrastructure projects were geared towards preparing to welcome a huge influx of tourists during the sports event. Major infrastructure projects included stadiums, hotels, retail and food outlets, an airport expansion initiative and enhanced transport links to improve internal connectivity.
In the years following 2022, there has been a significant shift in focus for the construction sector. Looking forward, growth is expected to be driven by the energy and utilities sector, as well as by urbanisation projects across the country. Greater global awareness of Qatar is also expected to spur higher visitor numbers, increasing the demand for tourist attractions and accommodation beyond Doha.
Green Standards
The government is increasingly focusing on sustainable development. In 2010 Qatar incorporated the Global Sustainability Assessment System (GSAS) – developed by the Doha-based Gulf Organisation for Research and Development – into its construction standards, making it obligatory for all private- and public-sector projects to obtain certification. By 2021 there were more than 1400 GSAS-certified buildings across the country, including all 2022 FIFA World Cup structures. The introduction of such standards supports the government’s aim of reducing carbon emissions by 25% by 2030.
The green standards have driven many companies to change their building materials, procurement procedures and other construction practices to become more sustainable. “An increasing number of developers and multinational contractors are recognising and prioritising sustainability in their projects, although some companies harbour concerns about the additional costs they may incur,” Mark Cooke, CEO of Mosanada FMS, told OBG.
Major Projects
The oil and gas sector has played a major role in Qatar’s economic development over the last 50 years and is expected to continue to underpin the country’s economy for the foreseeable future. The North Field expansion is a large-scale initiative to boost the country’s liquefied natural gas production capacity from 77m tonnes per year (tpa) to 126m tpa by 2027. In February 2024 national energy company Qatar Energy announced plans to increase capacity even further to reach 142m tpa by 2030, which would provide an added boost to the construction industry. “The North Field expansion and related energy infrastructure projects are generating new opportunities for contractors in the post-FIFA World Cup environment,” Chakib Nayfe, general manager of Medgulf Construction, told OBG.
In May 2023 Qatar Energy announced it had awarded the main engineering, procurement and construction (EPC) contract for the North Field expansion project to a joint venture of France’s Technip Energies and Greece-based Consolidated Contractors Company. The contract is worth an estimated $10bn. In August 2023 Qatar Energy awarded an additional EPC contract for pipelines, interconnections, auxiliary systems and other support components for the expansion project – worth an estimated $560m – to Spain’s Técnicas Reunidas. The contract marked the fourth tender that Qatar Energy had awarded to Técnicas Reunidas for work on the North Field expansion project within two years.
Meanwhile, the government has ambitious aims for the country’s renewable energy sector. The national target to derive 20% of electricity supply from renewable energy sources by 2030 will require the construction of solar power plants. The government approved two new plants in 2023: the 410-MW Mesaieed plant and the 470-MW Ras Laffan plant, both of which are expected to be completed by 2025. “The rising prominence of renewable energy projects is offering substantial opportunities for contractors,” Oussama El Jerbi, managing director for Qatar at Consolidated Contractors Company, told OBG. “As Qatar advances its green industrialisation efforts, there is a growing need for carbon capture projects.”
Elsewhere, the demand for water in Qatar is increasing as the population grows. Given the country’s desert climate, water-related infrastructure projects around desalination and re-sewerage form a major part of the project pipeline.
Urban Development
The government is playing a central funding role in several major urban development projects across the country, the largest of which is Lusail City – a smart city around 23 km to the north of Doha. Lusail City is being developed by Lusail Real Estate Development Company, a subsidiary of the government’s Qatari Diar Real Estate Company. It is expected to accommodate 450,000 people once fully complete. By mid-2023 a total of 25,000 residential structures in Lusail, including high-rise towers and standalone family homes, were reported to have been completed. Investment in the city is expected to total some $45bn, with spending going towards the construction of residential buildings, offices, hotels, retail and dining complexes, golf courses and other entertainment facilities.
The government also has a stake in The Pearl, a 400-ha, $15bn artificial island in Doha being developed by the United Development Company – featuring villas, apartments, hotels and office buildings. The area is aimed towards the high-end market, offering waterfront properties. One-bedroom apartments at The Pearl were leased for an average of between QR6000 ($1650) and QR8500 ($2330) per month in 2023, while three-bedroom units were leased for between QR13,000 ($3570) and QR15,500 ($4250). The Pearl is one of nine areas in Qatar that foreigners are permitted to own property on a freehold basis.
The country had a project pipeline of 11,700 residential units in 2023, 52% of which were in Lusail City and The Pearl. Beyond Doha, in November 2020 local firm UrbaCon Trading and Contracting signed a deal to construct two residential projects at a value of $1.4bn in Al Wakrah, Qatar’s second-biggest city and home to the 40,000-seat Al Janoub football stadium.
Infrastructure
Transport and logistics infrastructure has undergone a significant transformation in recent years, including the completion of phase one of the $36bn Doha Metro system, which delivered 76 km of track, three lines and 37 stations. Phase two is expected to be completed by 2026, delivering a total of 300 km of track, with a network covering the greater Doha region, connecting major residential, commercial and industrial zones.
Hamad International Airport is also undergoing an expansion, the first phase of which was completed in November 2022. The second phase, which includes plans to extend the D and E concourses and increase the airport’s passenger handling capacity to over 70m people per year, commenced in January 2023.
The Transportation Master Plan for Qatar 2050 serves as a strategic roadmap for investing in land transport. The plan includes 22 projects, with $2.7bn earmarked for 2023. The expansion of the country’s road, rail and aviation networks supports the government’s goal of establishing Qatar as a strategic logistics centre. The Logistics Areas Project is under development in the southern region of Qatar and aims to attract QR30bn ($8.2bn) in direct investment for project development, including assembly, processing, open storage spaces, storage facilities, exhibitions, shops and commercial offices.
Building Materials
Construction costs in Qatar are the highest in the GCC region due to several factors. The cost of some key raw materials – including steel, concrete and aggregates – is higher in Qatar than in neighbouring countries, as local supply chains lack maturity. The supply and pricing of construction materials are managed by the government in order to control costs and ensure that major project requirements are met. Some of the controlled materials include cement, steel, coarse and fine sand, limestone, bitumen, diesel and crushed stones. Qatar imports bitumen and aggregates from the UAE and Oman, while several other building materials are imported from around the globe. Materials imported via Qatar’s Hamad Port incur customs duties of around 7%. The price of steel rebar reached QR2890 ($792) per tonne in 2023, while a tonne of cement cost QR260 ($71).
Following the 2017-21 blockade imposed on Qatar by Saudi Arabia, the UAE, Bahrain and Egypt, economic policy has focused on increasing the country’s manufacturing capacity. Among the main local suppliers of building materials, Qatar National Cement Company has five plants in operation, with a cement production capacity of 14,500 tonnes per day (tpd) and a clinker production capacity of 11,000 tpd. The company also operates two sand-washing facilities with capacities of 20,000 tpd each.
Residential Real Estate
The residential real estate market has seen an oversupply of available properties since the end of the 2022 FIFA World Cup, which has placed downward pressure on rental prices. In the first quarter of 2023 the real estate price index fell by 2.7%, following a y-o-y increase of 5.1% in the fourth quarter of 2022, according to the Qatar Central Bank (QCB). Real estate firm Cushman & Wakefield reported that there were more than 400,000 apartments and villas in Doha as of April 2024, which represents a 6.2% compound annual growth rate of supply in the capital since 2015. However, in 2023 the number of real estate transactions in Qatar fell by 18.9% for the first 11 months of the year compared to the corresponding period in 2022, while residential sales transactions rose by 16.2% y-o-y in October and November 2023.
As is to be expected in a country with a high proportion of foreign residents, housing rentals are more popular than ownership, with some estimates indicating that rental living spaces constitute the majority of all occupied housing units, at around 59%. The median residential rental price in Qatar was QR9100 ($2500) a month in the third quarter of 2023.
Leisure & Retail
There was a wide range of leisure and retail facilities built in the lead-up to the 2022 FIFA World Cup to meet demand from the growing population and influx of tourists. Qatar’s shopping malls offer over 1.7m sq metres of leasable floor space, excluding supermarkets. There is a further 400,000 sq metres of outdoor retail, and food and beverage space in areas such as The Pearl, Souq Waqif, Souq Al Wakrah, Msheireb Downtown Doha, Katara Cultural Village, Doha Port and Lusail Boulevard. While some recently developed retail spaces are attracting tenants, some older malls are finding it difficult to lease retail space and maintain high occupancy rates as competition increases.
As part of its sustainable development aims, the government plans to repurpose many of the 2022 FIFA World Cup buildings for future sports events and for use as multi-purpose facilities. The Lusail Stadium, for example, will have its capacity reduced and part of it will be transformed into a community centre, with schools, shops, cafes and sports facilities.
Several sports events to be held in Qatar are expected to draw higher tourist numbers, which will increase occupancy in hotels and generate business for retail spaces. In early 2024 Qatar played host to the AFC Asian Cup, and it hosts the Qatar Formula One Grand Prix every year. The FIA World Endurance Championship took place in March 2024, and it will be followed by the World Table Tennis Championships finals in 2025 and the Asian Games in 2030.
The growing interest in tourism in Qatar has attracted several well-known hotel companies, including the Four Seasons, NH Collection and Waldorf. The number of hotel rooms increased by 8000 between the first quarter of 2022 and the third quarter of 2023 to reach 38,000. This figure was expected to surpass 40,000 rooms by the end of 2023.
Office & Industrial
There was rapid growth in the office segment in 2022. This was followed by a decrease in demand for office space in the first half of 2023. There is currently an oversupply of office space, which has driven down rent prices since 2015. There were over 5.3m sq metres of purpose-built office space in the country in 2023, with an estimated 1.3m to 1.5m sq metres of vacant space available.
The monthly rent price for grade-A office space stood at between QR100 ($27) and QR120 ($33) per sq metre in 2023. Companies are increasingly offering more attractive lease terms for shell-and-core space, which tenants must furnish themselves. In 2023 the average price of these spaces was between QR55 ($15) and QR60 ($16) per sq metre. Offices with high-end specifications generally have a higher occupancy rate than their lower-end counterparts.
Recent additions to Qatar’s office segment include 11 office floors in the 56-storey Burj Al Mana on West Bay’s Corniche, which increased the supply of office space in Qatar’s biggest commercial district to around 1.9m sq metres. Additionally, several major companies opened offices in newly developed districts in 2023. TotalEnergies moved to Msheireb Downtown Doha in December 2023, alongside Microsoft and Google Cloud. Visa opened offices in West Bay and Boston Consulting Group opened a space at The Pearl. Meanwhile, several government agencies, as well as companies from the oil and gas sector, are expected to relocate to Lusail City.
The expansion of the energy sector and the construction of water facilities are expected to largely drive development in the industrial construction sector, further supported by the growth of Qatar’s two free zones in Ras Bufontas and Umm Alhoul. The passing of the 2020 PPP law is expected to support efforts by the Qatar Free Zones Authority to attract international businesses to its free zones.
Mortgage & Housing Finance
The QCB announced major changes to regulations for real estate financing in 2023, targeting the expatriate market. Expatriates have been able to purchase properties in Qatar for the last 15 years, but the QCB had several strict requirements in place for expatriates to obtain a mortgage – including a maximum spending limit of 50% of their monthly salary on mortgage payments, with a mortgage payment term of 20 years. Expatriates were also only allowed to borrow up to 70% of their property value, meaning that entering the housing market required a large down payment in comparison to many other markets. The new regulations mean that land tenure now varies between 25 and 30 years, with variable lending amounts depending on the cost of the property. Mortgages with fixed and variable rates are both available to foreigners looking to purchase a home.
Qatar has two property purchase options for expatriates: leasehold and freehold. Leasehold properties are typically available on a 99-year lease scheme, which can be inherited for a further 99 years. This is restricted to specific regions of the country, with 18 designated leasehold developments currently available. There are also several freehold developments available for purchase, with more affordable options in Lusail City and Al Khor, and luxury options in Onazia and West Bay Lagoon. There are no property taxes, although there is a transfer fee of 0.25%. Expatriates that purchase a property valued at QR728,000 ($200,000) or higher are eligible for a residency card.
In recent years, green mortgages have become more widely available, with banks offering preferential rates for certified energy-efficient homes. These mortgages are available at a lower rate, with zero management fees, complimentary fire insurance and a free credit card. This reflects QNV aims to improve sustainability in the construction and real estate sector. Qatar has committed to reducing its greenhouse gas emissions by 25% by 2030 and intends to build the greatest number of green or carbon-neutral buildings in the MENA region by 2030.
Outlook
While the oversupply of residential and commercial buildings following the 2022 FIFA World Cup has driven real estate prices down, there are reasons to be optimistic about the construction and real estate sector. Qatar gained significant recognition during the sports event, which has driven up tourist numbers, as well as attracted more business interest in the country. The introduction of several favourable policies, including the PPP law and updated regulations for foreigners purchasing property, is also expected to spur sector growth.
Greater public and private investment in new developments across the country is expected to support urbanisation efforts beyond Doha. The construction sector’s expansion will be largely driven by energy developments, including oil and gas, as well as new renewable energy projects. This will be further supported by other industrial projects, such as the construction of water desalination and wastewater facilities. As the sector grows, the development of stronger supply chains and manufacturing capabilities are also expected to drive down building costs.
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