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The real estate “bubble” could burst in Qatar in the same way as it has in Dubai, Kuwait investment bank Markaz has warned.

Figures published in a report by the the investment bank on Sunday show that a high percentage (38 percent) of Qatar’s population work in the real estate and construction sectors – a key indicator of a property bubble.

The findings warrant a “need for a close watch” – especially in the current global economic climate that has had a negative impact on Dubai’s property industry – the report concluded.

“We…suggest that the growth in Qatar’s property market needs to be closely monitored to avoid a Dubai like situation in the future,” it said.

The warning comes just days after Colliers International in Qatar predicted that house prices in the Gulf state would fall by 10 percent this year.

And in a separate report Global Investment House revealed it expected rents for office and retail space to decrease, due to a slowdown in demand.

However, Markaz added that the amount of equity demanded by banks for loans in Qatar made speculation expensive, a situation that would act as a cushion against the impact on banks in the event of a downturn.

Census data shows that 48 percent of Dubai’s one million residents worked in the property industry in 2005.

This figure rose to an estimated 50 percent in 2007 – excluding a workforce of 300,000 that commutes to the emirate from Sharjah.

The same data for 2007 shows that 38 percent of the Qatari population were employed in the sectors.

The study also found evidence of a less significant property bubble in Bahrain, and a potential bubble being dispelled in Kuwait as a resust of action by the governemnt in 2008 to curb lending on real estate.

The move prompted the property market to correct less dramatically than in Dubai, Markaz noted.

“Our study finds evidence of a bubble in Bahrain although it had a less significant impact on the overall economy than in Dubai, while Kuwait avoided it with a less painful correction,” a team of analysts wrote in a research note.

Meanwhile, property prices in Oman and Saudi Arabia have not risen enough to create a bubble, despite census figures showing 40 percent of Oman’s population was employed in the real estate and construction sectors in 2007.

ArabianBusiness


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