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Posted On: 24 September 2009 01:09 pm
Updated On: 12 November 2020 02:10 pm

Construction firms hit by economic downturn

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The global economic crisis is affecting a number of local construction and real estate companies, hindering their operations and even causing them to freeze their work. These problems in the real estate and construction market began arising as signs of a slowdown in the sale of real estate started to appear. The local real estate market has been a magnet for investment for individual as well as institutional investors, due to the high returns it gave to those engaged in this sector in the past four years. The construction boom that the Qatari market witnessed led to land and property prices reaching unprecedented highs against all expectation at the time. But this was followed by a quick slump, much to the agony of many construction companies, real estate developers and property businesses. According to reports in Al Sharq, the downturn in construction companies’ activities has severely affected businesses tied to the industry, including property sales and marketing. The construction sector has witnessed a sharp fall in operations and the temporary freezing of many new projects. Many of these projects were planned during the construction boom, with their costs and expected returns calculated on the basis of the conditions then prevailing. These projects now seem financially unviable or too risky to take on. Real estate buyers are currently waiting to see how far prices fall before they get back in the market in order to get the lowest prices. This has caused many property brokerage firms to shut down their outlets around the country in order to cut down on expenses and to minimise the effect of the economic crisis on their business. Many real estate analysts say the current slump in the construction sector is a result of miscalculation and lack of planning by real estate companies. They say a correction in the market was expected at any moment and the companies should have kept this in mind as this is an inherent part of any commercial activity.