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Posted On: 28 October 2009 02:58 pm
Updated On: 12 November 2020 02:10 pm

Excess supply ‘keeps pressure on rents’

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The average rents for villas have fallen 15-20% in the first two months of this year, while apartment rents have remained stable in Qatar, according to Doha Bank CEO R Seetharaman. He also said Qatar has been witnessing a sharp fall in demand from foreign investors in realty projects, High levels of supply in the market and dampened demand on the back of the global financial crisis would keep pressure down on office rental rates too, Seetharaman said in a keynote address to a seminar on ‘Real Estate Sector after the Recession’, organised by the Doha Bank Assurance Company. The seminar was inaugurated by Qatar Central Bank Governor HE Sheikh Abdulla bin Saud al-Thani in the presence of Doha Bank Chairman Sheikh Fahad bin Mohamed bin Jabor al-Thani and Managing Director Sheikh Abdul Rehman Mohamed Jabor al-Thani. “In terms of business Qatar has performed reasonably well, with a real GDP (gross domestic product) growth of 9-10%, despite the crisis,” Seetharaman said. However, as far as the real estate was concerned, he said, there had been a sharp decline at many construction projects, some of which had seen prices dropping by 35%, indicating a sharp fall in demand from foreign investors. The seminar was attended by diplomats and other dignitaries. The average rents for villas are said to have fallen 15-20% in the first two months of 2009 and apartment rents have remained stable, suggesting apartment rents, especially for smaller units, are more resilient, according to him. “Office rents are unlikely to rise in Qatar until the end of 2010. High levels of supply coming to the market and dampened demand on the back of the global financial crisis would keep pressure down on rental rates,” Seetharaman said. There was also a panel discussion comprising Edd Brookes, director of DTZ Middle East; Jean Paul Pirog, senior underwriter, SCOR, France; Noman Ali, executive manager, Assurance and Advisory Business Services, Ernst & Young; Louis Scotto, head of retail banking at Doha Bank; and Xavier Landrin, structured finance officer, Al Arrab Group. Brookes, a chartered surveyor, spoke on the implications of the recession from an insurance perspective in terms of real estate valuations, contractors’ policies and exposure of banks to the real estate sector. Pirog said “a zero fault or defect in construction is elusive and that any new construction project can suffer damage which may not become apparent immediately.” Through visual presentations he demonstrated how faulty constructions could have a-long term impact on the economy. Scotto highlighted the lessons Qatar property market ought to learn from the other Gulf markets and provided an overview on the challenges in the country.