Qatar house prices are poised to ease 15% in 2010 on higher supply but the construction sector would grow as 40% of the state budget is earmarked for infrastructure, The First Investor Asset Management said.
“We expect 2010 to be the bottom of the market in terms of prices but we don’t necessarily see any upturn in 2011 as being aggressive because of the supply coming in,” Keith Edwards, head of asset management at the investment bank, said on Monday.
House prices in the world’s largest exporter of liquefied natural gas fell 20% during the first nine-months of 2009, Edwards said.
Prices appear to be set to fall another 15% in 2010 as around 10,000 new homes are expected to be built in the same year with additional supply seen in 2011, he added.
But country’s construction sector has a rosy outlook and is set to grow 5% in 2009, driven by infrastructure, to around $5.2bn, about 40% of the country’s budgetary expenditure, according to the firm’s estimates.
“Qatari-listed cement firms were the best performing cement firms in the third quarter in the GCC region showing that there is still demand for building materials and construction is still going on, albeit at a slower pace,” said Patrick Rahal, senior analyst, asset management at the investment bank.
An increasing number of international contracting firms are winning contracts in Qatar, and elsewhere in the region like Abu Dhabi and Saudi Arabia as they look to diversify their portfolios and weather the global economic downturn.
In contrast, few contracts are being won in Dubai’s once-booming real estate sector, where property prices are off some 50% from their peaks in 2008.
On Monday, French conglomerate Bouygues said it had won a QR4.75bn ($1.31bn) contract in Qatar from Barwa Real Estate, its second contract from the developer in two months.
“There are still a lot of opportunities in Qatar for contractors,” Pierre Sironval, resident manager at Belgian contractor Besix in Qatar, told Reuters earlier this week.
“There are still major infrastructure projects upcoming in Qatar over the next five to 10 years,” he said, adding Besix’s activities in Qatar had doubled over the last two years.
“In the 1970s, Qatar was the most developed place in the Gulf,” said another executive at a leading local contractor which specialises in highways, pipelines and government projects.
“After that there were not many major infrastructure developments but since 2000 the government has spent a lot on infrastructure projects using money from its gas industry.”
“It is trying to play catch up with the rest of the Gulf in a short period of time,” said the contractor, which so far this year has won three projects worth around QR1bn riyals, and expects the same order book for 2010.
“There will be a lot of infrastructure projects coming on for the bigger contractors, but there is still improvement to be done for the middle and lower-end contractors,” he said.
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