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Posted On: 9 June 2009 11:31 am
Updated On: 12 November 2020 02:09 pm

Oversupply in housing likely by next year

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A series of packages the state has announced for the local banks will improve their capitalisation but will not guarantee that lending will increase, says a report on the local real estate sector. This is because the banks will still have realised significant losses from the real estate downturn, according to Dubai-based Landmark Advisory. So, in the short to medium term, Qatari banks face a challenging economic environment characterised by continued financial stress and the likely persistence of weak oil prices at least until next year. Liquidity will remain problematic for Qatari banks, whose loan-to-deposit ratios are among the highest in the region. Deposits have fallen due to excessive lending, choked foreign direct deposits and repatriation of foreign funds. Qatari banks are, however, better positioned than their GCC counterparts, which are more leveraged and less likely to receive the same level of government support, says the report. The housing shortage is expected to shrink rapidly over the short to medium-term, and with a probable contraction of population growth, the local market is likely to be oversupplied by 2010. During this year and the next new residential developments will come online, says the report by Landmark Advisory, which is a division of Landmark Properties. The population here doubled between 2000 and 2008 and 46 percent of all residents in Qatar were living in Doha, according to a Qatar Statistics Authority census, the report said. If this proportion is extended to the present, then Doha’s current population would be approximately 670,000. Petroleum has a major share in the country’s gross domestic product, but employs only five percent of expatriates. Conversely, 45 percent of all expatriates are employed in the construction sector. Most of these workers live in labour accommodations and, therefore, do not contribute to demand for residential housing units. Thus, it is misleading to assume that Qatar’s recent population growth was matched by a comparable increase in demand, the report said. A dubai company giving advice? hahahaha