Real estate in for Significant Growth: expert
Qatar’s successful bid to host the World Cup in 2022 is set to have a significant impact on the country’s real estate sector in the long-term, according to a local expert, who claimed that the next 12 years will see considerable growth in the market due to increased media attention, business and infrastructure development and population growth.
Associate director of real estate advisers DTZ, Mark Proudley, said: “Qatar’s 2022 bid win was nothing short of a historic for Qatar and indeed the wider region – as the second largest sporting event in the world, it is bound to have a major impression on Qatar over a much longer term both before and after the event.”
With the announcement of the 2022 hosts being made six years earlier than usual, the short-term fundamentals of supply and demand will be less affected, Proudley said, adding that despite this, rental prices may increase in the aftermath of this month’s announcement.
“In the short period since the announcement, there has been a tangible increase in optimism and business confidence,” he said, adding: “It is conceivable that landlords and real estate investors will take an equally bullish approach, holding out for higher rentals and prices, driving the market upwards based on speculation, otherwise known as the ‘announcement effect’.”
Although this short-term effect is likely to subside, Proudley argued that the medium-and long-term will see “significant expansion in the real estate market across Qatar.”
Investment in infrastructure, combined with global media interest in the region, will attract business and people to Qatar, which will lead to a larger population and more demand for residential units.
Proudley referred to statistics from the Qatar Statistics Authority (QSA) from 2010, which indicate that as hosts of the 2022 World Cup, Qatar’s population will increase by 9% each year resulting in a population of around 4mn in 2022, as opposed to 4% growth and 2.5mn if the bid had been unsuccessful.
Proudley added that a number of projects that may have lost momentum will be reinvigorated by the successful bid and resultant increased development.
He cited Lusail as an example, claiming that the fact that the city will be the venue for the World Cup opening ceremony should generate focus on the many projects situated there, and may bring completion dates forward.
“Another development that will probably adopt a revised strategy following the announcement is Urjuan at Al Khor, which will also benefit from new transport links and a stadium planned for the World Cup,” he noted.
Many studies have been carried out on the impact of major sporting events on cities, with a range of results being offered.
Real estate prices in Paris are said to have increased by 55% over a one year period before and following the 1998 World Cup, whilst Olympic host cities have witnessed increases of up to 131%.
“It could be argued that the impact on pricing in Qatar will be even greater due to its relatively small population and land mass when compared with the other countries,” stated Proudley.
“The World Cup should have a greater legacy in Qatar than just increased prices in respect of real estate,” Proudley said, adding that international exposure will attract more foreign investment in real estate, leading to “further evolution of the market and demand for greater transparency.”
He pointed out that the World Cup will also bring a number of challenges to Qatar, including rising construction costs, investment in facilities with limited use post the World Cup tournament, ongoing construction works and possible congestion as infrastructure projects are upgraded.
The biggest challenge will emerge after the tournament – ensuring that facilities and accommodation developed are sustainable in the long-term, argued Proudley, adding that Qatar has already started to address this issue with proposals such as stadia which will be dismantled and presented to developing countries.
“There have been suggestions that cruise liners will be docked in the ports to accommodate visitors during the tournament – a similar tactic was employed during the 2006 Asian Games,” he added.
Proudley highlighted the impact that the Asian Games of 2006 had on Qatar, with many people involved in the event choosing to remain in the country for further employment, leading to a surge in real estate development.
“World Cup 2022 has the potential to recreate that effect but on a larger scale. If all this happens as expected, Qatar’s built form will move positively towards becoming a more mature and sustainable urban entity,” he added.
