An analysis by Bank of America Securities-Merrill Lynch describes the Qatari market as a safe haven due in the short term mainly due to its expanding gas industry, government cash reserves and economic reform. But it warns that by 2012, when the country's gas driven expansion plans come to an end, there will be limited need for labour in the country's non-oil economy, as expatriates who built the infrastructure leave in large numbers.
This could lead to a 'significant overhang' of real estate, they claim. 'While expatriates constitute 90% of the workforce, which is similar to Dubai, a much bigger portion of those are blue collar workers who are more likely to leave in 2012,' the bank report said.
'Though the long-term gas contracts secure a healthy cash flow, Qatar may end up being the Luxembourg of the Middle East, a wealthy state that enjoys low and stable growth with its small population, where companies are looking to expand abroad,' it added.
Meanwhile another report from Qatar Oman Investment Company predicts that rental market prices in Qatar are in for a battering over the next two years due to an oversupply of accommodation. It says that there are currently 15,000 apartments ready for occupancy across Doha with no takers.
And with many housing projects in and around the city close to completion and expected to be ready for uptake by next year, the situation is set to get worse.
'I wouldn't be surprised if over the next two years you see the rents in Doha back to their previous levels to QR1,200 and QR1,400 monthly. Already, two-bedroom apartments whose going rates were QR8,000 not too long ago, are now available for QR5,000,' said Nasser Mohamed Al Mansoory, CEO of the company.
'See the newspapers. Their classifieds are full of ads for all categories of vacant houses day in and day out, clearly signalling that supplies far exceed demand,' he added.
The company is also warning about de-population. Al Mansoory said that the latest published figures show that it has already fallen from 1.9 million to 1.6 million.
