The Pearl Qatar has fast become an icon of glamour, a place to be seen, renowned for excellence in design and construction
Within the Middle East, the Pearl Qatar has fast become an icon of glamour, a place to be seen, renowned for excellence in design and construction.
The Pearl is one of the largest urban developments in Qatar. Spanning an area of four million square metres, with a coastline stretching 32km, this reclaimed island has been developed with funds in excess of QR50bn ($14bn).
Edd Brookes is general manager and senior director of DTZ Qatar, with specific attention to valuation work.
Brookes did his first evaluation on The Pearl in 2006 and has been a first-hand witness to its growth and now expansion.
In its short life, the development has had a wobbly few years, the most widely publicised being the sudden, literally overnight, ban on the sale of alcohol, which saw restaurants slamming their doors shut as custom dropped.
So too, delivery delays have plagued the development. But Brookes assures that things have changed and are looking up for this iconic development. He discussed the short history of The Pearl and brought CWQ up to speed on what the situation is presently.
The Pearl originally launched in 2005 with a number of developers offering off-plan sales, which were very popular with launch prices at about QR9,500 to QR10,000 per square metre, which included a balcony area.
The development took mixed-use to a new level, with both luxury residential living, retail outlets and a plethora of restaurants. Everything about The Pearl was designed to be an asset, to be valuable, to be desirable.
“The master developer is UDC and within the development there are individual plots that have been sold to a range of individual developers. The first 2 phases to be launched were Porto Arabia, Phase 1, consisting of 31 residential towers, as well as townhouses and ancillary retail outlets around the boardwalk area.
“Phase 2 is Viva Bahriya, a more exclusive area comprising 29 residential towers, all with beach frontage and no retail. There are also various low-rise, low-density districts with individual villa plots as well as free-standing units in residential ‘compounds’ or complexes.”
During the last 12 months, a third area, Qanat Quartier, has been completed, being designed as a Venice of the Middle East, with architecture from that region. The rest of The Pearl is generally south of France or Tuscan. Qanat Qartier has the obligatory Venetian-like canals with connecting bridges between the land parcels.
“There is also ancillary retail to serve the residents,” Brookes explained.
Medina Centrale, located between Porto Arabia and Viva Bahriya provides the main retail offering of The Pearl. This area formally opened earlier this year with the 4,000m² Spinneys providing a much required supermarket offering.
More recently, the luxurious cinema operated by Novo, formally commenced operations, proving a big draw to non-residents. Multiple dining options have opened or due to open over the next few months as well as a wide range of retail and service providers. “This will undoubtedly become the heart of The Pearl,” Brookes envisages.
By 2009, prices for apartments had increased to about QR21,000 per square metre, all off-plan. The banks offered expat mortgages, with typically 10% cash deposit and mortgage payments running over 20 to 25 years.
“The idea was that the mortgage pa yments didn’t start until your ‘completion milestone’ which, in this case, was a date milestone not an event. The date set was the day that the developers originally envisaged the residential tower would be completed, with the first delivery due in 2008,” Brookes explained.
At the end of 2008, the first phase of The Pearl-Qatar’s development at Porto Arabia was completed, marked by a visit from their highnesses Sheikh Hamad Bin Khalifa Al Thani and Sheikh Tamim Bin Hamad Al Thani, their excellencies the Prime Minister, the Minister of Finance and the Minister of Municipal Affairs, along with presidents, prime ministers and dignitaries from all over the world.
The first commercial units and a number of restaurants started to operate in 2009. Within Doha there are eighteen investment zones in which expats can buy a usufruct or 99-year lease. There are also three free-hold areas within Qatar: Al Khor, West Bay Lagoons and The Pearl.
When you buy a house or an apartment you effectively get free-hold (strata in the cases of apartments) ownership which will entitle you to apply for a residence permit, based on your ownership. The latter is sponsored by the Minister of the Interior.
On paper this all sounded great, and as it is one of only three pieces of freehold real estate in Doha, the expats flocked in on their migratory trail, faces directed towards the sun, sand and quality living.
Money flowed, units were bought off-plan, and restaurants were busy with bookings often made weeks in advance to ensure a spot in one of the many renowned international branded eateries. “However,” Brookes added, “without exception, there were over-runs on all of the towers, with the first tower completed and delivered in about 2009.”
This had an impact on the expat purchaser who had taken out a mortgage fully expecting to start paying it off once they took ownership of the property, namely, when the keys were handed over. However, the completion date milestone set out in many of the Sale and Purchase Agreements kicked in before the actual completion date.
This left buyers obligated to make mortgage payments without being able to occupying the property, in some cases for several years.
This dilemma was handled in different ways by various developers and lenders. “Some, in conjunction with the banks, rescheduled interest and mortgage repayments.” So, while the development initially attracted significant interest from expats as purchasers, once the level of delays became clear, many expats they became more inclined to rent as opposed to purchasing. This was compounded by the global financial crisis.
“Between 2009 and 2010 Qatar Central Bank very wisely took a number of measures to ensure the robustness of the local banks. One thing they did was increase the deposit for mortgages from 10% to 30%, which again, reduced the attractiveness of purchasing within the expat market, most of which were only here on two-year contracts.”
Then, for a variety of reasons, some rumoured, sales of wine and beer within restaurants were suddenly stopped in
This reduced the number of customers, both residents within The Pearl, and also those who would come onto The Pearl as a dining destination.
Restaurants offered specials, varying enticements to draw elusive diners back to their establishments. However many customers went elsewhere and a number of the restaurants started closing their doors, hanging up their aprons and moving out.
Among them were the high profile Gordon Ramsay’s Maze restaurant, Bice and Mango Tree. Ramsay went on record saying that he didn't expect the ban to last very long because it had significantly impacted on restaurant earnings ...
Well that was back in 2011 and now, three years down the line, The Pearl is still in business, despite the alcohol ban. “In fact, seemingly stronger than ever,” he added. “Both the restaurant and retail offerings have significantly increased and foot-fall is increasing month on month. UDC have been very proactive in organising weekly entertainment and events which have drawn many non-residents to the island.”
The Marsa Malaz Kempinski hotel is set to take its first guests from December 1, signalling a return of alcohol sales to the island in some capacity, three years after a ban was first imposed and people are still buying and leasing property on the island.
The trend however, has since has become a mainly leasing option, with local and GCC investors constituting between 80 and 85% of ownership, according to Brookes. Qatari’s and Saudi’s make up the majority share of purchasers and expats are now mainly tenants.
“There are a number of factors influencing expat purchases, including the length of expat contracts; service charges in addition to mortgage repayments and tighter lending criteria etc. that make it more conducive to renting for expats.”
Brookes explained that there is continuous construction on The Pearl, specifically on the residential side, particularly in Viva Bahriya and Porto Arabia. “Another addition, Abraj Quartier, which is situated at the entrance to The Pearl, is the latest stage of the development,” he added.
The development comprises two 40 storey towers featuring an eight-level parking podium of an approximate total built-up area of 38,976m²; forty levels of high rise office towers, with an approximate total built-up area of 75,763m², of which the office space is approximately 51,730m² on the ground to 38th floor, and is being constructed as a core and shell. The scope of works includes the construction of the substructure, superstructure and external works.
Developed by UDC, the project’s completion date is scheduled for 2016, with an anticipated 36 months duration.
In June 2014 The Pearl-Qatar announced the official launch of the Hilton Panorama Residence, a 445-room serviced hotel apartment project.
First Qatar Real Estate Development Company, which will be investing up to $390mn in the project, said the construction is expected to complete by mid-2017.
All infrastructure for The Pearl is in place and, Brookes highlighted, “Out of the 31 towers in Porto Arabia, 16 are completed and occupied, with the remainder under substantial construction, most nearing completion.”
While a number have 2014 pegged as the completion date, the reality will see this extended by another year, at least. “Within 18 months certainly, the whole Porto Arabia will be completed and all the retail is completed,” he added. “In Viva Bahriya, about six towers have been completed, with the rest under construction with completion due dates around 2016 or 2017.”
Looking down the line
Congestion is an ongoing concern for The Pearl — as there is basically only one way in and out— and, given that once fully developed, there will be a population of approximately 45,000 people.
In time, however, Brookes explained, this will be alleviated as there will be water taxis servicing the new airport and nearby Lusail City.
So to, the Doha Sharq Crossing (formerly Doha Bay Crossing) — a 12km series of underwater tunnels and bridges connecting the new Hamad International Airport, Katara Cultural Village and the West Bay financial district — is due to get underway in 2015 and the crossing aims to open by 2021.
The Doha Sharq Crossing will be capable of handling 6,000 vehicles an hour and is expected to take some of the pressure off existing roads.
The design consists of three bridges, ranging in length from 600 to 1,310m, linked by 8km of subsea tunnels. It appears that The Pearl never really lost its lustre it was just construction dust that obscured it for a while ...