Qatar real estate sector facing liquidity issues
Qatar's real estate developers and investors are cautious in light of stricter lending conditions being implemented by banks
A leading Qatari developer, SAK Holding Group, said that the present constricting liquidity conditions are putting the real estate sector under pressure.
With the banks implementing stricter lending conditions, Qatar’s real estate sector is facing progressively greater challenges and the market is seriously in need of government intervention, The Peninsula reported.
The sector has been impacted by a significant fall in rents and property prices, more so in the rates of empty plots of land.
This is because developers are cautious, urging the government to address the liquidity problem.
SAK Holding’s Market Watch Office noted in its latest report on 5 February, 2017: “The real estate market entered 2017 affected by the repercussions of last year’s performance. This can be seen in a set of signs and indicators, the most evident of which are the growing trend to reduce the liquidity directed to the real estate sector, raising lending interest rates, banks strictness in financing the real estate sector.”
The developer added: “The complexity of guarantees required for getting real estate financing, leading developers to avoid large sized projects, and search for quick steady returns by trading in built residential and commercial properties suitable for investment.”
Empty lots of land have dropped by 15 to 20% in price, with more remote areas seeing up to a 25% fall in price, as there is little to no infrastructure in far-flung areas, away from Doha.
The report noted that the real estate market in Qatar is reconsidering its position owing to the limited adjustment of prices in different regions, correction of prices of empty plots and land being put out for rent by owners.
The report highlighted that during last year, the total value of real estate transactions declined to QAR27bn ($7.4bn), registering a sharp decline of 109.3% when compared to QAR56.13bn ($15.4bn) in 2015.
The pace and value of the transactions of the real estate market drop is laid at the door of the banks which are seen to be taking excessive precautionary measures in the context of granting real estate loans.
So too, so exaggerated collateral and high interest rates charged on loans in general are also seen to be the cause as they have impacted real estate liquidity, driving developers and investors to review their positions while waiting for the government to urge banks to deal with the needs of the real estate sector.