Doha’s developers are taking a cautious approach to real estate development in the final three months of 2009. They are leasing residential property, rather than selling new homes, and are scheduling projects to prevent the market from being flooded with work.
Their caution comes from the lessons learned during the construction boom that peaked in 2007 and the subsequent real estate crash. Oversupply has resulted in prices falling by up to 30 per cent this year for residential properties in Doha.
A major plan to restore the centre of Doha is a good example of the more sensible approach that Qatar is taking to real estate planning. The $5.5bn Heart of Doha project, led by Dohaland, a subsidiary of the state-run Qatar Foundation for Education, Science & Community Development, is being carried out in five phases over the next seven years to ensure that property prices do not plummet as new homes come on to the market.
The Al-Waab City residential development, which is situated to the south of the Heart of Doha scheme, is also being carried out in phases. The $3.2bn project’s shareholders, while content to continue with the original design of the scheme, have opted to lease the residential property rather than sell it, as was previously planned.
The Qatari authorities need to insist that developers follow this measured approach to construction to avoid a repeat of the boom-and-bust cycle that has afflicted property markets in both Qatar and its GCC neighbours over the past 12 months. But whether Qatar’s developers can resist cashing in on another boom will be the real test of whether the lessons of this year’s crash have been learned.