Banks in Qatar have been forced to extend repayment schedules on loans to several real estate projects because of the market slowdown, according to George Nasra, managing director of International Bank of Qatar.
Nasra says the loans have been rescheduled to reflect current market conditions, and in anticipation of a recovery in the market in 2011. The expectations of a market recovery have made it easier to extend repayment schedules, rather than launch more dramatic restructuring proceedings.
“There has had to be some rescheduling of some loans for real estate projects, but at the same time we have to stand by our viable customers in a crisis like this,” says Nasra.
He adds that despite this, the bank is continuing to fund real estate projects in Qatar. “We don’t just say no to funding real estate projects now,” he says. “But at the same time we need to know that it is a feasible project, with a strong sponsor who has the funds available to support the project if necessary, and that they have the equity necessary to cover the debt that we put into a project.”
The booming real estate market was one of the main drivers of Qatar’s double-digit inflation in 2008. The market slumped during 2009 however. The latest figures for December 2009 show a 0.7 per cent decline in rental prices, following a 2.9 per cent fall in November.