Real estate company profile: Qatar Diar

25 September 2008

As a wholly owned subsidiary of the Qatar Investment Authority, Qatari Diar Real Estate Investment Company has an agenda beyond pursuing real estate developments. It is also involved in some of the state’s largest infrastructure schemes, including Qatar’s national rail network and the Friendship Bridge, a causeway linking Qatar with Bahrain.

Launched in March 2005, Qatari Diar is now capitalised at $1bn. Under the guidance of CEO Ghanim bin Saad al-Saad, it has launched 18 real estate schemes throughout the Middle East and North Africa (Mena) region.

It began with the 35 sq km Lusail real estate project, north of Doha. Masterplanned by US firm Bechtel, this project remains Qatari Diar’s largest scheme. The massive urban sprawl is intended to provide housing for up to 200,000 people, in addition to office and commercial space.

Offshore island The Pearl is the first area in which non-GCC investors are allowed to buy property on a freehold basis. Real estate agents are experiencing high demand for these, and the first units are expected to come to the market in January 2009.

Steady sell-off

Completion of the scheme is not expected until 2020, and the company is steadily selling off plots to secondary developers such as Dubai-based Damac Properties and Abu Dhabi Investment House.

Key facts

  • Established: 2004

  • Value of projects: $10bn

  • Net profit (2007): Not available

  • Revenue (2007): Not available

The first infrastructure award on the scheme, for the sewage transfer and treatment system, was awarded to France’s Degremont, Japan’s Marubeni Corporation and Kuwait’s Mushrif Trading & Contracting Company in February 2006.

This was followed by the 30-month, $440m package for earthworks and marine development awarded to China’s Sinohydro in September 2006.

Up to 15 infrastructure contracts are expected to be awarded in total, but progress has been delayed.

The second infrastructure bid deadline was extended from mid-January to 21 February after contractors asked for more time. A consortium lead by the UAE’s Al-Jaber won the final award.

Since the launch of Lusail, Qatari Diar has become increasingly ambitious, launching several projects in Qatar, including the $600m Doha Convention Centre, for which the main contract bids closed in early September.

The centrepiece of the project will be Dubai Towers, the city’s tallest building, at more than 400 metres high.

In a departure from real estate, Qatari Diar has also embarked on the state’s first rail project, and is working with Germany’s Deutsche Bahn on the initial design.

The heavy rail components include high-speed rail links from Doha to the new airport that will also run over the new causeway into Bahrain, an east coast rail link for passengers and freight between Ras Laffan and Mesaieed via Doha, and a freight link connecting into the planned GCC rail network.

As part of the rail project, two metro schemes are also being developed: a Doha metro network and a light rail system serving new developments to the north of Doha, such as Lusail, Education City and West Bay.

But perhaps the most high-profile of Qatari Diar’s infrastructure schemes is its involvement on the $4.2bn Qatar-Bahrain causeway.

The firm is part of the construction consortium that includes France’s Vinci Construction Grands Projets, Germany’s Hochtief, Athens-based Consolidated Contractors Company, Belgium’s Dredging International and the local Qatar Dredging Company.

Extending relationships

Qatari Diar’s involvement is an extension of its relationship with France’s largest contracting company, Vinci. In mid-2006, the two parties set up a joint venture contracting company to develop Qatari Diar schemes.

“Our joint venture with Qatari Diar is a Qatari shareholding company that is 51 per cent Qatari Diar and 49 per cent Vinci Construction,” says Gerald Mille, CEO of Qatari Diar Vinci Construction (QDVC). “During the first three years [to 2010], Vinci is responsible for management and the chief executive officer is seconded by Vinci.”

This is until a senior Qatari Diar employee is ready to take over. “The idea is to build a major construction company dedicated to the design and build of projects for Qatari Diar, but also for other clients in the region,” says Mille.

Design and build is a mechanism where a contractor enters a project at an early stage and takes over all delivery risk. It is also responsible for the design.

“The project should be of significant size and technically difficult, and have early contractor involvement to optimise the design and potential savings,” says Mille.

Qatari Diar is so confident this model will be successful that it signed a similar agreement with German construction giant Hochtief in June.

Signing joint ventures with international firms is a small part of Qatari Diar’s international plan. The majority of its new projects are overseas and particularly target emerging markets such as Egypt, Morocco, Sudan, Syria and Yemen.

The schemes are largely designed to attract tourism through the construction of mixed-use developments hosting hotels and entertainment complexes.

In addition to emerging market investments, the firm has ventured into more established regions. Through its Guernsey-based subsidiary, Project Blue, which also includes UK investors the Candy brothers, the firm has purchased Chelsea Barracks in west London.

The site alone cost the firm $952m. It then raised $2.5bn through an Ijara (Islamic financing), underwritten by Project Blue’s strategic partner Masraf al-Rayan, with BNP Paribas, Calyon Credit Agricole, HSBC Amanah and Qatar National Bank.

Unfortunately for Qatari Diar, not all international ventures have gone smoothly. An attempt in June to purchase 30.4 per cent of shares of luxury resort owner Societe des Bains de Mer et du Cercle des Etrangers a Monaco (SMB) was rejected by SMB’s board.

The company is 69.6 per cent owned by the Principality of Monaco, with the remaining shares trading on the Euronext Paris exchange.

Qatari Diar currently owns 2.45 per cent of the company. SMB’s board requested the purchase was limited to 10 per cent, a suggestion that was rejected by Qatari Diar.

Despite this setback, Qatari Diar remains committed to its international ventures, with the overall objective of creating a long-term investment portfolio for its parent, the Qatar Investment Authority.

CAPTION: Friendship bridge: Qatari Diar’s $4.2bn causeway project will link Qatar with Bahrain

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