CountryView www.cbre.eu/research Q1 2010 Key Facts Capital City Governance Area million sq km (Rank) 0.01 (165) Population million (Rank) 0.9 (159) Population Structure 0 14 22% 15 64 77% 65+ 1% GDP PPP, $bn (Rank) 107 (65)* GDP per cap PPP ($) 87,717* GDP Growth* 2005 2009 13.5% 2010 2014 8.2% GDP by Sector Agriculture 0% Industry 66% Services 34% Average Inflation* 2005 2009 9.8% 2010 2014 3.6% Corruption Index (Rank) 7 (22) Source: CIA, IMF, Transparency International, 2009 data * estimates Qatar is a small, oil-rich country with one of the highest GDP per capita ratios in the world. The ruling Al Thani family continues to hold power following the declaration of independence from Britain in 1971. The Emir is the Head of State, and the right to rule is passed on within the family. The Emirate is a founder member of the Gulf Cooperation Council (GCC) and a member of OPEC. Qatar is now largely free of territorial challenges, having resolved a border dispute with Saudi Arabia and a World Court case with Bahrain over the Hawar Islands in 2001. The country has a large expatriate workforce, primarily working in the petrochemical and construction industries. Regional Map GYPT UDAN CYPRUS LEBANON JORDAN Suakin SYRIA ERITREA Mecca ETHIOPIA IRAQ DJIBOUTI Riyadh SAUDI ARABIA YEMEN KUWAIT Al h BAHRAIN UNITED ARAB EMIRATES OMAN Country Map POPULATION Qatar borders Saudi Arabia to the south and is surrounded by the Arabian Gulf, with close proximity to Bahrain. It ranks 159th globally by population, with under a million inhabitants. Over three-quarters of the population is of working age. Like other GCC countries, a large proportion of the population are non-citizens. The 2007 census indicated a rapidly growing population of about 900,000 people. However, a fluctuating expatriate workforce makes this hard to track and there is discrepancy over the figure. Only 38% of the population in the census were Qatari nationals. Qatar also has a heavily skewed sex ratio, with 3.46 males per female because of the large percentage of expatriates. is the capital city of Qatar and, including the suburbs, the city has a population of 415,000 people according to the census. This is almost 46% of the total population. MUNICIPALITIES IRAN AFGHA RAIN UNITE EMIR POPULATION (THOUSAND) * 420 Ar-Rayyan 320 Umm Salal 40 Al Wakrah 30 Source: Citypopulation.de, 2006 data, *2007 Census
Q1 2010 CountryView Qatar POLITICS AND GOVERNANCE Qatar is slowly evolving from a traditional autocratic society into a modern welfare state with Government departments established to meet the requirements of social and economic progress. The Basic Law of Qatar, 1970, institutionalised local customs rooted in Qatar s conservative Wahabi heritage and granted the Emir pre-eminent power. Despite periodic moves to alter the constitutional structure, the Emir s power remains unabated and he continues to be influenced by continuing traditions of consultation, rule by consensus, and the citizen s right of personal appeal. Although the Emir is not accountable to anyone he may not violate the Sharia (Islamic law) and, in practice, must consider the opinions of leading notables and the religious establishment. Their role was formalised in the creation of the Advisory Council, an appointed body that assists the Emir in formulating policy. There remains no electoral system at present other than for municipal elections (for both males and females aged 18 years or more) from which expatriate residents are excluded. The elected Municipal Council has no executive powers but may offer advice to the Minister. ECONOMIC STRUCTURE AND GROWTH The economy is driven by industry (66%) and services (34%), with virtually no contribution from agriculture. GDP Per Capita PPP, $, est. 2009 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Qatar Kuwait United Arab Emirates Bahrain Oman Saudi Arabia Libya Lebanon Kazakhstan Iran, Islamic Republic of Azerbaijan In 2007 Qatar had 15 billion barrels of proven oil reserves far less than the UAE, Kuwait, Iran, Iraq and Saudi Arabia. However, it is one of the world s top producers of natural gas with the majority of reserves controlled by the state-owned company, Qatar Petroleum. The oil and gas sector accounts for around 50% of GDP and 70% of Government revenue. The Government is trying to diversify away from the energy sector via the financial, petrochemical and tourism sectors. Tunisia Algeria Egypt Turkmenistan Jordan Syrian Arab Republic Georgia Iraq Pakistan Yemen, Republic of Sudan Tajikistan Afghanistan, Rep. of. According to the World Bank Qatar ranks 65th in terms of GDP (PPP). Per Capita earnings (PPP) are the highest in the Middle East region at $87,717 in 2009. Due to rising energy prices in recent years the country has posted current account surpluses of around 20% of GDP. BUSINESS ENVIRONMENT Regulation: Despite some concern over the relationship between the US, Iran and Qatar, the Emirate s political environment remains one of the most stable in the region. A keenly anticipated Investment Law is thought likely to allow for greater foreign private-sector participation. As a consequence of its enormous energy resources Qatar has significant business opportunities. Although this means that Qatar is highly reliant on a particularly volatile market sector, the sheer volume of resources means that this is not a significant risk factor. Qatar is ranked as the least corrupt country in the Middle East, ranking 22nd globally in the Transparency International index. Transparency: In common with many of the Gulf states, accurate socio-economic data is relatively hard to obtain in Qatar. Although Government sources of data do exist, they are not updated as regularly as many other markets. Tax: Qatar has one of the lowest tax regimes of any country, ranking 2nd in the 2010 tax section of the Ease of Doing Business report (ranking 39th out of 183 countries in the overall report). Neither expatriates nor Qatar nationals pay income tax. In addition, only firms from outside the GCC pay corporation tax (35%), but even this is expected to be lowered to 10% in the future. Hydrocarbon profits are taxed differently.
PROPERTY OWNERSHIP AND TAXATION There are currently three regimes for property ownership depending on nationality: Qataris, GCC nationals and other non-qataris. Qataris generally have unrestricted ownership rights. GCC nationals may invest in and own real estate in designated Investment Areas as defined by a Cabinet Resolution. These areas contain offices, residential, industrial, tourism and educational property. The three areas declared to date are Lusail, Al Khuraj and Thaayleb Mountain. Office Stock (m sq m), Q1 2010 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Kingdom of Bahrain CountryView Qatar The Foreign Ownership of Real Estate Law permits non-gcc nationals to purchase lands, buildings and constructions thereof, in three designated projects. These are The Pearl, West Bay Lagoon and the Al Khor Resort Project. Non-GCC nationals may also acquire rights of usufruct in one of 18 designated areas as follows: Office Prime Rents, Q1 2010 1,400 1,200 US$/sq m/annum 1,000 800 600 400 /sq m/annum Real estate for a term of 99 years renewable on similar terms, within the Investment Areas One or more residential units for a term not exceeding 99 years, renewable on similar terms. In general, a right of usufruct is a right to enjoy property belonging to another person and to us it for one s own profit, utility and advantage. 200 0 14% 12% Office Prime Yields, Q1 2010 est. Tunis 10% REAL ESTATE MARKET MATURITY The real estate sector has seen strong value growth in recent years due to rapid population growth, high per capita GDP and excess liquidity. The real estate sector s contribution to GDP was 10.4% in 2007 and fell only slightly to an estimated 9.7% in 2009. During the period from 2003 to 2009, building and construction activity rose from QR 4.6 million to QR 17.8 million per annum. Credit finance to the real estate sector grew by 360% during this period from QR 43.8 billion to QR 201.6 billion. REAL ESTATE MARKET TRENDS DEVELOPMENT Occupancy in the residential sector in is high with the city generally considered to be undersupplied. The result is that there has been a drastic increase in development with an anticipated delivery of over 30,000 units by 2012. This is expected to shift the balance and cause an oversupply situation. 8% 6% 4% 2% 0% LEASING TURNOVER Leasing activity for Class A office space has slowed during 2008 and 2009 and there is a significant development pipeline. However, as new supply enters the market it continues to be absorbed by government entities and major corporates. The booming oil and gas sector is driving demand from industry service providers in. The prime office market is split into two areas the most expensive space is in West Bay. The other prime area is Bank Street (Grand Hamad Street) and the four ring roads circling the central area. Traffic and access problems in central areas are not as pressing as they are in most other Gulf economies and as a result there are no specific location dynamics in the two main commercial districts. 2010, CB Richard Ellis, Inc. Q1 2010
Q1 2010 CountryView bahrain Qatar RENTS AND YIELDS Commercial office rents for prime space vary as follows in Q1 2010: West Bay QR 220-259/sq m/month A,B, C & D Ring Roads QR 150-180/sq m/month Grand Hamad QR 166/sq m/month (Q4 2009) Although very few transactions have taken place in the last year or two, yields are estimated to be somewhere around 10%, dependent on specific asset dynamics. REAL ESTATE MARKET PRACTICES Basis of Measurement / Valuation Method Market Transparency Areas are quoted in square metres. Transparency in Qatar is limited. Rent Payment Rent is quoted on an annual basis in Qatari Rials/ sq m. Rent Escalation & Rent Review Tenant Covenant Service Charge Property Taxes & Other Costs Agents Fees Incentives Lease Length & Terms Lease Renewal Selling a lease Repairing Liability RESIDENTIAL SALES Housing rents in Qatar reportedly rose by 22% between 2002 and 2005 and by a further 154% between 2005 and 2007 despite the introduction of a rental rate cap of 10% in 2005. However, residential rental rates in reportedly fell between 5% and 10% in 2008 and by a further 10% to 20% in 2009. It appears that rental rates have now stabilised although the number of units in is forecast to increase from around 130,000 at the end of 2009 to approximately 185,000. Residential investment yields are currently estimated to be in the range of 9.5% to 11%. The annual rent usually remains fixed for the duration of the term. If a new lease is agreed then the rent will increase to the prevailing market level. The importance of strong tenant covenant is not widely understood. Service charges are typically charged at between 10% and 15% of base rent levels. Rental income is taxed in line with standard business taxation rates. Capital Gains may also be taxed as a business income. Agent fees are generally calculated as a percentage of the yearly rent and usually paid by the tenant. Fees will be equivalent to about 5% of the first year s rent. Landlords rarely engage external consultants, choosing to employ their own representatives. A new tenant may expect to receive a rent free of between one and three months. Average lease length is between one and three years. Typically rolled over but with more flexible termination terms. Virtually unknown. The Landlord undertakes to repair and maintain the structure and common parts of the building and will pass the costs back to the tenants via the service charge.
CountryView Qatar For more information regarding the CountryView, please contact: Middle East Nick Maclean Managing Director CB Richard Ellis Middle East Building 6, 8th Floor Emaar Square UAE t: +971 4 437 7200 e: nick.maclean@cbre.com Research & Consulting Mike Williams Senior Director, Research & Consultancy CB Richard Ellis Bahrain WLL Ground Floor, Centre Government Avenue PO Box 11370 Kingdom of Bahrain t: +973 1655 6600 e: mike.g.williams@cbre.com EMEA Research & Consulting Nick Axford Executive Director, EMEA Research CB Richard Ellis St Martin s Court, 10 Paternoster Row London EC4M 7HP t: +44 20 7182 3039 e: nick.axford@cbre.com Catherine Bushnell Analyst, EMEA Research CB Richard Ellis St Martin s Court 10 Paternoster Row London EC4M 7HP t: +44 20 7182 3405 e: catherine.bushnell@cbre.com For more information on market characteristics read our MarketViews at: WWW.CBRE.COM/MENA WWW.CBRE.EU/RESEARCH DISCLAIMER 2010 CB RICHARD ELLIS Information herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CB Richard Ellis clients, and cannot be reproduced without prior written permission of CB Richard Ellis. Copyright 2010 CB Richard Ellis 2010, CB Richard Ellis, Inc. Q1 2010