Real estate firms wait and watch

WITH the slowdown in private construction activity in Qatar becoming more tangible, different stakeholders of the industry, including consultants, contractors and developers, have gone into the “waiting-out mode” though a few have started exploring ways to “let go” some of the staff who are dispensable, it is learnt.

Among the first to go may be sales and marketing teams, according to industry sources, since “there are not too much sales-related activities” taking place now.

“I know some of the best towers have been ready for the last three months but the uptake has not been up to expectations; however our studies show the demand for commercial space is likely to remain for three years,” an official of an international property consultancy told Gulf Times.

“The earlier trend had been unhindered expansion, but now we (consultants) are holding back.”

In some cases, firms are also considering “non-performing” employees such as a few in the human resources (HR) department to “let go”.

“So far, our estimates suggest 10% retrenchment but it depends on how the situation unfolds,” another industry associate said.

Crucial to construction projects, consultancies offer essential services such as land economics, surveying and valuing, architecture, design and property management among other things. In that capacity, they are usually the first ones to know about upcoming projects.

Another recent development is the flocking of Dubai-based consultants to Qatar after business prospects in the neighbouring emirate have dwindled.

“This is likely to increase competition, which is good for the clients but raises the chances of local employees being affected in the long run,” the associate said. “They are also under-quoting to establish themselves in a new market.”

Some others, however, maintained that the situation was favourable and they were in the process of hiring since there was a greater availability of talent pool.

“Also every one in the industry is just waiting 2009 out and so it wouldn’t be wise to let our technical staff go,” an official at a consultancy firm said.

Around 20-25% real estate projects in Qatar have been put on hold, not abandoned, since the start of this year, according to industry sources.

“A novel strategy now is to go about in phases with developers moving on to the second phase only after seeing the results of the first phase. This is called risk diversification,” one source said.

Investors who earlier used to buy properties here are now looking to invest in the US since the real estate market there has hit the rock bottom.

While the government-backed infrastructure and industrial projects are still progressing, private sector investment in real estate has been affected as a result of the global financial crunch.

According to a banker, other than tightening their financing regime, banks in Qatar have also reached their lending ceiling for the current year.

“Our real estate department has not been busy for the past four months. It used to be very busy,” he added.

Reflecting the slowdown, a supplier of construction and technical equipment said his sales had dropped by 30%, while a contractor, doing business in Qatar since 1983, said that some of the projects they were about to start, had been put on hold. “The developer told us they are having financing troubles.”

Meanwhile, every one agreed that Qatar, along with Abu Dhabi and Saudi Arabia, is better positioned to face the slump and will bounce back once the “wait and see period” – expected to last 2009 – is over.

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