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Investments based on solid foundations

Emerging Qatar 2007. Investments based on solid foundations. Contents. Page. Country Profile 03

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Investments based on solid foundations

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  1. Emerging Qatar 2007 Investments based on solid foundations

  2. Contents Page • Country Profile 03 • Population 03 • Geography 04 • Natural Resources 05 • Politics 06 • Economy 09 • Banking 16 • Capital Market 18 • Retail 19 • Transport & Infrastructure 20

  3. Contents Page Construction 21 Real Estate 26 Tourism 31

  4. Country Profile • Population • Last census that been carried in March 2004 by the Planning Council is 744,029, with 5.3% annual increase between 1997-2004. • The March 2004 census shows that 66.7% of population are male, while 33.3% of the population are female. • Foreign workers are estimated by 75% of the total population. • According to 2003 census, Doha, the capital of Qatar accounts for 46% of the total population

  5. Country Profile • Geography • The country covers an area of 11,437 sq km on a low-lying limestone peninsula • The coastline 550 km long and bounds the country to the west, north and east • Only 2% of the land favorable for agricultural activity • Doha, the capital is beginning to spread northwards with major residential such as Pearl and Lusail

  6. Country Profile • Natural Resources • Hydrocarbons is the cornerstone of Qatar’s resources • Oil & gas accounts 60% of Qatar’s GDP, 85% export earning and 70% government revenues • The country holds the worlds third-largest gas reserves • By 2012 Qatari LNG will be reaching all the major markets, with an export capacity of 77 m tonnes per annum • Beginning of 2008, one-third of gas exports will go to the USA; one-third will go to Europe, including the UK (taking 20% of exports), Spain and Italy; and one-third to Asia, including Japan, Korea and India

  7. Politics • Qatar has established the Arab Foundation for Democracy, the move was made public in May 2007 • The emir Sheikh Hamad supported the organization with $10 million, and it will be the biggest civil organization in the Arab world for the purpose of supporting democracy • In July 2007 the Qatar Investment Authority (QIA) planned to acquire a substantial stake- up to 10% - in shares of the European Aeronautic Defence and Space Company (EADS), Airbus’ parent firm • “Investing $130 billion in the next five years, with half going to non-energy related projects, will go some of the way in creating an infrastructural platform that will allow Qatar to grow” – (H.H Sheikh Hamad Al-Thani, OBG, p.18)

  8. Politics • “Our economy is set to double in size by 2010, and along with the dreams and aspirations of its people, native or foreign, as we all work together in creating a progressive, successful and multicultural society steeped in the ancient and rich culture of the Arab world” – (H.H Sheikh Hamad Al-Thani, OBG, p.18) • women plays important role in Qatar development, now, more than 50% of the Ministry of Education’s employees are women, and the same is true of both staff and students at the University of Qatar. Graduating women are in increase and they started taking place in the private sector. c

  9. Politics • “Qatar now supplies one-third of the UK’s gas supplies and this proportion may grow in the future” – (Lord Stuttard, M., OBG, p.37)

  10. Economy • The marquee static for 2006 was that GDP per capita had topped the world at $62,914 • Qatar has executed a precise development plan for its abundant natural gas reserves, it has already concluded sales and purchase agreements (SPAs) on future liquefied natural gas (LNG) output for more than two decades into the future making it the world’s largest LNG exporter in 2006 • The associated industrial petrochemicals and metal manufactures that use cheap feed-stock and energy, and the financial industry, remains the biggest contributors in the Qatar’s economy

  11. Economy • With an estimated native population of some 200,000, Qatar’s rapid economic expansion has meant that the country continues to struggle with labour shortages and high inflation • The total production reached $52.8 billion in 2006. Meanwhile, GDP growth fell due to record-high inflation of 11.8% • Most analyst believe that the real GDP growth for 2007 will increase above 8%, mainly because the contracted LNG exports are planned to increase by 4m tonnes at RasGas II (a field jointly exploited by state-owned QP and ExxonMobil) • “The GDP will be more than $100 billion by 2013”-(Kamal, Y., the minister of finance, P.41) • Qatar currently has 925 trillion cu ft of natural gas reserves

  12. Economy • The ministry of finance stated goal, to get non-hydrocarbons to represent 75% of GDP by 2015 • Bank assets have increased nearly threefold in the past four years to $52 billion in January 2007, as assets-to-GDP increased from 76% to 99%. • As with capital market, the government has removed the regulatory from the national telephone company Qtel • The construction sector has been working at full capacity for a number of years. It was the fastest growing private sector segment in 2006, with revenue up 17% to $2.83 billion

  13. Economy • With $130 billion worth of capital investment in infrastructure planned for the coming seven (7) years, the construction sector will need more foreign companies in order to finish the projects on time • Crude oil, natural gas and refined products are increased their overall share of total exports to 92% or $33.6 billion • The value of imports in 2006 reached $16.4 billion • “The Opportunities are limitless nowadays with the market. The really interesting thing in a developing economy is that you open up opportunities in all sectors”-(Sheikha Hanadi Al-Thani, Vice-Chairperson and managing director, Amwal, P.48)

  14. Economy • “If you have a boom in energy and real estate, how do you keep it from getting out of hand and ensure these flows go in a constructive direction. That is why investing outside of the region is a smart thing to do”- (Steve Forbes, P.51) • Qatar has adopted the strategy of assembling easily identifiable brands for its relatively few investment zones, which do not overlap, they include: • Education City • Qatar Science and Technology Park (QSTP) • Qatar Financial Center (QFC) • Energy City • Qatar Free Zone

  15. Economy • Standards & Poor’s sovereign ratings on the state of Qatar (AA-/Stable/A-1+) among the three highest in the Middle East and North Africa (MENA) region • Standards & Poor’s expect a fiscal surplus of 10% of GDP and gross general government debt is expected to be 12% of GDP in fiscal year 2007-2008 (ending March 31, 2008). The state is expected to record a net asset position of about 63% of GDP in fiscal year 2007-2008 • Qatar has a strong external liquidity position with current account surplus of 20-25% of GDP forecasted for 2007-2010 • Standards & Poor’s estimates Qatar’s GDP per capita to $58,000 in 2007

  16. Economy • Standards & Poor’s the state of Qatar real economic growth to maintain its impressive pace, averaging 9% annually in 2007-2008 and 11% in 2009-2010 • Standards & Poor’s expects both the US and Europe would seek protection of Qatari assets because of their involvement in the country’s hydrocarbon sector. The US is likely to remain committed to ensuring Qatar’s security into at least the medium-term given its military and economic significance • Qatar has a strong external liquidity position with current account surplus of 20-25% of GDP forecasted for 2007-2010 • Standards & Poor’s estimates Qatar’s GDP per capita to $58,000 in 2007

  17. Banking • In the past five (5) years , Qatari nationals and high-net-worth expatriates as retail individuals has become the key clients that commercial banks wish to target • loans through personal and consumer finance and credit cards have more than tripled in the past five (5) years to $9.7 billion • The building boom has boosted real estate and construction-related lending by more than 12 times to $4.3 billion in the past five (5) years • The capitalization of the banking sector grew from $2.6 billion to $26.6 billion in the period 2001-2006, a rise of 911% • Qatar Financial Center (QFC) has welcomed 20 regulated banks, among them Deutsche Bank, Citibank, The Royal Bank of Scotland, Barclays and Morgan Stanley

  18. Banking • The Qatar Central Bank (QCB) and the Qatar Financial Markets Authority will merge into a single entity in 2009 • Qatari government has two main objectives: • To protect the overall economy by supporting productive sectors that mitigate global petroleum risk and have the potential to eventually flourish into major contributors when reserves begin to deplete, far in the future • To develop the entrepreneurial initiative of its own people and motivate them out of well-paying government jobs and into creating their own business

  19. Capital Markets • “Leasing in Qatar is still in its embryonic stage when compared to what is taking place in this segment in Europe and US”- (Ghanim Al-Hammadi, P.84) • “If companies rent a house on a freehold property for $4109 a month, it makes more sense to lease it for $4931 and own it in ten (10) years instead of entering a cycle of dead money”- (Ghanim Al-Hammadi, P.84) • “The Qatari banking sector recorded the largest percent increase in total asset in the GCC region with 45.6% in 2006, reaching $52 billion” – (Ali Al-Emadi, P.86)

  20. Retail • Tourist sector comprises less than 5% of the overall retail market, whereas the local population continues to dominate the demand side • Traditional souks are losing the market share for fast-moving consumer goods (FMCG) to hypermarkets, as rising rents force increased prices • The $4 billion bridge between Qatar and Bahrain, and There is plan for a $3 billion causeway to Dubai, these project will introduce new GCC retail opportunities • Qatar is hopes to increase number of tourist visitors from 700,000 in 2006 to 1.5 million in 2010

  21. Transport & Infrastructure • The Public Works Authority (Ashghal) has set aside $4.9 billion in its 2007-2008 budget for road projects • Port capacity will not meet demand until new Doha port is complete • Qatar airways has seen a 35% increase in passenger numbers year-on-year and is expected to fly approximately 8 million people in 2007 • New Doha International Airport (NDIA) is designed to handle in excess of 50 million annual passengers when it is complete in 2015

  22. Construction • Construction sector saw 17.7% growth in 2006, contributing $2.83 billion to the Qatar’s total GDP $52.7 billion or 5%. Compared to $2.4 billion in 2005 • Housing and construction sector credits has extended by 65% to reach $4.32 billion in 2006 from $2.62 billion in 2005 • By 2009, it is projected that Qatar will have spent some $6.88 billion on setting a number of public works and transportation projects on-line • Education is in the government five (5) years plan with $1.38 billion in the 2007-2008 budget • Health is receiving $1.32 billion in the 2007-2008 budget

  23. Construction • In terms of four and five star hotels due to come on-line between 2007 and 2010, there will be an additional 8468 rooms, doubling existing capacity in Doha alone • The building of 800 new towers over the next ten (10) years has been approved by the Qatari Authorities, and while figures are not available for how many building permits were issued in the capital city Doha after 2005. There are 2241 permits came out in 2005, 1930 in 2004 and 1581 in 2003 • The growth for Qatari projects market reached 1.9% in the first quarter of 2007, after 12.3% growth in the fourth quarter of 2006 • High demand and complete quickly are having negative consequences in two (2) areas, prices and standards

  24. Construction • In March 2007 the average material prices were higher than in neighboring Bahrain and UAE. Prices stated below: • Vinyl tiles = $30 - $40 per sq m • Ceramic tiles = $30 - $48 per sq m • Block wall (200mm) = $27 - $33 per sq m • Cement = $3.30 - $3.58 per bag • The government has been more than helpful in promoting growth in the construction sector, providing a business friendly framework. Qatar remain an essential destination, and will likely stay that way for many years to come

  25. Construction • “Qatar is moving very quickly, and people think this is the boom. I’m afraid they’re wrong, this is only the beginning. We will have a huge surplus of almost $40 billion by 2010-2011”- (Nasser Al-Ansari, CEO, Qatari Diar, P.155) • “Quality (in buildings) has increased dramatically in recent years, and people are now competing on quality, safety and maintenance”- (Nasser Al-Ansari, CEO, Qatari Diar, P.155) • The growth for Qatari projects market reached 1.9% in the first quarter of 2007, after 12.3% growth in the fourth quarter of 2006 • High demand and complete quickly are having negative consequences in two (2) areas, prices and standards

  26. Real Estate • Real estate sector was around 17.7%, with contribution to GDP of 5.4% • The demand for residential accommodation is increasing, expatriate residents are not the only reason; but the increase in population is a second reason • The number of new properties coming onto the market has not been able to keep up with the demand • The rent in Doha went up to 83% in the period between November 2004 and November 2006. This made the rents in Qatar the highest in the GCC. There was no increase in rents in 2007 • Bavaria suits will put 2200 apartments in the market for short and long term rental, with prices ranging from $687.5 per month for short term and $1815 per month for long term

  27. Real Estate • Demands for office spaces reported to be 75,000 sq m in May 2007, and it is expected that there will be 100,000 sq m of extra office spaces in Doha by the end of 2008 • The average rent for category-A prime finished office space as in June 2007 was $60.5 per sq m • Lands in West Bay reached price of $678.5 per square foot • In April 2007, Barwa real estate company announced to build 2000 low-rent housing units at two locations around Doha, rentals to be $962.5 per month, with project completion date set for April 2008 • Um said town, 30 km south of the capital, is likely to make Gulf-area headlines more frequently in the future, is planning to build 5000 housing units there

  28. Real Estate • The municipality of Doha said there should be more than one car parking for every 50 square meter of building space, yet the current reality is between 1:60 • Barwa real estate bank will start operations in the first quarter of 2008. The bank is dedicated to real estate and construction, it will provide sharia compliant products, with share in the bank- now 100% owned by Barwa- to be offered to the public • In the short term, rents for all sizes and classes of property are likely to stay high with some stabilization • “The city is expanding northward, and this is expected to continue for the next 15 years, but here in the center of Doha, you will see a complete picture within the next 12-24 months”- (Khalil Sholy-President and Managing director-(UDC), P.163)

  29. Real Estate • “This is the best system (Qatari system for foreigners), because it gives everybody the opportunity to become part of the country’s growth”- (Khalil Sholy-President and Managing director-(UDC), P.163) • “The demand is going to be more concerned with the quality of the residential or office units”- (Khalil Sholy-President and Managing director-(UDC), P.163)

  30. Real Estate

  31. Tourism • Qatar government announced $18 billion for tourism master plan • “We are still very much in the infancy of the tourism life cycle. The next ten (10) years will be an interesting time” said Jan Poul de Bore, the acting director of the Qatar Tourism Authority (QTA) • The leisure market in Qatar is still underdeveloped • With 960,000 visitors to Qatar in 2006, approximately 90% came on business • Overall hotel occupancy rates ran into 75% in 2006 with an average room rate of $239 compared to $199 in pervious year • QTA is planning to turn Qatar into a major niche tourism player in the region such as sports market, education and medical markets; and MICE (meeting, incentive, conference and exhibition) market

  32. Tourism • Qatar is a very young country and in the advantageous position of being able to look at other destinations, such as Dubai, and avoid the mistakes that other countries in the world have made in the early stages of development

  33. Tourism

  34. THANK YOU www.first-qatar.com

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