Buying versus Renting
14 Apr 03:02 AMSector : Construction Country : Qatar
By: Johnny Archer
As an increasing number of expatriates move to Qatar, the question of whether one is better off renting or buying property crops up on a regular basis. Many of the arguments for and against are universal, and will be familiar to most people, but it is important to be aware of the characteristics of the local property market when considering purchasing a home in Qatar.
Many expatriates in Qatar expect their stay to be temporary, and will be attracted by the flexibility that renting provides, however for those planning to stay in Qatar for a prolonged period, the question of whether they should buy property becomes more relevant.
The first thing to be aware of is the restrictions on where expatriates can purchase in Qatar. Non-Qataris can only acquire absolute ownership of property in six designated areas, these being The Pearl-Qatar, West Bay Lagoon, Al Khor Resort, Lusail, Fox Hills and Al Khuraj (residents of Doha will be aware that not all of these areas have been developed yet). Local legislation also permits expatiates to hold Leasehold rights for a period of 99 years in 18 other designated investment areas.
While the law limits expatriate purchasers to the areas they can live, an obvious benefit of purchasing resulted from Law No. 17 of 2004, which entitles purchasers to apply for residency visas for a period of up to five years. Such visas, if granted, can be extended to the person’s immediate family, and automatically terminate once a person ceases to be an owner of property.
One of the main questions people will ask when deciding whether to purchase a property in Qatar is “how safe an investment is it?” In a more mature property market, potential purchasers can usually make this decision with a confidence that has been underpinned by historic market performance, and often a more predictable macro-economic environment.
The construction boom in Qatar has resulted in an enormous increase in residential stock with even greater numbers projected in the coming decade. Rents and prices for residential property have increased significantly and many believe that values will continue to increase. These factors, on the face of it, appear to provide an environment that encourages owner occupation rather than renting.
The unprecedented scale of development required for World Cup 2022 cannot be accomplished without a large scale speculative development based on projections of population increases. The property boom, while providing exciting opportunities for developers and property investors alike, it is not without its risks. Potential purchasers should be aware that capital appreciation is not guaranteed, as the sharp fall in property values in 2008 demonstrated. Should the scale of development in Qatar result in a prolonged period of oversupply of certain types of residential units, the potential exists not just for a fall in values, but also problems in selling in such a market.
It is important to keep an exit strategy in mind. How easy or difficult might it be to sell the property when the time comes? While future market conditions are out of a purchaser’s control, there are two areas that should be looked into before committing to a property.
Firstly, it is likely that the property will be in a development that is subject to a co-owners association. It is vital that the property is under the control of a professional Property Management company. Not only will the benefits of a well-managed property be reflected in its saleability and its future value, the procedures for the sale of the unit may involve substantial paperwork. This could result in a drawn out process if the appropriate management procedures are not in place. One should also get confirmation of the associated costs of ownership, such as service charges and master community charges, before making a purchase.
We would advise any expatriate buying in Qatar to consult with a lawyer who has experience in dealing with local property transactions. The law in relation to property is evolving quickly in Qatar, however, consistent with other Gulf countries, has its own nuances that expatriate investors may find unfamiliar. A lawyer can provide advice on issues such as ownership and registration of title (which may not always be clear cut), your obligations as a property owner, and, if anything goes wrong, the best approach to dealing with real estate disputes in Qatar.
Ultimately, whether somebody decides whether to rent or buy will be dictated largely by their personal circumstances. The financial implications will be the major consideration, however we would not underestimate the importance of getting professional advice on the intricacies of the local property