High land prices deter investors in hospitality

May 19, 2014 - 7:31:39 am

DOHA: A significant rise in the prices of plots of land over the last several years has pushed potential investors in the hospitality sector on back foot. Experts from the industry seek government intervention to curb on the unprecedented hike in the prices of land properties, which is discouraging fresh investors due to low rate of returns.

“Massive investments in the hospitality sector have pushed the prices of land properties skyrocketing. As a result, a huge chunk of capital (up to 70 percent) goes to pay for the land alone, which is discouraging fresh investments in the sector,” Abdulaziz Al Emadi, a Qatari businessman was quoted by a local Arabic daily as saying, yesterday.

Al Emadi, highlighting the low rate of expected return on investment, said: “There is a kind of race among the businessmen to own a hotel or a luxury property which has caused the expected rate of return on investment very dicey. At times, it may take more than a decade to recover the invested capital in the hospitality industry.” 

He said that aiming at developing and promoting a vibrant hospitality and tourism industry by attracting private investments in the sector, government should intervene and provide some sort of incentives and relief. However, he noted that the government, in line with the National Development Strategy 2011-16 and Qatar National Vision 2030, is striving to achieve economic diversification by encouraging private investments in the sector, but more needs to be done to safeguard the interests of private investors. 

“Most of the investments in the hospitality industry are taking place in building 5-Star hotels and resorts, but it is equally important to develop a significant number of budget-hotels to provide tourists and guests a wide range of options,” added Al Emadi. 

The Peninsula

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