That is when big-time development projects in preparation for FIFA World Cup 2022, some of which were awarded this year, are expected to be launched.
Supplies of basic construction raw materials currently exceed demand, so the prices (of these materials) are stable.
“But there is nothing to be happy about as equations might change from next year when work on mega projects takes off, pushing up demand,” said a building industry insider on grounds of anonymity, insisting the issue was sensitive.
The population has been rising rather rapidly, jumping government forecasts, and it is likely to have reached close to the two million-mark, if it has not breached that barrier.
Affordable housing, with monthly rents of QR5,000 and QR6,000, is hard to get due to shortages that have been yawning despite soaring demand as more expatriates in middle-income brackets have been coming in than those in higher categories.
“Low-rent houses are also carrying a premium, and might get more expensive simply because supplies are limited and demand is peaking,” a real estate market operator said, asking not to be named.
“As demand keeps surging, owners would up the rentals to take advantage of market conditions. It is a natural outcome in such situations.”
Higher-end and luxury housing stocks, on the other hand, continue to pile up, causing almost a glut. “Developers are building homes for the rich as though every foreigner who is coming here has a high-income profile,” said another real estate market operator.
Naturally, a vast majority of those coming in are semi-skilled and unskilled workers but labour lodgings are in short supply, and the result is that their rents are also hitting the roof.
Qatar’s planning officials insisted earlier this year they didn’t see inflationary pressures mounting in a repeat of the nightmarish price rise witnessed after the Asian Games in 2008.
But their own figures for inflation released recently show rents soared more than six percent in a year, indicating a disturbing trend.
“I think given the situation, prices should begin spiralling from 2014 when mega development projects begin in a big way,” another construction industry insider said.
This is what happened during the 2006 Asian Games.
The impact of hectic development at the time was eventually felt by the common man as prices of almost everything went up, with rents wreaking havoc, said the insider.
It all began with occasional shortages of basic construction raw materials in those days that saw their prices escalate.
Companies doing projects passed on the extra financial costs on to project owners.
The owners, in turn, passed on the burden on to end users. “That’s how the markets operate. Of course, this time also that would most likely be repeated, so you can’t escape price rise this time as well,” the insider warned.
The size of Qatar’s economy is $200bn and almost an equal amount is anticipated to be spent on mega infrastructure and supportive projects over a period of five to seven years.
“So how can you possibly escape higher inflation,” wondered the insider, suggesting that the bitter lessons learnt during the 2006 Games have helped and might aid in streamlining the supplies of the raw materials this time, but nonetheless a higher inflation regime could be hard to fight back.
Raw material supplies remain government-controlled and so are their pricing, so the chances of shortages and price manipulations are not much this time around, insist officials. The government has, in fact, made advance forecasts of the requirements of various raw materials as the projects progress. And just how they would be sourced, the government appears to be confident about.
But not many in the construction industry seem to be convinced as some key raw materials have already become expensive.
Officials maintain that is because some materials like aggregates (loosely called here as ‘gabbro’) sourced mainly from Ras Al Khaima and Fujairah in the UAE, and bitumen, from Saudi Arabia, have become expensive in exporting countries.
Saudi Arabia is also witnessing a construction boom, and Dubai’s real estate market has begun recovering. Construction industry sources say the testing times actually begin for the government the next year when the demand for raw materials start going up.