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The government and housing rents

May 08, 2014 - 4:40:21 am

One of my friends wanted to be a real estate owner, so he agreed with a real estate office to buy suitable land, and because he could not afford it, he decided to take a loan from one of the banks in Qatar.

The architectural blueprints were submitted to the licences complex at the Municipality of Doha, which made a set of demands, which were fulfilled.

The blueprints were then submitted again to the licences complex for approval of services such as water, electricity, telephone lines, roads, civil defence, sewage and drainage. If any of these departments asked for a change, the Private Engineering Office needed to modify the blueprints and submit them again.

As for the civil defence engineers, it was an entirely different story. After one engineer approved changes in the blueprints, another engineer disapproved of them and asked for fresh changes. After months, he finally got the construction licence with the support of some mediators.

When my friend requested a construction completion certificate, he was shocked by the disapproval of the civil defence authorities, who asked for changes in the safety equipment which amounted to a radical amendment. Again, after a long while, he got the certificate, but the money spent was beyond his expectations, so he had to increase the rents from that decided at the time of construction to recoup what he had spent.

The conclusion is that the rise in rents and land prices is the result of the following: 

First: A shortfall in supply of housing units. Qatar receives around 200,000 expatriates every year. According to latest statistics, the number of residential units completed in 2011 was 6,066 units. These units include 4,781 villas and 662 traditional houses. Around 8,000 housing units are required for expatriates every year and around 3,000 units are required for Qatari citizens.

Therefore, it is not strange to find more than one family sharing a villa. According to legislation, expatriate workers need 640,000 square metres of buildings, while what is being built does not exceed 150,000 sqm.

In such situations, it is normal to see farms and manors being converted into labour camps. Land costs more than construction, and we are not in Makkah, Hong Kong or Japan to complain about scarcity of land.

Second: Building permit procedures, which we can say are the main factor deterring investors from investing in the real estate sector.

These procedures involve three entities. The first is engineering offices licensed to operate in Qatar. The qualification of these offices is under question. Do they have unqualified engineers who work from home without viewing the blueprints?

The reason behind denial of approval and repeated changes in blueprints is that these offices are not familiar with Qatari laws.

The civil defence authorities, for example, did not change their requirements before and after the Villaggio fire. They tightened supervision before granting any permission, but the engineering offices are not complying with the requirements.

The second entity is architects at Doha Municipality, who apply rules without being familiar with the layout of the buildings, the roads, the availability of electricity, water, sewage and drainage, which results in repetition of procedures. 

The third entity is service engineers, who work according to their own standards, as some of them give their approval while others don’t, which indicates lack of a uniform code or coordination. 

For instance, there are two, identical towers in the Pearl area; one of them got approval while the other one did not, maybe because every engineer has his own vision.

The government controls the real estate sector in terms of providing land, determining land use (whether it will be for housing or commercial activity) and the height of buildings in each area, speeding up or slowing down licensing procedures, determining the real estate loan rate of banks and their tenure through Qatar Central Bank,  fixing the fees for licences and buildings, approving services like electricity and water supply, and determining the rent Qatari property owners can charge. 

In other words, the government controls land prices and rents.

In the end, I would like to say that there are many Qataris who want to invest in the real estate sector but get repelled by land prices and procedures to get licences for buildings. 

The solution is for the government to rent out plots in areas out of plan to the private sector according to specific conditions, like in the industrial area. The government should also set standards for all services, make engineers aware about the changes in law, and punish those who do not comply with the regulations.

All the aforementioned procedures are enough to speed up the real estate investments so that citizens could take the advantage of the construction boom and find housing units smoothly and easily.