Investments based on solid foundations Emerging Qatar 2007

Investments based on solid foundations

Emerging Qatar

2007

Investments based on solid foundation

Country Profile 03

Population 03

Geography 04

Natural Resources 05

Politics 06

Economy 09

Banking 16

Capital Market 18

Retail 19

Transport & Infrastructure 20

Contents Page


Construction 21

Real Estate 26

Tourism 31

Contents Page


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


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


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

Country Profile


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)


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


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)


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

Economy


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


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

Economy


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)


“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

Economy


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


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

Economy


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


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

Banking


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)


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


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


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


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

Construction


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


“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

Construction


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


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

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)

Real Estate


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)


Rental Prices Across the GCC

Average year-on-year increase (%)

11/2004 – 11/2006

Rent for 2-bedroom flat($/month, 2006 Average)

Doha831930

Dubai601850

Muscat29860

Manama27710

Kuwait24700

Riyadh21680

Real Estate


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


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

Tourism


Tourism

Visitors Mix

20062010

Conference/Incentive2.5%10%

Group tour12%15%

Leisure3%15%

Aircrew7%5%

Corporate discount56%35%

Full rate16%15%

Other6%5%


THANK YOU

www.first-qatar.com

Documents

Investments based on solid foundations Emerging Qatar 2007