Qatar Real estate, Pros and Cons

7 Replies

Hello

I am a real estate investor, i have extensive experience in the aforementioned market, and I would start with the prons

1) tax free

2) high yield in some Area

Cons

1) lack of data and reports related to real estate, in the USA, there are many reports. In Qatar, there are some report but it is not like the USA and the western world

2) foreigners cannot buy in certain areas

I am choosing to invest here, because I have the data and experience, for me, it is too hard to invest outside because i have to learn everything from zero. Who is willing to invest in Qatar, he/she shall study the market carefully, If i want to purchase any real estate outside Qatar, I will study the market for at least 3 months.

Please don't hesitate to ask me any related question of this subject

Can foreigners buy property?   If you can are they friendly to non-citizens buying property or do you have to do risky work arounds?  Are both the rent profits and capital gains tax free?   What are rents vs purchase price?   Can you hit the 1% rule?   Is there appreciation?   Is there reliable property management?   Who is your target renter?   Do things change if US reduces forces there or changes off base housing policies?   How is the country doing on adding job base?   Is the currency stable?

Please find my answers below



Can foreigners buy property? 

Yes

If you can are they friendly to non-citizens buying property or do you have to do risky work around? 

no, it is 100% legal (and friendly) for non-local to purchase in many areas, and foreigners might obtain a visa permit to live

, in other areas it is illegal, but some non-local do it anyway, they use some laws which is risky and the law is grey in these areas.


Are both the rent profits and capital gains tax free?

yes, if you are an individual it is free, there is rent profit taxes, but if you own a company, the rent profit might be taxed ( i am not sure about this), but i am  sure 100% there is no capital gain tax for everyone

What are rents vs purchase price? Can you hit the 1% rule?

Yes you could, but it is hard to get this yield in houses or flats. However, in commercial or logistic real estate, the net roi could be between 8% 15%, but this not very common in housing and flats investment

Is there appreciation?

yes, there is appreciation, but in the last 5 years there is a correction period for many reasons, mainly because oversupply in some areas, check the below official website for the real estate index, you could check in the long run there is appreciation. 

http://www.qcb.gov.qa/English/...

Is there reliable property management?

yes and they are very professional, there are international/western companies for this, and also there are very good  local companies

Who is your target renter? 

depends on the real estate setcor, there many types of renters, blue collar, white collar, commercial, storage, admin. etc. Blue collar worker are important player in the real estate industry

Do things change if US reduces forces there or changes off base housing policies?

 Americans in Qatar are not the major players in the local real estate industry, their population is less1% of the total population,  the major players are the governmental project and private sector projects. 

How is the country doing on adding job base?

There are always trends to achieve this, the real GDP will be increased within 5 years, as I read in many international websites

Is the currency stable?

The Qatari Ryal is  very stable because it depends solely on the USD from 40 or 50 years

Updated 4 months ago

Correcting grammar and spelling error

Updated 4 months ago

correcting grammer

Hey Mike,

If you have a lot of experience investing there, I assume that you've been doing pretty well. I generally don't like invest in countries that don't equally treat foreigners under the law. And, with the restrictions you mentioned, Qatar is one of those.

Even if that wasn't the case, I still would have issues investing there so I was wondering what is your take on those?

One of the main rules of real estate investing is to invest where the economy is diversified (except if you invest in short-term rentals in touristic areas of course). The Qatari economy is very concentrated and entirely dependent on energy in the form of oil and natural gas. What makes that worse is that both of these industries are hugely challenged over the long term and real estate is generally a long term investment.

There is a constant oversupply of oil and it's not only because of Covid. It existed way before and, as a result, the oil price has been in a bear market for years now. This isn't likely to get better with the upcoming mass adoption of electrics car and the growing shift towards renewable energy.

Thankfully for Qatar, it's the world's biggest exporter of liquefied natural gas in the world (LNG). While it's not a renewable source of energy, it's still less polluting. Unfortunately for Qatar, there is a huge amount of shale gas in North America that can be produced at de facto no cost since it's the byproduct off shale oil production. Until a few years ago, there was no way for that gas to get out of North America and compete on the international markets. However, these all changed recently when LNG liquefaction terminals were started to get built in the US and Canada, along with LNG supertankers to transport the liquid gas. It's therefore doubtful that Qatar will be able to continue selling on the international market indefinitely at a huge premium to North American gas prices.

The, there is the usual the political risks in the Middle East region. Aside from the general enduring explosive situation in the Middle East, Qatar has been the victim of an economic embargo imposed by its own former allies from the Gulf.

I'm left wondering whether it's worth investing in a place with all these risks, where I don't get equal legal with the locals under the law and all this to make a return of maximum 8 to 15%.

The tax advantages sound great but they are of little benefit to US citizens and residents and to residents of most countries, given that they have to pay taxes on their worldwide income regardless of the tax laws in Qatar.

Thank you for your feedback

Laws are now more friendly to overseas investors nowadays and there is a trend to be more friendly, and you are right, the economy is not very diversified as the USA , this is a fact no one could deny it. There is a Qatar investment authority which has oversea assets to generate income besides the main income(oil/gas), there are plans to diversify more and more. Recently Mircosoft and UBS and other well-known companies invested in Qatar, there are plans and trend to make international companies to invest more. As a matter of fact, overseas companies are investing since 1970s in Qatar, I do not think they are stupid to invest in high-risky country.  Just google American and British companies in Qatar. There are many international companies invested  heavily in Qatar since 1970s and they are still here.

Please check the LNG price and the real GDP within 10 and 15 years, as per my information the LNGprice will not be decreased, if you have a source deny this information, please point it out, it will be great, i am in the same shoes as you, i want to know further information about the macroeconomic factors which affect investment and real estate

For the safety issue, currently, Qatar is the safest country in the world, check the below link, for the political issues, there are many good allies(USA, Gemany ,Britian. etc.) to stop any illegal acts by others. Qatar has an official security agreement with NATO.

I agree with you, if one find better real estate high roi with more advantages and less risk, he/she should select the maximum roi with low risk, please point out the best town for real estate investment and predicted roi and the tax legislation, so i might consider it as well. I know Brandon Turner is generating more than 16% net ROI but i do not know the secret :) . I could generate 20% net but it will be very rare deals

https://foreignaffairsnews.com...

If invest in any town outside my country, I will consider both the macroeconomic factors and microeconomic factors

Many investors like to invest oversea because they like to diversify the risk (do not put all your eggs in one basket)

Since 1910s my grandfather and father invested heavilyy in the real estate locally,  it is not paradise, there is a good time and bad times, but in the long run they succeeded financially, and i hope i could be like them. I am sure this story is not unique, I am pretty sure in almost all countries this story is repeated in history since the babylion.

@Mike Jordan

Regarding the LNG story, there were many articles about it when the US was going to start exporting LNG back a few years ago. I haven't followed it since but I'm sure you can easily search on Google.

If you don't find it that way, you could look at the financial statements of Cheniere Energy, the pioneer in US LNG exports. They have signed mega supply contracts so you could look at the price of their latest sign contracts. I'm not sure if you could find the same info about Qatari prices as I assume that the whole business is government owned.

Which again is my main issue with Qatar. Not only the economy isn't diversified; it's almost entirely dependent on the prices of oil and LNG, which Qatar cannot control. It's great (for the country and its citizens) to read that they're making some efforts to diversify. I hope they're gonna do enough of it quick enough before oil (and maybe gas) eventually become irrelevant. 

Thanks, i will search more for the LNG, i am always concerned about the macroeconomic factors, this what i found as the below links, they suggest there will be a small increase, but no one could know for sure

https://knoema.com/ncszerf/nat...

https://www.statista.com/stati...

I agree with you about income diversity,  it is a must, not for nations only, even for an individual investors, do not put your eggs in one basket.