Following the recent lifting of the embargo on Qatar, by Saudi Arabia, Egypt, the United Arab Emirates and Bahrain, the stage has been set for greater economic growth and stability in the Gulf. For Qatar, this is an opportunity to diversify its economy, reduce its reliance on natural gas, and regain access to regional supply chains. For the rest of the GCC, this is a much-needed, timely development, to recover from a prolonged oil slump and combat the pandemic through coordinated efforts. Experts like Fitch and Moody’s believe that normalization of ties will benefit non-oil sectors too, particularly real estate. So, what makes the removal of Qatar blockade so consequential?

Qatar’s core competencies

According to the IMF, Qatar is the only GCC country to achieve fiscal surplus, since the embargo came into effect in 2017. In fact, Qatar’s policies, to offset the consequences of the embargo, have been largely successful. The severing of regional trade led to ties with competitive Eastern and Western economies, to secure food supplies and other essential commodities. Thanks to its sizable sovereign wealth fund, and natural gas reserves that account for almost 14% of global reserves, Qatar was able to weather the geo-political storm. Interestingly, the nation’s real estate sector remained buoyant during this period of turmoil.

Of resilience and potential resurgence

Qatar’s residential sector has registered healthy numbers in the past couple of years, despite unfavourable market forces. In the second quarter of 2020, total residential transactions were valued at $1.48 billion. The same period witnessed the likes of Sotheby’s International Realty, a luxury real estate brand, enter the Qatar market. As per recent reports, 972 new building permits were issued, and short-term rentals are in demand, ahead of the upcoming 2022 FIFA World Cup.

Immediately after restoration of ties, logistics and supply-chain sectors witnessed a knock-on effect. Qatar’s main stock market index ended the day with 1.4 percent gains. Days later, Qatar’s finance minister flew to Cairo, to attend the inauguration of a billion-dollar luxury hotel of Qatari company Diar – which had been stalled for three years. And Qatar Airways, which had diverted flights to circumnavigate neighbouring countries, is now offering competitive prices to customers, due to savings on fuel and distance. This is perhaps a hint of all the possibilities that lie ahead.

Qatar announced the cancellation of mandatory Qatari sponsorship for property ownership, along with new residency policies. Around 25 areas, of which nine are available on a freehold basis and rest on 99-year leaseholds, are now open for foreign investments. These include the coveted man-made Pearl island and the brand new Lusail city close to the World Cup stadium. Ranging from $200,000 to over a million dollars, each investment slab accompanies temporary or permanent visa benefits. And although similar schemes exist across the Gulf, Qatar offers a significantly lower entry threshold.

This development has particularly invigorated expat interests, particularly from those who have stayed in Qatar for many years, but couldn’t invest due to ownership challenges. In Qatar, where 90% of the resident population are expats, this could be a gamechanger. In addition, Qatar’s growing relationship with China could aid resurgence in the property market. Qatar, in fact, is the only country in the Gulf region with a currency-swap agreement with the Chinese central bank. Qatar’s sovereign wealth fund is expected to invest $15-20 billion into Chinese real estate and infrastructure. The Chinese, in return, have been instrumental in the development of Lusail Stadium for the 2022 FIFA World Cup and Hamad Port in Doha. Institutional Chinese investors are now likelier than ever to buy into Qatar’s real estate market.

Since current real estate market economics are closely tied to the pandemic, it is hard to estimate the full potential that revived ties will unlock. But considering that one outcome will be to enhance Qatar’s management of the pandemic, the impact could manifest sooner than expected. Of course, this momentous moment warrants an acknowledgement of Kuwait’s painstaking diplomacy and the US’ assistance in normalization of relations, which will not only enhance Qatar’s competitiveness across sectors, but also bring solidarity and stability in the Gulf.