Property Ownership in Qatar
By David Chaddock
Qatar Business: Etiquette and Business Practice
Some Qatar residents wish to buy houses to escape the sky-high cost of rent, others, before the recent credit crunch hit, hoped to make a mint on rising prices. Whatever your reasons for purchase, buying a property abroad and under foreign laws is never easy. In this article update, David Chaddock, author of Qatar: A Business Traveller's Handbook, lays out the rules and regulations governing property ownership for foreigners.
Until very recently, when Law 17 of 2004 was enacted, it was impossible for non-Qatari nationals to own or enjoy long-term lease-hold on property in Qatar. Until then Law 5 of 1963, with the blunt title of "Inability of Foreigners to own Fixed Assets in Qatar," held sway, and this meant only Qatari Citizens were permitted to own property.
The new law, rather cumbersomely entitled "Regulating Ownership and Usufruct of Real Estate and Residential Units by Non-Qataris," opened the doors for foreigners to invest in property for either their own use or as a pure investment to rent to others.
The arrival of the (more user-friendly named) "Foreign Ownership of Real Estate Law", giving property rights to non-Qatari nationals, effectively changed the face of the real estate market in Qatar.
Of course there it's never as simple as it seems. Whilst the rights are there, it's not possible to own just anywhere. Qatari citizens can of course own anywhere, as long as the government doesn't decide it wants it, "...expropriation thereof in the public interest" as it says in Article 7 of the law. Non-Qatari & GCC national buyers (and the rest of this article refers to those two classes of investor) are restricted in locations.
Following a treaty of The Cooperation Council for the Arab States of the Gulf ("GCC"), Qatar passed Law 2 of 2002 which permitted nationals of GCC member States to possess not more than three real estate assets within the residential regions of Qatar provided that the total did not exceed 3000 square metres.This could be increased with special direct Ministerial appoval.
GCC nationals may also invest and own real estate in "investment areas" declared by cabinet resolution being Lusail, Al Khuraj and Thaayleb Mountain. These investment areas can be allocated for carrying out a wide range of activities including commercial, residential, industrial, tourism, and educational activities.
For the rest only three areas are available for freehold purchase. These are The Pearl, West Bay Lagoon and Al Khor Resort Project. However, there are another 18 areas in and around Doha* that have been designated for foreigners to acquire the "right of usufruct", which effectively means purchasing a leasehold from the property owner.
In general, a "right of usufruct" is a right to enjoy property belonging to another person and to us it for one's own profit, utility and advantage.
Law 17 of 2004 provides very clear rules on how this is to be managed in Qatar, which safe-guards the individual purchaser's of a right to usufruct. This is generally embodied in a leasehold agreement with the property (building / developer) owner.
The law allows the tenure of the initial lease for up to 99 years and to be renewable. The right of usufruct is to terminate upon the expiry of its defined term, or upon the mutual agreement of the parties, or the destruction of the property, or the expropriation by the government. However, if either of the last two conditions occur then the owner of the property must indemnify the usufructuary (leaseholder) for the remaining period of the right to usufruct (lease).
The leaseholder retains the right to sell his lease or pass it to his or her heirs. The property owner must not include anything in the lease agreement that would interfere with the rights of the leaseholder. The property owner can even sell the property but may not include any terms that diminish the rights of the leaseholders. Should the property owner die his heirs must assume all the same legal commitments in respect to the property.
The desirability of investing in property in Qatar was enhanced by the enactment of Law No (2) of 2006 that authorises the Minister of the Interior in Qatar to issue an entry visa and Residency Permit to non-Qataris (subject to certain conditions), due to the individuals interests under the Foreign Investment Law and the Foreign Ownership of Real Estate Law.
This is an important advantage for many as it provides the benefit of avoiding the need to have the right to residence (and exit from the country) controlled by a third party Qatari Sponsor.
The conditions for issuing a Residency Permit (RP) remain subject to the existing medical and character requirements, plus a minimum size of property; currently 80 square metres. If the primary interest is to get a residency based on property ownership don't look at a 50 SqM studio!
Once the RP is issued the holder may sponsor his wife, children and parents. The law specifically refers to "wife" rather than "spouse" or "husband". While there are no restrictions imposed on women owning property the subject of a women sponsoring her husband remains unclear.
The new laws and their possibilities provide a benefit for the country, the developers and the foreign investor. However, for the individual investor, until there is property built buying into the dream remains just that. Purchase of plots in West Bay has occurred. And people are living in or renting out properties they have built in this location. The other two locations where it is possible to buy freehold (The Pearl and Al Khor Resort) remain very much a "work in progress", although the first tower on The Pearl is likely to open its doors to residents in early 2009.
The other 18 areas of course depend on there being developments for which the owners are ready to provide long-term leases under the "right to usufruct". Suitable property in both the form of compounds and separate villas have been built but with rents and land values at their current levels it seems unlikely that owners are going to change the habits of a lifetime.
List Of Available Areas
... began life as an engineer before finding his true vocation as an international Businessman. He has worked in developing markets for nearly four decades, starting in West Africa and migrating (via the far East) to the Middle East in 1976. Tasked with opening and expanding new markets for English, American and French multi-national manufacturing companies he brought considerable experience to Qatar where he has assisted in and witnessed Qatar's dreams come true.
Substantial discounts are available on David's books for bulk buyers - see Qatar.pdf for details.