x Abu Dhabi, UAEMonday 22 January 2018

$214m loan to finish shopping hub in Pearl Qatar

United Development Company has raised 780 million riyals to build retail space in the Pearl Qatar.

The Pearl Qatar, a man-made island on Doha's West Bay, is the first place in Qatar where foreigners are allowed to own property. Sean Gallup / Getty Images
The Pearl Qatar, a man-made island on Doha's West Bay, is the first place in Qatar where foreigners are allowed to own property. Sean Gallup / Getty Images

United Development Company (UDC), the developer of the Pearl Qatar project in Doha, has arranged for US$214 million (Dh786m) in financing to complete a shopping centre on the man-made island.

The loan, arranged with Doha Bank, will be used for construction of retail space in Porto Arabia, the cluster of 31 residential towers around a 400-slip marina, the company said in a brief statement filed with the Qatar bourse.

Pearl Qatar is a residential, retail and resort area covering 4 million square feet on a man-made island on Doha's West Bay. The first project of its kind in Qatar to allow non-Qataris to own property, the Pearl will eventually house 41,000 people.

More than 3,000 buyers have taken possession of homes in the Pearl, the company said in July.

UDC, a diversified company with interests from fashion to energy, has been moving in recent months to raise funds to pay off debt and complete its projects.

Last month the board approved a plan to raise the company's capital by 50 per cent.

The Pearl Qatar, the company's flagship project, has struggled to find buyers in recent years.

During a panel discussion as part of Cityscape Global, Fahad Al Ghunaim, the chairman and chief executive of First Qatar Real Estate Development Company, which developed a tower in the Pearl, said sales virtually stopped for a year after the global financial crisis in 2008.

But sales picked up in the past year, primarily to buyers from around the GCC, he said.

Leasing rates for units also stabilised in the first half of this year, as construction slowed.

"The slowdown in new units coming to the market has been one of the contributing factors to the stabilisation, coupled with the increased demand for Pearl-Qatar units," Elaine Jones, the chief executive of Asteco,a property firm, said in a recent report.

The Pearl is emerging as one of Qatar's preferred locations, "owing to its contemporary design and increased amenities as development phases continue to be completed", Ms Jones said.

A two-bedroom apartment in the Pearl rents for about 13,000 rials (Dh13,112) a month, unchanged from the first quarter, Asteco reported. But sales transactions around Doha were low, as a "gap remains between primary and secondary prices", Asteco said.

UDC posted a net profit of 358.4m rials for the first six months of this year, up from 353.2m rials in the same period last year. Revenue jumped 29.6 per cent, to 831m rials, up from 641m rials.

UDC has pushed ahead with construction on the Pearl in the past year.

The Porto Arabia retail complex will enter an increasingly competitive market.

"There is significant supply coming up," said David Dudley, an nalyst with Jones Lang LaSalle. "And that's going to affect the market."

High-quality locations will draw shoppers while older centres will suffer and "not all will survive", Mr Dudley said.

United Development shares fell to 19.15 rials yesterday, down 0.13 rial on the day, and off a recent high of 23.20 rials in April.