05 June 2009
DOHA: Ezdan Real Estate Co, Qatar's largest developer by market value, said yesterday it planned to sell some of its real estate portfolio as it seeks to raise funds for billion-dollar projects in the next five years.

Ezdan's deputy chief executive officer, Samer Wahbeh, said the company, which complies with Islamic law, would build schools, hotels, residential units and hospitals in Qatar.

"We are still quite bullish about the market and have an aggressive expansion plan and we need to fuel this growth for the company," Wahbeh said.

Ezdan, which nearly doubled its net profit in the first quarter, is likely to earn QR98m ($26.9m) in the second quarter, Wahbeh added. The company reported full-year net profit of QR1.4bn in 2008. Qatar's property sector has suffered price drops of about 30 percent in the last six months. But the economy could grow 7 percent or more in real terms this year as it boosts gas production, its central bank has said.

To help finance new real estate projects, Wahbeh is in talks to sell about 4 percent of its portfolio, worth about QR600m, to a real estate investment trust (REIT) based in Malaysia, Wahbeh said.

"We are looking at good opportunities to sell part of our property at the right price," he said, adding the company was looking at similar REIT vehicles in Singapore and the Dubai International Financial Centre.

Qatar is spending billions of dollars on infrastructure and property projects as it seeks to reduce its reliance on oil and gas income, which contribute 60 percent of gross domestic product and 66 percent of state revenues.

Wahbeh did not rule out pursuing real estate projects outside Qatar. Ezdan expects to conclude a take over of International Housing Group, first unveiled in March, before the fourth quarter, Wahbeh said. "This will be done through share issuance to International Housing Group by Ezdan," Wahbeh said. "It is going to be a major competitor to Ezdan and it makes sense to acquire it," he said, estimating Ezdan's assets are worth between QR14bn and QR16bn, including projects under construction.

The companies share a chairman and both focus on developing property for the middle-income segment--a fact that has enabled Ezdan to shrug off a property market decline since middle-income housing is facing a lack of supply, he said.

"If we are going to revise our prices, it is not going to exceed 10 percent, which is the maximum," Wahbeh said. On the whole, Qatar home prices have fallen as much as 30 percent in the last six months due to the global slowdown, but lingering demand for property will limit price weakness, real estate services company Jones Lang LaSalle said in May.

Earlier this year, the government ordered Ezdan rival Barwa Real Estate to merge with Qatar Real Estate Investments Co as it sought ways to help companies weather the financial crisis.

© The Peninsula 2009