Qatar Population Explosion Fed by Expats and Gas
Population continues to grow despite projected slowdown for Qatar's robust economy
The population of Qatar continues to explode, driven by large scale-immigration by western expats attracted to the robust economy based on natural gas exploitation. The early results published last week of a census conducted by the country’s statistics office indicated that the population has now reached 1.69 million, an increase of 128 percent from the last census in 2004, which put the population at around 744,000.
Due to Qatar’s massive reserves of natural gas and the construction of large scale liquefaction facilities, it has become the world’s wealthiest country per capita, a far cry from the pearl-fishing based subsistence economy of less than a century ago. The nation sits on an estimated 900 trillion cubic feet of natural gas, and through generous government investment and successfully attracting foreign capital, Qatar has become the world’s largest liquid natural gas (LNG) exporter. This economic base has fueled growth of 18.5 percent this year and is projected by the International Monetary Fund to achieve a further 14.3 percent in 2011.
The population boom has been nearly exclusively due to the influx of expats, with only 200,000 of the current 1.69 million residents being actual natives of Qatar. As Qatar’s energy projects reach maturity, both the rate of economic and population growth are expected to level off and fall to normalized levels. Simon Williams, chief economist of HSBC Middle East, observed that “It has been an exceptionally rapid phase of economic growth, and that’s required strong gains in the work force. As the economy matures, the pace of demographic growth will moderate as well…. Many people are involved in the build out of Qatar’s energy infrastructure – when the work is done, they will go home.”
By the end of this year, the last two LNG plants are scheduled to be completed as the final phase of a network of 14 such installations. The completion of the project will result in a measurable dip in the demand for skilled and unskilled labor – the first of the projected normalizing reductions in population and growth. Ibrahim Ibrahim, economic adviser to the Emir, told reporters that whilst ‘double digit’ growth for the next two years can be expected, expansion of the economy will ‘cool’ to an annual nominal rate of no more than 9 percent thereafter, with a direct corollary effect for population growth.
There are some projections that suggest that the expat based population explosion will continue for some time even after the maturation of the natural resource programs. Farah Ahmed Hersi, senior economist at the Masraf al Rayan bank, said ‘We believe Qatar’s population will continue to grow at a steady base of 5.3 percent per year, as there are still plenty of untapped resources in the country, including some energy-related resources that would fuel growth in the foreseeable future and serve as a magnet for expatriates”.
The amount of housing units in Qatar has increased by around 146 percent since the prior census in 2004, with a further 18,000 buildings under construction, including the massive $20 billion Pearl development. However, residential compound rents have already started to dip by about 10 percent, attributed to the global economic slowdown. Rents in the top-tier office towers in the New District of Doha have fallen by almost 25 percent since their peak in 2008, with occupancy rates down from 95 percent to 85 percent.
Regardless of Qatar being not as recession-proof as was originally thought, confidence in its prospects by expats and investors remains high, with unparalleled growth projected well into 2013.
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