Recent Trends in Qatar Real Estate

In the wake of the global financial crisis, we have noticed an increased desire among real estate industry participants in the Middle East, and particularly in Qatar, to modify their approach to documenting their agreements. In our opinion, there is a noticeable trend away from short-form agreements, towards the parties setting out their legal and commercial relationships using increasingly sophisticated documentation.

It is unclear what the primary motivation for this trend may be, but contributing factors are sure to include the parties taking a more risk-averse approach to legal documentation in the light of the financial crisis. The fallout from those global problems shone a light on contractual relationships and brought the rights and responsibilities of the parties sharply into focus. What we are witnessing may also be in response to the tightening of credit requirements from financiers in the region and internationally; undoubtedly, there are other contributing factors.

Suffice it to say that there has at times been a gap between the long form detailed legal documentation which has gained currency in other jurisdictions and the accepted commercial practice in this region. As described later in this article, it seems that this gap is now closing. As the market matures we are delighted to note this as a welcome and encouraging sign of the continued positive development of the real estate industry in this region.

Leasing documentation

This trend has been particularly clear in the willingness by the industry to more fully document and regulate landlord and tenant relationships. We have detected a notable shift away from the acceptance of short form documents substantially covering only key commercial terms of the transactions. Now, both landlords and tenants are increasingly interested in regulating the ongoing relationship and allocation of risk between the parties through the term of the lease.

Some of these risks include those set out in the table at the foot of this article.

In the development sector, where a real estate development is to be constructed and then occupied by a tenant through the term of a lease, there is an obvious increase in the willingness of parties to enter into more detailed documentation. For example, the parties are now keen to identify and allocate those risks that arise during the development phase of a project, compared to those that occur during the operation and use of the constructed property. Moreover, to underscore the differences, parties are now more likely to document those arrangements through separate agreements; the development phase covered by an agreement for lease and the operational phase covered by a lease which only takes effect on completion of the development.

Some of these risks include those set out in the table at the foot of this article.

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