Qatar's hospitality, residential real estate, retail, and telecoms sectors are set to reap tangible benefits from the World Cup, which begins in two weeks, according to Standard & Poor's, a global credit rating agency.
The country reportedly had about 30,000 rooms at the end of 2021 but expects to see a more than 30% increase in 2022 as many new hotel openings have been fast-tracked for the World Cup, S&P said in a report.
Highlighting that the authorities had blocked about 80% of existing rooms for teams, sponsors, and VIPs; it said having met that demand, they have only just begun releasing several thousand unallocated rooms.
"We expect the event to further lift average daily room rates, which had already started to recover in 2021, and lead to close to full occupancy during the event," it said.
In the longer run, though, the rating agency views that the new additions will weigh on occupancy and room rates.
On real estate sector, S&P said positive effects will come mainly from higher rental and occupancy rates. At the end of 2021, rents had already started picking up but sales prices have hardly improved.
Rental revisions are notable but vary depending on property type, it said. However, after the World Cup ends, the inventory build-up will lead to a correction in rental rates that will gradually affect 2023 results as leases are renewed, S&P said.
"Economic pressures, including higher interest rates, will soften demand by end-2022, sustaining pressure on rents and sales prices in 2023," the report said.
S&P also expects mortgage transactions to slow as the Qatar Central Bank follows the Fed's rate hikes, and its lending rate is now 4.5% following the September 2022 revision (2.5% at the end of 2021), with likely further hikes in 2023.
Still, real estate properties in Qatar remain attractive for some investors, as the Qatari riyal is pegged to the US dollar, which provides stability when emerging currencies are depreciating against the dollar, as well as a relative safe haven in the region.
About retail sector, S&P said higher international visitors will increase traffic in malls, which have been gradually recovering since the pandemic.
"Higher footfall will propel retail sector recovery, thereby temporarily increasing the variable lease component that will benefit mall operators. Still, new projects this year have increased retail space by over 20%, leading to additional capacity that will put pressure on rental rates and occupancy in the longer run," it said.
Telecom operators in Qatar (Ooredoo and Vodafone) will also benefit from an influx of football supporters.
Operators have incurred some additional costs as they get ready to welcome up to 1.5mn visitors, but "we expect those to be offset by higher seasonal profits as roaming revenues increase along with data consumption", the report said.
Ooredoo, which has been selected as the official global connectivity services provider for the event, is expected to capture the lion's share of growth.
This will be limited given the scale of domestic operations, with Qatar contributing 34% of its overall consolidated revenues and 42% of Ebitda (earnings before interest, taxes, depreciation and amortisation) as of June 2022.
"We expect Ooredoo to report an increase in pre-paid customers in its fourth quarter, as well as higher roaming and data revenue," S&P said, adding it would also benefit from higher video feeds and data transport for the media broadcasters that will be relaying the event globally.
"World-leading fibre and 5G penetration in Qatar will enable Ooredoo to address higher demand, in our view," it added.
The country reportedly had about 30,000 rooms at the end of 2021 but expects to see a more than 30% increase in 2022 as many new hotel openings have been fast-tracked for the World Cup, S&P said in a report.
Highlighting that the authorities had blocked about 80% of existing rooms for teams, sponsors, and VIPs; it said having met that demand, they have only just begun releasing several thousand unallocated rooms.
"We expect the event to further lift average daily room rates, which had already started to recover in 2021, and lead to close to full occupancy during the event," it said.
In the longer run, though, the rating agency views that the new additions will weigh on occupancy and room rates.
On real estate sector, S&P said positive effects will come mainly from higher rental and occupancy rates. At the end of 2021, rents had already started picking up but sales prices have hardly improved.
Rental revisions are notable but vary depending on property type, it said. However, after the World Cup ends, the inventory build-up will lead to a correction in rental rates that will gradually affect 2023 results as leases are renewed, S&P said.
"Economic pressures, including higher interest rates, will soften demand by end-2022, sustaining pressure on rents and sales prices in 2023," the report said.
S&P also expects mortgage transactions to slow as the Qatar Central Bank follows the Fed's rate hikes, and its lending rate is now 4.5% following the September 2022 revision (2.5% at the end of 2021), with likely further hikes in 2023.
Still, real estate properties in Qatar remain attractive for some investors, as the Qatari riyal is pegged to the US dollar, which provides stability when emerging currencies are depreciating against the dollar, as well as a relative safe haven in the region.
About retail sector, S&P said higher international visitors will increase traffic in malls, which have been gradually recovering since the pandemic.
"Higher footfall will propel retail sector recovery, thereby temporarily increasing the variable lease component that will benefit mall operators. Still, new projects this year have increased retail space by over 20%, leading to additional capacity that will put pressure on rental rates and occupancy in the longer run," it said.
Telecom operators in Qatar (Ooredoo and Vodafone) will also benefit from an influx of football supporters.
Operators have incurred some additional costs as they get ready to welcome up to 1.5mn visitors, but "we expect those to be offset by higher seasonal profits as roaming revenues increase along with data consumption", the report said.
Ooredoo, which has been selected as the official global connectivity services provider for the event, is expected to capture the lion's share of growth.
This will be limited given the scale of domestic operations, with Qatar contributing 34% of its overall consolidated revenues and 42% of Ebitda (earnings before interest, taxes, depreciation and amortisation) as of June 2022.
"We expect Ooredoo to report an increase in pre-paid customers in its fourth quarter, as well as higher roaming and data revenue," S&P said, adding it would also benefit from higher video feeds and data transport for the media broadcasters that will be relaying the event globally.
"World-leading fibre and 5G penetration in Qatar will enable Ooredoo to address higher demand, in our view," it added.
