DOHA // Qatar's bid to fund a series of world-class golf courses through off-plan sales is in danger of ending up in the rough.
Barwa Real Estate Group, one of the country's biggest developers, this week revealed plans for the Lusail Golf Residential Development, which is expected to feature a Greg Norman-designed course.
But analysts say there are serious question marks over a funding model blamed for the spectacular collapse of property prices in Dubai four years ago.
A statement from the developer describes a 3.7-million-square-metre site that will also include a boutique hotel and shopping centre.
It has been reported that the cost of the project will run to about US$4.9 billion (Dh17.99bn) and include about 4,000 homes funded through off-plan sales and sub-development.
But such large-scale developments financed by the deposits and down payments of investors have a below-par track record in the Gulf.
"Off-plan in Qatar or Dubai is not going to receive the same level of interest because investors remain risk-averse, as they should be," said Matthew Green, the head of consultancy and research at CBRE in Dubai.
"If you need a mortgage, there's a fair chance this is not going to stack up for you," he said.
Several luxury golf course developments were launched during the peak of the property market in Dubai and sold off-plan to investors who bought into the prospect of double-digit capital appreciation.
But most suffered severe construction delays and prices fell sharply for any units that had not reached completion by the time the market collapsed in late 2008. It has left some courses in Dubai surrounded by half-built houses after contractors pulled their crews off sites.
"There is very limited demand for off-plan sales at the moment. Most investors are looking for completed or nearly completed properties," said Craig Plumb, the head of research at Jones Lang LaSalle in Dubai.
"It's a flawed method of sale. If you are confident in your product, why don't you build it and then sell it?"
Jumeirah Golf Estates, which hosts the finale of the the Race to Dubai event, was one of the biggest golf-themed developments ever undertaken and was supposed to include four courses named after the elements: earth, water, wind and fire. So far, only two of them have opened in what was intended to be a $7bn project.
The Tiger Woods golf course planned for Dubailand became one of the biggest casualties of the property downturn.
Launched in 2007 by Tatweer, the developer of Dubailand, it should have been finished about three years ago. But work has been suspended on the site, where 100 luxury villas were planned in addition to 75 mansions and 22 buildings being marketed as "palaces".
More than $125bn is expected to be spent on major projects in Qatar in the run-up to the 2022 Fifa World Cup. That has led to fears of a glut of empty property in the country's capital after the event.
Still, alternative funding methods and a phased approach to construction may boost the viability of projects such as the Lusail golf development.
"A golf course is probably not a bad idea. There's pretty much one course in Doha and it is not particularly easy to play if you're not a member," said Mr Green. "If you can generate the capital to put in the infrastructure, you can look to sell off a phase of lots for people to develop their own villas, which in this region is still quite popular."
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