Qatari banks face growing risks from real estate downturn, says Fitch

A view of Doha Bank Tower (R) in Doha, Qatar. (File/AFP)
Updated 16 May 2019
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Qatari banks face growing risks from real estate downturn, says Fitch

  • Qatar has seen its rental prices slide by 20 percent over the past three years
  • Analysts expect these prices to fall further as a wave of projects tied to the tournament come online over the next three years

DOHA: Qatari banks face growing pressure from high exposure to the country’s sluggish real estate market, hit by oversupply tied to preparations for its 2022 World Cup, ratings agency Fitch said.
The tiny but wealthy Gulf state has seen its rental prices slide by 20 percent over the past three years. Analysts expect these prices to fall further as a wave of projects tied to the tournament come online over the next three years.
Qatar has had the added challenge of a diplomatic and trade boycott imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt since 2017. The move has hit tourism and dampened demand for real estate from foreign buyers.
The bloc accuses Qatar of supporting terrorism, which Doha denies. Qatar has since moved to liberalize its real estate sector, opening up new areas to foreign buying in a bid to boost demand.
While Qatari banks have largely bounced back from liquidity issues arising from the 2017 boycott, when around $30 billion in deposits left the system, Fitch said deteriorating real estate assets are now a “key risk.”
“Qatari banks’ concentrated exposure to the weakening domestic real estate market is an increasing risk to asset quality,” Fitch said, naming Doha Bank, Commercial Bank, and International Bank of Qatar as the most exposed.
“The real estate and hospitality sectors, already facing falling prices due to oversupply in preparation for the 2022 World Cup, have been further pressured by reduced tourism and occupancy rates resulting from the boycott of Qatar.”
Fitch said however that Qatari banks’ credit ratings would not be affected “as they are driven by our assumption of the authorities’ propensity and ability to provide support to the banks, if needed.”
Qatar injected about $40 billion into its banking system in the months after the boycott in order to boost liquidity.


British Airways to resume Pakistan flights next week after a decade

Updated 23 May 2019
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British Airways to resume Pakistan flights next week after a decade

  • BA halted service to Pakistan in the wake of the 2008 Marriott Hotel bombing in Islamabad
  • BA will begin the London Heathrow-Islamabad service with the Boeing 787 Dreamliner

ISLAMABAD: British Airways will resume flights to Pakistan next week a decade after it suspended operations following a major hotel bombing, becoming the first Western airline to restart flights to the South Asian country.

BA halted service to Pakistan in the wake of the 2008 Marriott Hotel bombing in the capital Islamabad that took place during a period of devastating Islamist militant violence in Pakistan.

Security has since improved, with militant attacks sharply down in the mainly Muslim country of 208 million people, reviving Pakistan as a destination for tourist and investors.

“The final touches are coming together for the airline’s return ahead of the first flight on Sunday June 2,” British Airways said in a statement. It will launch a three-per-week service to London Heathrow, it said.

“We’re on board,” Pakistani Civil Aviation spokeswoman Farah Hussain said about the flights resumption.

BA, which is owned by Spanish-registered IAG, will begin the London Heathrow-Islamabad service with the airline’s newest long-haul aircraft, the Boeing 787 Dreamliner.

At present, only loss-making national carrier Pakistan International Airlines (PIA) flies directly from Pakistan to Britain, but its ageing fleet of planes is a frequent source of complaints by passengers.

Middle Eastern carriers Qatar Airways, Etihad Airways and Emirates have a strong presence in Pakistan and have been eating into PIA’s dwindling market share. Turkish Airlines also lays on a regular service to Pakistan.

Islamabad has been running international advertising campaigns to rejuvenate its tourism sector, which was wiped out by Islamist violence that destabilised the country following the Sept. 11, 2001 attacks in the United States and the U.S.-led war in Afghanistan.

“We hope customers in both the UK and Pakistan will enjoy the classically British service we offer, with thoughtful bespoke touches,” Andrew Brem, Chief Commercial Officer at British Airways, said in BA’s statement.

BA said there will be a halal meal option in every cabin and the airline would also ensure sauces in every meal do not contain alcohol or pork.