All questions

Structuring the investment

Law No. 13 of 2000 (Foreign Investment Law as amended) regulates foreign investment within Qatar and sets down a general principle that foreign investors are allowed to invest in all sectors of the national economy provided they have one or more Qatari partners owning a minimum of 51 per cent of the entity's capital. Accordingly, non-Qataris wishing to incorporate an entity in Qatar are generally restricted to owning a maximum of 49 per cent of any such entity.

Under the Foreign Investment Law, non-Qatari companies are not permitted to invest or trade in real estate. However, since the government's approval of foreign ownership of real estate by virtue of the Foreign Ownership of Real Estate Law, some foreign investment activities can take place in the real estate market provided that the investing company is established in Qatar and the company adheres to the restrictions that apply to foreign ownership, such as the inability to purchase land outside the investment areas. For example, a GCC fund would be able to own freehold properties in both the areas permitted to GCC citizens and the areas permitted to foreigners where the underlying ownership of the fund lies with GCC nationals. However, if the underlying ownership of the fund involves non-GCC citizens, then freehold would be restricted to the areas permitted to foreigners.

The incorporation of companies that are fully owned by foreign shareholders (whether GCC or other nationalities) in Qatar whose objects include investing or managing real estate assets, or both, within the areas permitted to GCC citizens or areas permitted to foreigners, require the approval of the Ministry of Economy and Commerce. Normally, the articles of association of such companies will contain objects for investing in, managing and leasing of real estate assets in the particular permitted area. The Ministry of Economy and Commerce has discretion with regard to the documents that must be provided before registering a company above the limits of the Foreign Investment Law.

The Real Estate Development Law permits non-Qatari companies to obtain a specific licence to conduct real estate development activities provided that:

  1. the activities of the real estate development are within the investment areas where freehold ownership is available for non-Qatari nationals and within the land space permitted to be owned;
  2. the activities are conducted by a company permitted to conduct real estate development activities in its place of incorporation. The incorporation documents should be authenticated by the Qatari diplomatic mission or consulate in the country of incorporation, or by an equivalent authority in the country of incorporation;
  3. the company has at least 10 years of previous experience in construction and building developments prior to the submission of its application to conduct real estate development activities in Qatar, and additionally has a good track record of performance; and
  4. the company is to be incorporated in Qatar with a commercial registration.

Real estate developers and contractors are expected to become compliant with the Real Estate Development Law within six months of it coming into force. The Law provides for financial and criminal penalties for those who practise real estate development activities without a licence being issued.

i Common forms of companies registered in Qatar

All juristic entities incorporated in Qatar (other than Qatari Financial Centre entities) must be established pursuant to the provisions of the Commercial Companies Law (the Companies Law). Foreign investors are often interested in incorporating a limited liability company (LLC) for the purpose of developing or conducting real estate activities in Qatar.

The incorporation of a Qatari LLC requires registration with the Ministry of Economy and Commerce to obtain a commercial registration certificate that includes the company's activities to engage in real estate development, including acquisition, disposition and rental activities. At least 51 per cent of the shares in the Qatari LLC must be owned by Qatari nationals or a company wholly owned by a Qatari national.

Foreign investment

As previously mentioned, the ownership of real estate property in Qatar is generally restricted to Qatari nationals. However, the Foreign Ownership of Real Estate Law was passed in 2004 to permit foreigners and Gulf Corporation Council (GCC) citizens (whether individuals or companies) to own properties in certain investment areas as defined in related ministerial resolutions. Non-Qataris cannot own real estate properties outside these designated investment areas.

The Foreign Ownership of Real Estate Law defines 'investment areas' as 'lands allocated for carrying out commercial, industrial, tourism, residential and educational activities and any other activities the investment in which is permitted in accordance with the applicable laws in the State'.

Resolution No. 5 of 2006 permits GCC (individual or juristic) citizens to freehold ownership in the following areas: Lusail, Khuraj and Fox Hills (areas permitted to GCC citizens). Any registration of property, registration of real rights or transfer of ownership will be handled by the Real Estate Registration and Authentication Department through Qatari Diar Real Estate Investment Company, which is the company entitled to manage each of the mentioned areas permitted to GCC citizens.

In addition to the areas permitted to GCC citizens, GCC citizens are also entitled to freehold ownership in the areas designated for foreign investors. Ministerial Resolution No. 20 of 2004 determined such areas to be the Pearl, West Bay Lagoon and Al Khor. Similar to the registration process in the areas permitted to GCC citizens, any registration of property or real rights is to be administrated by each area's administrator. United Development Company (UDC), as the master developer, is the administrator for Pearl, and is required to liaise with the Real Estate Registration and Authentication Department in respect of purchased properties in the Pearl area. In practice, very few plots of land have been subdivided in the Pearl area, and no title deeds have been issued to purchasers of the units. The units are still considered by the Real Estate Registration and Authentication Department to be owned by UDC until they are subdivided and title deeds are issued in this regard.

Another option available to non-Qataris is the right of usufruct of real estate for a term of 99 years, renewable for a similar period, in 18 investment areas determined by Ministerial Resolution No. 6 of 2006 (the Lusail development is one of these areas). There are no specific usufruct areas that are permitted only for GCC nationals; all of the above areas are open to all foreigners.