Hefty government spending is expected to boost demand for real estate in Qatar despite a threat of oversupply, property consultant DTZ has said in a report.

Qatar is pouring billions of dollars into civil infrastructure development to diversify the economy away from hydrocarbons and accommodate its expanding population.

Over five years it plans to build a $25 billion rail network, a $11 billion new airport, a $5.5 billion new deep-water seaport and a $1 billion crossing linking the new airport with mega-projects in Doha. It will also spend $20 billion on new roads.

'This spending will create a knock-on effect on the rest of the economy, contributing to increased consumption and demand for better quality housing, office and retail facilities,' DTZ associate director Mark Proudley said.

Qatar, the world's largest exporter of liquefied natural gas, was one of the fastest growing economies worldwide in 2009. The economy grew at an average pace of 17.4 per cent over the past five years and is set to largely outperform fellow Gulf oil producers in coming years.

'The retail market remains comparatively strong and does not suffer from the oversupply characteristics at this time, which prevail in the commercial office and residential markets. That market dynamic has led to increases in average rental levels,' the report said.

A Reuters poll last month showed that Qatar's economy was likely to expand by 15.5 per cent this year.

Some projects have stalled recently due to the property market slump. In August, Barwa Real Estate said it delayed its Al Khor project due to market conditions.

But Qatar has largely escaped the storm that pummelled neighbouring Dubai, with only minor injury due to state moves to control development of new offices, shops and homes.

Signs of stabilisation in Qatar's property market and renewed investor confidence has led to a positive outlook for the sector over the remainder of the year, the report said.-TradeArabia News Service