The Kuwaiti is looking for his seventh permanent boss in four years following Dougie Freedman's dismissal on Sunday.
First team coach Paul Williams will take over from Freedman until the summer, with the Nottingham Post reporting that the club favours a foreign head coach.
But speaking to the Alan Brazil Sports Breakfast on TalkSPORT on Monday morning, Pearce, who was relieved of his duties 13 months ago, provided a list of factors which could deter a potential new appointment.
"They're in an embargo, they won't be out of that until - I think - next summer," he said. "Other clubs' academies in the local area have gotten a lot better - at Derby and at Leicester. You can throw other things into the mix - a bit of disillusionment from the fans and maybe even from the staff as well.
"Consequently, you just don't turn up and all of a sudden don't do things right and then your relationship with other football clubs is fractured so they won't lend you any loan players.
"They'll see the fixtures out until the summer and then start again basically. There's a real building process being needed to put into place there.
"The club needs a little bit of structure, it needs a little bit of stability from top to bottom, and the way the chairman is at the moment he's not setting that structure in place to actually enable that to happen."
Forest were beaten 3-0 by Sheffield Wednesday at the City Ground on Saturday, despite the Owls playing the last 14 minutes with 10 men, and the performance prompted a furious row between Freedman and Al Hasawi the following morning, according to the Telegraph.
The Tricky Trees sit 14th in the Championship as a result, but are only nine points above the relegation places, with sixth-placed Wednesday 14 points ahead of them.