DOHA: Despite an increase in the supply of new units, rentals for residential properties in Qatar relatively stabilised during the third quarter of the current year (Q3, 2018) after witnessing two years of decline, noted a latest report released yesterday by a leading real estate consulting firm.
According to the DTZ report (Q3 Qatar 2018) by DTZ, the longest established global real estate advisor in Qatar, the overall rental trends have declined by approximately 10 to 15 percent in the past year alone as supply has witnessed steady increases.
There has been an increase in leasing activities in Q3, however, the vast majority of new lettings are to existing residents of Qatar looking for reduced rents, rather than incoming residents.
The relative lack of new demand currently being generated means that oversupply continues to grow as new developments complete.
Asking rents for vacant apartments in areas such as Al Sadd, Bin Mahmoud Al Mirqab, and Bin Omran have fallen by up to 20 percent since 2016, although a number of new high-quality developments with high specification finishing still command relatively strong rents in these areas. West Bay and The Pearl Qatar have typically dropped by 10 to 15 percent over the past 12 months, with rent-free incentives of at least a month available on the majority of new leases.
The recent drop in rent has restored a sense of affordability to the prime residential sector, following several years of escalating rents. Lower rents have also encouraged residents to seek a higher quality accommodation that may have previously been deemed affordable.
The large pipeline of new prime apartment developments in neighborhoods such as The Pearl Qatar and Lusail is likely to put further downward pressure on rents unless significant new demand is created.
DTZ expects new demand in Qatar to be largely generated by those in the service sector as construction projects complete prior to the Fifa World Cup. Developments such as Ezdan Oasis in Al Wakra now provide modern master-planned residential neighborhoods catering for this demand.
Rental levels of QR4,500 for a one-bedroom apartment up to QR6,500 for a three-bedroom apartment, are currently being sought in some areas in Qatar.
Values have continued their downward trend, which has been evident since 2016. New apartments in The Pearl Qatar are currently available for between QR12,000 and QR16,000 per square metre (sqm), depending on size and apartment type, while in the ‘second-hand market’ recent transactions have typically reflected prices of between QR9,000 and QR11,000 per sqm.
The activity in office leasing market has been dominated by relocations within Doha in recent months with limited new demand. The first commercial office occupiers have now moved into Msheireb, which is likely to become one of Doha’s prime office locations
Office rents in West Bay now average QR130 to QR150 per sqm per month on a floor-by-floor basis for shell and core space, however, premium fitted suites can still command in excess of QR200 per sqm per month.
In the hospitality sector, hotel supply surpassed 25,800 keys by Q3, with 4-star and 5-star accommodation comprising 87 percent of total available keys. An additional 16,000+ hotel room and hotel apartment keys are currently at various stages of planning and construction.
The supply of organised retail accommodation in Qatar has grown by more than 600,000 sqm since 2015. The increase in supply has seen a shift in the market dynamic from undersupply to oversupply during this period resulting in a fall in occupancy rates and rental levels throughout 2018. (Source)