DOHA: The combined value of Qatar’s real estate transactions in the first quarter of this year (Q1, 2018) reached over QR4bn, witnessing a marginal decline compared to the corresponding period last year, mainly due to a fall in prices of real estate properties.
However, the decline in prices led to corrections in rentals almost across the country making residential, commercial and retail spaces more affordable and competitive, noted a latest report.
The first quarter 2018 review issued by leading regional consulting firm ValuStrat reported increased affordability in residential capital values and rents. Office rents became more competitive. Less pressure was seen on the retail sector, and increased occupancy for hotel apartments and 3-star hotels.
Pawel Banach, General Manager at ValuStrat Qatar, said: “Lower oil prices since late 2015 have continued to exert downward pressure on capital and rental values for property across Qatar. Despite the more recent pick-up in oil prices, the status quo remains the same with a downward trajectory evident in the performance of real estate sector.”
Banach added: “Falling prices led to increased affordability, making real estate prices more competitive. Looking ahead, it will be interesting to see if initiatives such as a widening of freehold residential locations are considered as a way of encouraging further investment in the sector.”
A total of 1,200 housing units were delivered in Q1, 2018 bringing the total residential stock to 287,325. Fiscal consolidation in both the private and public sectors contributed to limited staff allowances and new employment opportunities. Coupled with an increase in new supply, this resulted in citywide rental declines.
A further 13,000 units are projected to be completed in 2018 of which 75 percent are concentrated in Lusail and The Pearl.
Qatar’s residential capital values have been declining for the last two years. However, the rate of decline appears to have slowed over the last 12 months to a rate of less than 3 percent each quarter. The weighted average value of a residential unit during Q1, 2018 stood at QR8,955 per sqm. More specifically, apartments were at QR12,700 per sqm and villas stood at QR7,091 per sqm.
As of Q1, 2018, gross yields averaged 4.8 percent, with 6 percent for apartments and 4.2 percent for villas.
Citywide residential asking rents declined 11.8 percent over the past 12 months and 3 percent since the last quarter of 2017. Rents for villas declined by 7 percent with biggest declines experienced in West Bay, Old Airport, Lusail and Al Sadd.
“Despite current peripheral development, buyer demand continues to favour central Doha where most business activity is concentrated. Old Airport, Old Al Ghanim, Mushiereb, Doha Al Jadeed and Umm Ghuwailina are emerging as the most competitively priced rental areas. Projected future deliveries and competitive listing prices in these areas is expected to sustain pressure on rental levels and continue to attract tenants as centre areas become more affordable”, said Anum Hasan, Market Research Analyst at ValuStrat.
Hasan added: “To better understand the trend in prices, and complement existing transactional data, we launched the ValuStrat Price Index which tracks the sale and rental rates of representative residential properties across the country. With this initiative we can update all stakeholders on price changes and impact on yields, so they can make more informed investment decisions.”
As of Q1, 2018, office supply reached 3.94 million sqm with an addition of 50,000 sqm during this quarter. Approximately 910,000 sqm is expected to be added during 2018, of which 70 percent is concentrated in Lusail. Citywide increases in vacancies and new supply is causing downward pressure on rentals in secondary locations. Asking rents for offices fell 17.5 percent compared to last year and was 9 percent lower than the fourth quarter of 2017.
This year began with 26,246 hotel rooms within 134 hotel and hotel apartment buildings. Out of the total supply of hotel rooms, half of them are categorised as 5-star properties followed by 4-star (37 percent) and 3-star (11 percent). Some 24 hotel establishments (46 percent are 5-star rated) are expected to be added by the end of this year, assuming no construction delays making the total supply approximately 32,000 keys.
