File photo for representation only. Salim Matramkot © The Peninsula
With the absence new mall opening in the fourth quarter of 2018 (Q4 2018), the headline rents of retail space at malls remained relatively stable during the fourth quarter of 2018 (Q4, 18). The third edition of ‘Shop Qatar’ helped improve footfall of all participating malls by 25 percent during the Q4.
Leading real estate advisory firm ValuStrat noted in its latest review report that the organised retail stock remained at 1.8 million square metres (sqm) of gross leasable area (GLA) by the end of 2018. However, the rents are expected to face downward pressure as nearly 450,000sqm GLA retail space is projected to be added during 2019.
Capital values and rents in the residential sector slightly weakened, rents continued to favour tenants in the office sector. Falling Average Daily Rates (ADRs) have given rise to occupancy in all categories except 5-star hotels. Headline rents for malls remained relatively stable.
Pawel Banach, General Manager of ValuStrat-Qatar, said: “Qatar’s real estate sector during the final quarter of 2018 witnessed a continuation of the tough trading conditions experienced in Q3, however, the rate of decline continues to slow down.”
Banach added: “In 2019, we expect the market to continue to show resilience backed by additional foreign investment opportunities introduced by the government, robust public spending on construction and improvements in the non-hydrocarbon sector.”
Qatar’s Residential ValuStrat Price Index (VPI) where a 100-point base was set in Q1 2016, now stands at 75 points. Countrywide residential capital values declined by 17.5 percent compared to the same quarter in 2016, 9.3 percent compared to Q4 2017 and 1 percent compared to Q3 2018.
The weighted average value of a residential unit stood at QR8,334 per sqm. More specifically, apartments were QR12,064 per sqm and villas stood at QR6,477 per sqm. Values of freehold apartments have declined marginally by 1.2 percent on a quarterly basis, whereas values of villas fell by 1.1 percent QoQ. Compared to previous quarters, villas coped well and only a few clusters such as West Bay Lagoon, Al Waab, Fereej Soudan, Umm Salal Mohammad and Al Kharaitiyat experienced quarterly declines of up to 5 percent. In Q3 2018, gross residential yields averaged at 4.9 percent for all unit types.
Citywide residential asking rents declined 10.8 percent over the past 12 months and 2.2 percent since the third quarter of 2018. Due to influx of supply, apartment rents declined 10.6 percent annually and 2.3 percent quarterly. Similarly, corrections were observed in the villa market, as rents declined 12 percent compared to 2017 and 2 percent QoQ.
“In 2018, overall gross yields remained relatively stable for all residential units. Residential performance of ‘The Pearl’ (for apartments) and ‘Al Wakra’ (for villas) surpassed all other locations. Capital values of villas in Al Wakrah declined 19 percent, however, its rental values fell 7 percent causing gross yields to increase by 1 percent. In The Pearl, capital values and rents decreased by 8 percent and 5 percent respectively YoY. It will be interesting to see how interactions of capital values and rents will affect the yields in 2019,” said Anum Hasan, Market Research Analyst at ValuStrat.
Residential supply reached 290,000 units as of Q4 2018 with the delivery of 1,265 apartments and villas in The Pearl, Lusail, Umm Salal, Duhail and New Salata. Projected completion for 2019 have been adjusted upwards from 10,600 units to 13,700 units releasing previous construction backlogs.
