DOHA: With a mix of 775 new apartments and villas during the second quarter of this year, the total number of residential units in Qatar reached 288,100 by the end of June 30, 2018. However, the additional supply of residential units to the existing stock during the period led to a decline in capital values, both yearly as well as quarter-on-quarter.
The second quarter 2018 ValuStrat Price Index (VPI) for the residential sector displayed overall 10.9 percent annual and 4.5 percent quarterly declines in capital values. Villas and freehold apartments saw quarterly price drops of 5.2 percent and 1.1 percent respectively.
Apartment supply consisted of 600 units from delivered projects in Al Mansoura, Al Muntazah, Lusail (Fox Hills) and Al Aziziya. Completion of villa compounds in Umm Salal Mohammad, Umm Salal Ali and Al Wakrah added 175 new properties to the existing stock, and expected completions for 2018 have been adjusted downwards from 14,200 to 12,800 due to delayed deliveries, according to a latest report by ValuStrat, one of the leading consulting groups in the region.
Amongst freehold apartments, The Pearl witnessed the highest overall decline in values followed by Lusail and West Bay Lagoon. Whilst some villa locations had only marginal reductions, others experienced steeper falls.
Quarterly capital depreciation of 0.7 percent to 5.4 percent was seen in clusters of Ain Khaled, Abu Hamour, Al Waab, Muaither, New Al Rayyan, Al Thumama, Al Dafna, Onaiza, Duhail and Umm Salal.
Declines of 7.3 percent to 12.5 percent were seen in Al Wakra, Wukair, West Bay Lagoon, Al Khor and Old Airport and Al Hilal. Gross yields stood at 6 percent for apartments and 4.3 percent for villas, averaged at 4.9 percent for all residential units.
The ValuStrat research report, citing official data provided a macro-economic snapshot of the local economy, noted that consumer price index (CPI) increased 0.24 percent y-o-y and decreased by 0.68 percent during the second quarter.
Transport, Education, Food & Beverage and Health were the main drivers of annual inflation. Housing and Utility Expenses Index decreased 4.6 percent y-o-y and 1.2 percent q-o-q, and the Real Gross Domestic Product (GDP) increased 1.4 percent y-o-y (QR199.2bn), driven by growth in the non-hydrocarbon sector (4.9 percent y-o-y in Q1 2018).
Qatar Central Bank increased deposit rates by 25 basis points to 2 percent, post US Federal Fund increment by the same amount, and population is estimated at 2.58 million as of Q2, 2018.
The report also noted government’s ratification of a draft law which will allow foreigners to own 100 percent of businesses in all economic areas, except for financial sector and commercial agencies involved in the purchase of real estate.
During the first two months of Q2, 2018, oil export revenue and total imports value increased by 29 percent and 2.9 percent y-o-y, respectively.
This year’s Cityscape exhibition unveiled major residential projects such as Gewan Island in The Pearl (660 units), second phase of Giardina Villas (66 units), Wadi One in Mshiereb Downtown (72 units), Al Kharaij Tower in Lusail (250 units), Baywalk Towers in The Pearl (244 units) and second phase of Place Vendome in Lusail (350 units). All projects are expected to be ready by 2021
The report also said that the median transacted prices for houses fell 6.2 percent y-o-y and 3.9 percent q-o-q. Transactional volumes for houses increased 16.4 percent y-o-y and 12.5 percent q-o-q. Median transacted price for houses was QR2.7m. Five largest ticket sizes were seen in The Pearl, Al Thakhira, Al Qetaifah and Umm Karn for developed plots ranging from 1,500 sqm to 11,000 sqm.
Majority of transactions took place in Al Daayen (24.5 percent) followed by Doha (22.7 percent) and Al Rayyan (21 percent). And some 40 transactions were recorded for residential buildings with 48 percent of transactions above the median ticket price of QR10.1m concentrated in Najma, Umm Ghuwailina, Al Sadd and Fereej Abdul Aziz.
According to the report, median asking rents declined 12.4 percent y-o-y and 2.5 percent q-o-q. Median monthly asking rents for apartments fell by 3 percent against Q1, 2018. The highest quarterly fall in rentals was seen in Al Mansoura, Fereej Bin Mahmoud and Al Sadd area.
As per ValuStrat research, less than 50 percent of households in Qatar can afford the current average rental of QR7,250 for a typical apartment in Doha City.
The median monthly asking rents for villas decreased by 2 percent q-o-q. Villas in areas outside of the city centre experienced the highest quarterly declines of up to 8 percent. Monthly leasing rates for two-bedroom apartments are QR9,500-17,000 in The Pearl and QR7,000-9,000 in Lusail.
