Qatar’s real estate transaction value witnessed a significant year-on-year growth of 15.8 percent to QR9.52bn during the the first half of 2019. The real estate transaction number in the first quarter was improved by 8.2 percent y-o-y. The number of transactions , excluding June, stood at 1,754, according to KAMCO Research.
However, residential rents continued to decline in Q2, 19 as asking rents were down 1.5 percent quarter-over-quarter. The fall in rentals is reportedly higher for villas in secondary locations, and apartments in areas such as Najma, Al Sadd, Old Airport and Al Wakrah.
Office rents in Qatar receded by 4 percent quarter-over-quarter in the second quarter of 2019, as the addition of seven office buildings, amounting to a total of 200,000 sq.m put additional pressure on rents. Office rents in West Bay declined by 4 percent, as vacancy rates in Qatar remained high at around 35 percent; KAMCO Research noted citing market data.
On the GCC market trend, the KAMCO Research noted, real estate sale transactions (excluding Bahrain) rebounded in the first half, as total value transacted improved by 9.7 percent to $45.9bn, as compared to $41.9bn in H1-18. The number of transactions was also gained by a higher 18.9 percent over the same period to reach 281,168 transactions in H1, 19.
The transacted value in Kuwait moved up by 10.5 percent as compared to H1, 18. Nevertheless, KAMCO estimates suggest that the higher transactions came at the cost of lower achieved prices, as the average value per transaction in the GCC declined by 7.8 percent to around $163,200 in H1,19 from around $177,000 per transaction in H1,18. On the lending side, aggregate credit to the real estate sector disbursed by GCC banks at the end of Q2-19 grew 3 percent quarter-over-quarter and 4.6 percent to reach $202.7bn.
“Although we see some intermittent signs of residential ownership demand coming in at lower price levels, prices and rents in the GCC are still witnessing downward pressure from the existing oversupply prevalent in the market, and upcoming supply”, KAMCO analysts said. Government initiatives aimed at improving legislation for broadening home ownership beyond the luxury market should aid home occupier demand as well.
Office space take-up however is skewed towards specific space requirements based on smart technologies and flexible fit-outs, while aggregate demand remains weak. Kuwait on the other hand is continuing to witness strong demand for premium office spaces, a trend which is expected to continue in the near term as no significant supply additions are expected.
Retail mall owners in the GCC continue to look at Entertainment and F&B as the new drivers for retail space demand, while trying to combat lower demand from retailers who are more looking at expansion via e-commerce capabilities.
