Doha: The recent law amendment of expanding freehold ownership in residential and commercial sectors will attract investors in Qatar’s real estate sector. Qatar’s real estate will remain a buyer friendly market over the next quarters of 2019 due to softening in prices, according to leading regional consulting firm ValuStrat.
“The recent law amendment of expanding freehold ownership in residential and commercial sectors have provided further incentives to foreign owners to have outright property ownership in Qatar,” Pawel Banach, MRICS – ValuStrat’s General Manager, Qatar told The Peninsula.
According to ValuStrat’s first quarter performance review report, Qatar’s estate market witnessed continuation of overall correction phase where prices have become more competitive.
Residential capital values and rents weakened and office rents continued to favour tenants. Falling Average Daily Rates (ADRs) have given rise to occupancy in all hotel categories. “Prices and rents continue to fall, however, the rate of adjustment is slower, indicating they have reached a more representative level in several areas of Qatar. Competitive prices can partially explain the jump in transaction volume by 20 percent annually this quarter,” Pawel Banach, MRICS – ValuStrat’s General Manager, Qatar told The Peninsula. “Existing and upcoming supply in 2019 will entail further softening of prices, ensuring Qatar remains a buyer-friendly market over the next quarters of 2019. In a bid to entice tenants and buyers, a range of attractive incentives were offered by landlords,” he added.
According to the report, Qatar’s ValuStrat Price Index (VPI) for Residential Capital Values is a 100-point valuation-based index with its base set in first quarter of 2016, stood at 73.4 points. Countrywide residential capital values declined by 18.3 percent compared to the same quarter two years ago, down 9.9 percent Year-on-Year (YoY) and 2.2 percent Quarter-on-Quarter (QoQ).
The average capital value of a residential unit stood at QR8,186 per square meter (sq m). More specifically, apartments were QR11,934 per sq m and villas stood at QR6,320 per sq m. Compared to the previous quarter, apartment capital values softened by 0.8 percent, whereas villa values fell 2.5 percent. Villas in West Bay Lagoon, Al Waab, Fereej Soudan, Ain Khalid Abu Hamour, Duhail and Muaither and Al Kharaitiyat experienced quarterly declines up to 10 percent.
In the residential rental market, the downward pressure on rents witnessed throughout 2018 carried over to first quarter of 2019. Citywide residential asking rents declined 10.3 percent over the past 12 months and 2 percent since the fourth quarter of 2018. Secondary apartment and villa locations such as Al Wakrah, Al Khor, Muraikh, Old Airport, Al Gharrafa and Umm Salal Mohammad experienced annual rental falls of up to 10 percent.
“Capital values of villas in Ain Khaled declined 6 percent quarterly, however, its rental values dipped 1 percent causing gross yields to elevate to 3.8 percent. In Zig Zag Tower, capital values and rents declined by 4 percent and 0.6 percent respectively YoY leading to a gross yield of 6 percent. Overall gross yields increased to 5 percent. This trend is expected to prevail throughout 2019” said Anum Hasan, Senior Market Research Analyst at ValuStrat.
