A New Wave of Retail Real Estate Supply Hits the Market Qatar Q4 2016
• In November, Qatar signed up to a cut of 4.5% in crude output as part of OPEC’s attempts to boost oil prices by restricting production. It is hoped that the OPEC deal will restore confidence in the economy and in the real estate market in Qatar, after a period of uncertainty
• Prime office rents fell by an average of between 10% and 15% in 2016, due to lower demand and an increase in new supply. An increase in demand witnessed in Q4 will need to be maintained to avoid market oversupply levels in 2017 and beyond
• Following a fall in residential rents throughout the first 9 months for the year, rents stabilised to some degree in Q4. Overall, residential rents fell by an average of between 5% and 10% in 2016.
• There has been an increase in good quality ‘affordable’ accommodation in peripheral suburbs. DTZ expects that the completion of additional residential property in 2017 will help to relieve the upward pressure on rents, which has been experienced in recent years
• Hotel performance declined in Q4, continuing the trend witnessed over the past 2 years. The fall in occupancy rates and revenue per room is a result of a fall in tourist numbers to Qatar, coupled with significant new supply that has come to the market since 2014.
• Q4 saw the opening of Qatar’s largest retail mall, Mall of Qatar, which enjoyed a soft opening in December. The total supply of organised retail supply has now increased to c. 838,000 sq m. The retail real estate market continues to perform strongly in Qatar despite a reported fall in retail sales of between 10% and 15% since 2015.