DTZ published its review of Qatar’s Real Estate market over 2017
The findings show an increase in transactions during Q4 2017 when compared with the same period in 2016. In particular October and November showed an increase of 8% and 12% respectively in terms of transactional volume.
Whilst there continues to be a softening in the residential and commercial rental market, this has been driven by supply pipeline and not a result of the ongoing blockade. In fact the Qatar market has shown considerable resilience when compared regional with, for example, Abu Dhabi seeing residential rents fall by 13%, and Bahrain by 16.2% during 2017. Whilst office rents continue to soften under additional supply pressure, there have been a number of new international occupiers entering the Qatar market during 2017 however, the highest demand remains for occupiers requiring less than 250 sqm.
Whilst prime residential rents have softened by up to 10% over the past 12-month period, the secondary market has shown more resilience over the past year with Ezdan Oasis setting the benchmark in terms newly built middle-income apartments. The precise effect that the much awaited Metro will have on the property market is unquantifiable as yet; the research DTZ have undertaken elsewhere when a new mass transit system comes into operation suggests that cities with a similar climate as Qatar see a 10 – 15% increase in property values within 50 metres of a metro station, and 5-7% increase when within 50 – 100 metres distant. It remains to be seen as to whether such increases have already been factored in to pricing. Although this is unlikely.
Total organized retail supply in Qatar is almost 1.3 million sqm, distributed amongst the country’s twenty principle shopping malls, almost doubling the supply from 2014. Amongst new additions in 2018 will be the official opening of Tawar Mall and the completion of Northgate, Katara and Doha Souq. The increased supply, coupled with stagnating oil prices have impacted performance levels and whilst prime retail destinations have maintained headline rents of QAR. 280 sqm per month and higher, the challenging retail conditions have resulted in more landlords adopting turnover rents to attract and retain tenants.
The recent lifting of visa restrictions to the Nationalities of 80 countries has yet to filter down into any quantifiable impact on retail performance however DTZ believes that this will be very much dependent on the country of origin of the visitors. Following a brief surge in “staycation” trade over the summer months in 2017, the hospitality sector has been the most impacted, in the immediate term, by the blockade – given that Saudi tourists made up some 67% of all visitors in past years. According to QTA, hotel occupancy averaged 62% for the first half of 2017, with the Ministry of Development Planning and Statistics noting that occupancy had fallen to 57% in November.
The total hospitality inventory is approaching 25,000 keys, and whilst 70% of properties are 4 and 5 star, there have been some welcome new 3 star entries including the Holiday Inn and Premiere Inn. A further 10,000 hotel rooms and 2,000 serviced apartments are at various stages of planning and construction. The impact of enabling visa on arrival / visa free access to Qatar for visitors from 80 countries will be more quantifiable during 2018 as travelers are able to incorporate Qatar into their travel plans.