DTZ reports demand-fuelled price inflation in residential and commercial markets
Global real estate company DTZ released its Q4 2014 market report for Qatar today. Among many findings, DTZ’s research team uncovered significant pressure on the residential and commercial real estate markets as demand outstripped supply, creating inflationary pressures on prices in both sectors.
Average freehold prices for apartments in Doha’s Pearl development were in the QAR14,000/sqM range, 3.5 times the price of similar apartment space in Riyadh and closing in rapidly on prime space in Dubai.
The hotel sector realized strong growth throughout the year with occupancy levels reaching 73% in the fourth quarter of 2014.
Commenting on the findings of DTZ’s latest report, Mark Proudley, Associate Director, Consultancy and Research, DTZ, stated: “These findings are not unusual in a rapidly growing market. There is high demand for property in Doha as the population continues to grow particularly the middle income segment. The commercial market is experiencing unprecedented levels of demand from retailers looking for prime locations; however, no new retail malls opened in 2014.”
Edd Brookes, General Manager of DTZ in Doha, stated: “This is an exciting time for Qatar. The country’s growth is evident from the demand in the real estate market. We have been in this market for a decade providing valuable consultancy, research and agency services as the nation experiences rapid expansion. Given current growth rates of 6-7% per annum, we anticipate prices returning to 2008 levels in the next three years.”
With the increase in the population, the report indicates that increasing rents are especially affecting the middle income families in Doha as the demand for these residential units is rising. The number of prime residential units is anticipated to increase by 40% over the next 12 months, whilst stock focused on middle income is anticipated to grow by only 12%. This is likely to translate into a stabilization for grade A stock, whilst mid-range units are likely to continue to rise ahead of inflation.
The pressure on the commercial market is expected to ease as a number of new shopping malls are expected to open in 2015. Proudley explained, “There are many retail spaces opening including the 80,000 sqm Gulf Mall and the Medina Centrale in the Town Centre of The Pearl-Qatar. Prime locations are being hunted down by retailers looking to enter the Doha market or expand their business.
The hotel sector is also experiencing growth with occupancy levels reaching 73% in the fourth quarter. There are a number of new 5-star hotels opening in 2015, which will cause the average occupancy levels to reduce. The number of hotels scheduled to open in the medium term is leading to concerns that the hotel sector will be oversupplied.
Johnny Archer, Associate Director at DTZ Qatar, add that report’s findings “confirm that the rapid increase in Qatar’s population has an immediate knock-on effect on many sectors of the economy – with real estate particularly susceptible to demographic changes. With Qatar’s population growth set to increase by over 7% per annum in the coming years, the real estate market will need to expand more quickly to keep pace and avoid over-heating the market.”
Click here to download this press release in Arabic.