Q1 2016 Qatar Market Report: Residential Market Overview
The supply of residential real estate in Qatar struggled to meet demand between 2011 and 2015 as the population during that period increased from 1.7 million to 2.4 million.
The shortage of available accommodation created upward pressure on rents in both the apartment and villa markets, with annual growth of between 5% and 10% per annum evident throughout the Doha market.
Population growth, which has been the driver of real estate demand in Qatar remained strong in 2015. This reflected a 9% increase between January and December, however it is thought that much of the increase is represented by lower to middle income workers in the service and construction workers.
Over the same period there has been extensive redundancies in the hydrocarbon and government sectors, and a subsequent knock on effect in the private sector. This has resulted in reduced demand good quality residential accommodation throughout Doha.
The supply of new residential accommodation has increased in recent months and this trend will continue throughout the year as a significant number of apartment projects reach completion. This has resulted in increasing vacancy levels for primary and secondary apartment market. The changing dynamics in the market suggest that recent signs of falling rents in the apartment sectors may continue throughout 2016.
Construction of new villa compounds throughout Doha has been limited in comparison to apartment buildings. While there has been an increase in vacancy levels, DTZ believe that occupancy rates for compound villas will remain relatively high, with less downward pressure on rental levels.
DTZ has also witnessed a fall in demand for corporate residential lettings of entire residential blocks and compounds. It is becoming increasingly common for companies to provide a rental allowance rather than employee accommodation.
On The Pearl-Qatar, DTZ estimates that the supply of apartments may increase by more than 30% in 2016 as new towers in both Porto Arabia and Viva Bahriya near completion. Incentives such as rent free periods, and rents inclusive of utility bills became common in 2015, however DTZ expect to see rents fall in 2016 as landlords try to secure tenants in a more competitive environment.
Freehold prices on The Pearl Qatar increased steadily between 2011 and 2015, however recent months has seen a fall in sales activity and prices have stabilized. Local investors make up the majority of purchasers, where second hand units typically trade at between QAR13,000 and QAR15,000 per sq m, and new units can achieve in excess of QAR17,000 per sq m.
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