Q3 2015 Qatar Market Report: Residential Market Overview
Residential Market Overview
Demand for new residential property in Qatar has been underpinned by strong growth in population. According to Qatar Statistics Authority, before the traditional decrease during the summer months, the population reached 2.37 million in May 2015, a twelve month increase of 9.2%.
The demand for new residential property is most evident in the lower to middle income bracket, where developers have struggled to meet demand for affordable residential accommodation. Recent redundancies in various Oil & Gas companies due to restructuring throughout the sector created an increase in vacancy levels in the prime residential market in Q2 & Q3.
The recent restructuring in this sector has also seen some large companies put their requirements for new residential accommodation on hold, and in some circumstances, downsize their portfolio of staff accommodation. In addition, ongoing construction throughout the greater Doha area is increasing the supply of new villa and apartment accommodation.
The increase in vacancy levels has resulted in rents for prime apartments and villas stabilizing, providing respite to tenants who had experienced strong rental growth in recent years. These has been little evidence of reduced rents due to the increase in vacancy levels, however in some cases landlords have been willing to grant incentives such as rent free periods for properties that have been vacant for an extended period. DTZ are of the opinion that the recent increase in vacancies caused by the redundancies in the oil and gas sector is likely to be temporary, as further demand will be generated by the economic and population growth in the coming months.
At the premium end of the residential market DTZ estimates that current levels of prime apartment stock has surpassed 14,000 units across the Pearl Qatar and West Bay. The residential sales market had a strong start to the year, with the increase in mortgage applications from 2014 continuing into Q2. The past 3 months has seen a significant fall in sales activity, however this is likely to be explained by traditional ‘summer slowdown’. Freehold prices have been growing consistently since 2011, however sales prices in recent months have stabilized somewhat. Porto Arabia has seen the highest amount of sales activity, 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.
For more insight and further information, please click the link below to download the full report.