Qatar residential market occupancy to improve in six months
With Qatar’s non-hydrocarbon sectors experiencing double-digit growth, occupancy levels in the country’s prime residential market are likely to recover over the next six months, global real estate firm DTZ has said.
DTZ Qatar, in its market report for the third quarter of the year, noted an increase in vacancies in the prime residential market due to recent redundancies in the oil and gas sector. Despite these increases, rents in this sector have remained strong in the second and third quarters due to population growth, the report said.
According to DTZ, steady job growth in non-hydrocarbon sectors such as finance, hotels, restaurants, trade, and transport helped push Qatar’s population to 2.37mn in May 2015, representing a 9.2% growth compared to the same period last year.
The commercial sector, according to DTZ, has witnessed a reduction of new office acquisitions from the public sector, which accounts for 60% of office leasing in Doha’s West Bay area.
The report said most of the activity in the second and third quarters has been limited to transactions of less than 250sqm, and there have been no commercial leases in excess of 3,000sqm agreed in the third quarter.
DTZ associate director Johnny Archer (Consultancy and Research) said: “The key concern in the residential sector is rental inflation where new supply of accommodation for the middle income families has struggled to meet the demand of an increasing population.
“There has been an increase in vacancies in the prime residential market in recent months; however, with non-hydrocarbon sectors experiencing double-digit growth, occupancy levels are likely to recover over the next six months.”
DTZ Qatar head of Commercial Agency Kenneth Corbin noted that while the residential market is showing signs of resilience “during this period of government review,” the commercial sector “is likely to be challenging in the near term as landlords look to the private sector to fill the temporary void in government take up.”
He added: “In our opinion, those landlords offering the most flexibility in lease terms will reap the greatest benefits. Additionally, with an excess of 300,000sqm of office space expected to be released to the market in the next 12 months in West Bay and Lusail, occupiers will be presented with an opportunity to improve the standard of their existing space and/or improve their current lease terms.”
In the hospitality market, DTZ expects occupancy levels to come under pressure due to the 4,000 new hotel rooms that will be available in the market from 2016.
“The supply of hotels will increase further in the medium term as preparations for Qatar’s FIFA World Cup 2022 continue. A total of 11 new hotels have opened in 2015 adding around 1,400 rooms to the sector,” the report said.
DTZ Qatar’s report further said more than 1.3mn additional square metres of retail space in 12 new shopping malls is currently under development and may be handed over by 2019.
“This translates into a 220% increase on the current supply, which will have a major impact on the retail market. Currently there is a strong demand from retailers and high occupancy levels and there is an increase in rental levels of lease renewals at busier shopping malls,” it said.
Despite the fall in oil prices, DTZ Qatar general manager Edd Brookes noted that “the Qatari market continues to provide both landlords and occupiers with significant opportunities.”
“In particular, robust population growth forecasts together with very positive infrastructure deployment reinforces our view that Qatar economic growth ambitions remain highly-positive despite budget revisions in the public sector,” he added.
Original article: gulf-times.com