Q4 2015 Qatar Market Report: Residential Market Overview
Residential Market Overview
Over the past decade, demand for residential property, such as apartments and villas in Qatar has been underpinned by strong growth in population, which continued throughout 2015.
The increasing rents has led to concern at government level and following a scheduled meeting in December, the Shura Advisory Council called on authorities to curb the increasing levels of rent, potentially by introducing rent controls.
The past year has witnessed a change in residential market trends, which suggest that market forces may dictate a fall in residential rents, alleviating the need for rental caps.
Over 2015 redundancies in the hydrocarbon and government sectors, together with new building completions have increased vacancy levels in many areas. The increase in vacancy levels has been most evident in the past three months, where we have started to see rents in some areas reduce for the first time since 2009.
Demand for apartments for rent in Qatar’s residential areas such as Najma, Umm Ghuwailina, and Al Mansoura increased as tenants seek more affordable accommodation. As a result, rents in Al Sadd, Bin Mahmoud and Al Mirqab have softened over the last three months in order to attract tenants.
There has also been a fall in demand for corporate lettings of entire residential apartment blocks and compounds. Companies are increasingly look to provide a rental allowance rather than employee accommodation. This has resulted in a number of residential apartment blocks remaining vacant as some landlords prefer to secure corporate leases.
On The Pearl-Qatar, DTZ estimates that new supply of apartments for rent in Doha is likely to increase by between 30% and 40% in 2016 as up to thirteen new towers in Porto Arabia and Viva Bahriya near completion. This will have a significant impact on the prime residential market in Qatar, and has potential to see rental levels reduce further if delivered as expected and demand remains stagnant.
Freehold prices have been growing consistently since 2011, however sales prices in recent months have stabilized. Porto Arabia has seen the highest amount of sales activity, largely from local investors, 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.