Qatar-based United Development Company (UDC) has seen profits plunge in the first half of 2016 amid a softening home rental market.

The Pearl-Qatar developer reported a net profit of QR353 million (UD$96.98 million) for the first two quarters of this year, down 39 percent from the QR577 million (US$158.52 million) reported at the same time last year.

In a statement, UDC’s President and CEO said the results actually beat expectations and “reflect the soundness of our strategy.”

Ibrahim Al Othman added that to keep business going, the company has been working with unnamed “strategic developers” who are investing in several of the Pearl’s properties this year.

So far in 2016, UDC has sold a tower plot in Viva Bahriya, various plots in the planned Giardino Villas and is in the process of selling one of the new Abraj Quartier’s commercial towers, which stand at the entrance of the island.

Demand for luxury rentals down

In its statement, UDC said leasing of residential units at the Pearl went up 4 percent in the past six months, compared to the same period last year.

While that growth appears small, it comes amid an overall decline in demand for luxury apartment rentals, real estate analyst Mark Proudley told Doha News.

This is in large part because thousands of white-collar expats have left Qatar this year, due to belt-tightening layoffs and other opportunities.

According to Proudley, the head of DTZ Qatar, many upper-end apartment towers around the country are starting to see vacancy levels in the double digits.

“Rentals have also softened by around 5 percent to 10 percent, though a lot of landlords are offering tenants a rent-free period as an additional incentive,” he said.

The Pearl has been no different. UDC has been offering a promotion on several of its apartments there, offering tenants two months’ free rent if they sign up for a 14-month lease.

Retail a boon

One bright spot for the Pearl has been retail leasing, which is up 39 percent from last year, UDC said.

Commenting on this growth, Proudley told Doha News that this is likely due to the opening of Medina Centrale, a mixed-use walkable area with several midrange eateries, a cinema and new gaming center.

Shops there are more “attractive to retailers than the retail available around Porto Arabia, which is spread out over long distances,” he said.

Medina Centrale is the result of a strategy shift for the Pearl, which originally had a high-end focus.

After sales slowed at upscale restaurants over an alcohol ban, UDC announced it would pivot to make the Pearl a “comprehensive, welcoming, flexible and balanced” place instead of a high-end, “heavily upscale” shopping hub.

According to management, it will continue in that direction by opening an indoor shopping arcade inside of Medina Centrale called Souq Medina and welcome retailers at its new Abraj Quartier tower.

Thoughts?