Housing and office rents in Qatar are becoming more affordable
Rents for compound villas and two-bedroom apartments in Qatar fell in the first quarter of this year, according to a new real estate report.
This was driven primarily by a slowdown in the country’s population growth and white-collar layoffs, DTZ said in its Property Times communiqué for Q1 2017.
Companies have also been looking to cut costs by providing staff with housing allowances rather instead of accommodation, it added.
Finally, new residential developments in central Doha districts including Al Sadd, Bin Mahmoud, Al Mirqab and Umm Ghuwailina have also increased supply in the market, particularly for two-bedroom apartments, the report said.
Average monthly rents for a three-bedroom apartment in the business district of Dafna/West Bay earlier this year were around QR15,000 for a three-bed apartment. Two-bedrooms went for QR12,000 and one-bedroom apartments cost about QR10,000 a month.
This is around QR1,000 a month cheaper than rates charged during the third quarter of last year.
Prices will likely continue to fall in the coming years as Qatar’s population levels off and supply keeps growing.
The number of available apartments in “prime” areas is set to more than double in the next three years. This is thanks in part to rising developments at Lusail and Msheireb.
Available flats will go from 20,000 in 2016 to more than 35,000 by 2020.
Energy sector struggling
Meanwhile, lower oil prices continues to affect Qatar’s property market, particularly for the rental of villas in compounds.
These compounds were often rented out by firms for their employees.
But now, many companies, particularly in the energy sector, have ended these housing contracts and are instead giving accommodation allowances to employees.
Other firms have reduced their housing allowances as a way of cutting costs.
“This has had an impact on the rents achievable for compound villas: a market that had previously been dominated by corporate leases,” DTZ said.
This softer market – which is better for tenants, but tougher for landlords – is set to continue, according to the report:
“It is unlikely there will be a return to the strong rental increases witnessed between 2011 and 2015, due to the continuing development of new residential buildings and the lower demand from higher-earning expatriate workers.”
However, an expected influx of service workers in the coming years will likely push up demand for more affordable accommodation, it added.
Under-construction developments will also have a big impact on the commercial market in the coming years.
The QP district in Dafna/West Bay is finally expected to launch this year, bringing the total supply of office space for lease in West Bay to more than 1.86 million sq meters.
And a further 134,000 sq m of commercial buildings is set to open in Lusail soon, as well as in Msheireb.
All of these factors have caused office rents in West Bay to fall by up to 20 percent in the past year, DTZ said.
The over-supply could mean that some proposed developments, particularly in Lusail “will be put on hold over the next decade,” it warned.
Construction is also continuing apace on more hotels in Qatar.
The country is working to meet FIFA’s requirement of at least 60,000 hotel rooms before the 2022 World Cup.
This would require tripling the current stock of nearly 23,000 rooms and apartments in the country – 87 percent of which are four- and five-star rated.
Despite a very slight increase in hotel occupancy, many operators have been forced to reduce prices to attract guests.
Average daily room rates were QR460 in February 2016 – down from QR487 in February 2015, the report said, citing government figures.
Qatar’s mall market is also one that has seen many changes in the past year.
According to DTZ, the shopping center building boom is creating a “two-tier” market of malls. Customers are favoring those that are easy to get to, have plenty of parking and include family entertainment.
Another four are set to launch this year, and two more by 2019.