As many local businesses and organizations look to cut costs, employees in Qatar are expected to receive their lowest salary raise in at least three years, a new report has said.

Recruitment firm GulfTalent forecast this week that salaries in Qatar will rise by an average of 4.7 percent in 2016. That’s down from an average of 6.1 percent last year, when Qatar tied for the highest in the GCC with Oman, and 6.5 percent in 2014.

Across the region, GulfTalent said low oil prices and a drop in government revenues have given rise to a “two-tier economy.”

It continued:

“Energy companies have borne the brunt of the slowdown and laid off thousands of staff, while construction firms which depend heavily on government-funded projects have also seen a slowdown in new business.

At the same time, sectors that rely on population growth and consumer spending such as retail … are showing high resilience and continue to outperform the overall economy.”

GulfTalent said many professionals are likely to face a double-whammy of stagnant salary growth due to the depressed job market and the rising cost of living.

In Qatar, the inflation rate hit its highest level in more than a year last month and residents are paying more for petrol and electricity.

Many tenants are also paying more for rent, even as the country’s real estate market softens.

Affordable housing

In a separate report (PDF), real estate firm CBRE said residential rents in Qatar rose 7 percent last year, down from 14 percent in 2014.

Similar to reports from other property firms, CBRE’s figures show signs that the market is cooling.

Looking only at the second half of last year, rents increased 5 percent. And that figure declined to 1 percent in the last three months of 2015.

But CBRE suggests there is little relief coming to those earning a modest income as the market for affordable housing remains tight. The real estate firm said demand was highest for less-expensive homes in “less prominent areas of the city.”

Last year, this led to large rent hikes for some tenants who left central Doha in search of more affordable accommodations.

CBRE said it will continue to be difficult to find modestly priced villas and flats. It estimated that four out of every five new units under construction will command a rent of more than QR7,500 a month once completed:

“Despite the significant growth in the overall residential inventory, budget homes remain relatively scarce, with new supply typically orientated towards mid-high, and high-end properties,” the company said.

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