A recovery in land prices over the past two months is likely to cause even greater hikes in rental rates by the middle of this year, experts from Qatar National Bank (QNB) have said.

Rent inflation slowed by 1.9 percentage points between August and December last year, but this trend is likely to reverse after May, as prices for new land are now picking up due to population growth, the report explains.

It adds, however, that the rise should only be modest – QNB estimate a rise from four to five percent in the second half of this year.

“This level of rent inflation is moderate and should alleviate any concerns that the real estate sector is entering an asset-price bubble or that the economy is overheating,” the report states.

Under pressure

Rental inflation is one of the main drivers of Qatar’s Consumer Price Index basket – accounting for some 32 percent.

In recent years, residents have been feeling the pinch as a result of rising rental costs. Some have complained that housing allowances are not keeping pace with the rental rises, and some have begun moving out of Doha into surrounding areas with more affordable homes.

A recent comparison of like-for-like costs across the GCC concluded that Qatar was the most expensive place to live in the region.

A steep increase in the cost of renting a home in Qatar in recent years had propelled Qatar to the top of the index, the report’s authors said.

Thoughts?