Home builders in Qatar are unable to keep pace with the country’s rapidly growing population, leading to housing shortages and rising rents, according to two new reports.
While actual prices vary depending on the size, location and quality of the unit, recent research by Qatar-based Al-Asmakh Real Estate Development found residential rents increased five to 10 percent in the first three months of the year, compared to the end of 2013.
A separate report by real estate services firm Colliers International puts the average increase slightly lower, at four percent, during the same time period.
Despite these increases, average rental rates are still below the peaks reached in 2008, which was followed by several years of declines before the market began heating up again in 2012.
Rental costs by area
Currently, high-end three and four-bedroom villas in Onaiza and Al Waab currently cost renters roughly QR18,000 a month, according Al-Asmakh.
Similar sized villas in Madinat Khalifa, Gharrafa, and Al Hilal are slightly less expensive, at QR13,000 to QR15,000 per month.
The firm found that average rental rates for two-bedroom apartments, meanwhile, stand at QR15,500 in the Pearl-Qatar and QR14,500 in West Bay.
However, Colliers’ estimates for two-bedroom apartments in those two neighborhoods are marginally lower, and its report adds that two-bedroom units average QR8,000 in Al Saad and roughly QR7,500 in Old Airport.
Outlook
According to the two companies, market forces are set to put further upward pressure on rents in the coming years as demand for housing greatly outstrips supply.
Colliers estimates 22,000 new homes will be constructed by 2018, adding to Qatar’s existing housing stock of 122,000 units. However, demand for housing is set to reach 266,000 units – excluding labor camps – during the same time frame, the company estimates.
“Doha’s residential real estate market will continue to remain significantly under-supplied over the next five years,” Colliers says.
Meanwhile, a government crackdown on illegally partitioned villas is likely to exacerbate the shortage. Inspectors are stepping up their enforcement of laws prohibiting unauthorized modifications of homes.
Many middle-income expats rent rooms within divided villas to lower their housing costs and live closer to their workplaces.
The government says that these illegal alterations pose a safety hazard, but expats living in them say that they are the only kinds of housing they can afford.
Labor camps
Al-Asmakh’s report also raises questions over whether there are enough accommodations for low-income expats, despite a recent spurt of new projects.
The infrastructure building boom underway in advance of the 2022 World Cup is expected to require a massive influx of foreign labor.
Government estimates suggest the country’s population will surge 15 percent this year alone to reach 2.4 million residents.
Al-Asmakh estimates Qatar needs to recruit another half-million blue-collar workers to construct the buildings and infrastructure projects that have already been publicly announced.
However, by its calculations, the labor camps planned and under construction can only accommodate 100,000 additional individuals.
Those figures include Barwa’s massive “Worker’s City” in the Industrial Area – formally known as Barwa Al Baraha – which is scheduled to see its first residents early next month.
Furthermore, tightening living standards for workers mean labor camp landlords will be limited in how many individuals can be accommodated in each unit.
Standards for contractors working on World Cup or Qatar Foundation projects ban companies from installing bunk beds and can only house up to four workers in a room.
Additionally, government officials promised unspecified universal rules for workers’ accommodations as part of proposed reforms to Qatar’s kafala, or sponsorship, system announced last month.
This, Al-Asmakh says, combined with the forced exodus of laborers from residential areas and the growing population, will only add to the demand for new labor camps:
“As per our estimate nearly 500,000 to 800,000 new beds would be required to accommodate the inflow of new workers to the country and existing laborers which would need to be migrated from housing units and poorly managed labor camps.”
Thoughts?
*AFFORDABLE housing supply not keeping up with the population rise. :pp
TRUE.. why not face the truth that most of the expats in Qatar are not even reaching to the minimum wage earner or at least to be in the minimum wage section.
Precisely, thats how it should have been worded, Housing may be in “demand” but the supply of an affordable house for middle income workers is extrelemely dissapointing. This report is applicable only to high end customers.
In other news, rain is wet, snow is cold, and chocolate is delicious.
Could be worse. Dubai rents have just rocketed by 50%.
An’ $h!? stinks!
Sorry… was intended too add to Ivan’s list
Speak for yourself, some of us are like gardens of roses. Clean living don’t you know?
And still Dubai has better quality housing available for cheaper. Even the “High-End” housing market doesn’t meet average standards compared to most parts of the world. Greed is the only thing that comes to mind when talking about rents.
Ah! The 4 – 6 monthly real estate report to talk up the market. There is no normal market here, just an artificial creation of greedy estate agents and/or landlords.
The rents are too high, and the west Bay / Pearl towers are too empty. It requires an incredible amount of delusion to call that ‘Market Forces’.
‘PR manipulated thievery’ would be far more appropriate.
No, there’s no such thing as a normal market. Also, there are no standard protections for the renters. Landlords shouldn’t be doing things like demanding post-paid checks, but they can and will.
Although I would not believe the words of a real estate agent that has an interest in driving up rental prices, this is normal for a country going through growing pains. When a country’s economy grows this rapidly from such a low base, there will be strain on resources and housing will be one of them. It is something expats and locals will have to get used to for at least the next five to seven years. Some expats will leave as they cannot afford the cost of living in Qatar anymore
How can We understand the agent report while 50% of pearl’s apartments are empty?
“However, demand for housing is set to reach 266,000 units – excluding labor camps – during the same time frame, the company estimates.”
Is “labour camp” the official term, or just the one Doha News uses. Its a very bad choice of words. Google it and see the first hit.
I wanted to point out exactly what you mentioned about the choice words ‘ labour camp’. It is a poor choice of words to say the least and an insult to lower income expats.
“Labour camp” has been in common use across the gulf for years and seems pretty accurate for many of them, although things are slowly changing.
I think “Workers’ Accommodation” is the trendy new label.
“Standards for contractors working on World Cup or Qatar Foundation projects ban companies from installing bunk beds and can only house up to four workers in a room.
Additionally, government officials promised unspecified universal rules for workers’ accommodations as part of proposed reforms to Qatar’s kafala, or sponsorship, system announced last month. ” Its not bad enough that blue collar workers are treated like crap…now..even among them…..there is going to be different standards. LOL…from the kettle into the fire. Well done Qatar…a Qatari solution to a Qatari problem.
Ironic statements from a Real estate development firm that there is a shortsge of affordable housing units…question is what is this particular company doing to adress this situation …answer is ..ITS DOING NOTHING….just flip through the classified section of Gulf times and see the listing for Al Asmakh…..I rest my case
ever increasing inflation in rent prices, and lack of places in schools, will kill the incoming high skillled labour force as well as expats. This is will reflect on the quality and cost of things. Some new institutions are having problems hiring expats for these reasons. How do you expect people in the service industry with 6-9000 Qr salaries, you can not place everyone in “labor” camps”. These will all have drastic impact in the next 3 years time.
Wasn’t there an article very recently talking about how 75% of the Pearl is unoccupied? Which is it??
The Pearl isn’t in most people’s price range.
It isn’t in the price range cause of artificial rent inflation. If rent was based on demand and supply the prices would be a lot lower.
If so much unoccupied there, then maybe use it as temporary accommodation for all the construction labour, then they don’t have far to commute in their non-airconditioned buses, and removing these bus journeys will take traffic off the congested road system as well. Seems like a win-win for all.
This presumes that the labourers will put up with the sea views and noise from Ferraris, Porsches, and jet-skis, rather than the more homely sights, sounds and smells of the Industrial Area.
….is it that they cannot keep pace with the growing population after all this years of having the same crisis situation or is it that they just don’t want to so that they can keep the rents and prices artificially inflated and make loads of money while the sun still shines
For those who appreciate joke:
http://www.panarabiaenquirer.com/wordpress/landlord-awards-showcase-the-very-best-in-dubai-rent-increases/
London – New York – Paris – Monaco rents, in return getting a (half built) Doha!
Sort of like paying for a Bentley, and getting an un-painted Kia?