Apartment rental rates at Lagoon Plaza and Al Sadd experienced the greatest declines, up to 11%, whilst four and five-bedroom villas in Al Waab, and five-bedroom villas in Al Khraytiyat were also affected, says Asteco’s report on the Qatar residential and commercial property market for Q1 2010 published today.
“Encouragingly, however, there were a number of residential locations and asset classes where the decrease in rental levels appear to have stabilised: Al Muntazah witnessed only a 1.5% decrease in the last three months, whilst the areas of Bin Mahmoud and Westbay Lagoon saw no further declines,” the report adds.
“Generally, studio and one-bedroom apartments across the market witnessed minimal sale price movements. There have been no noticeable price changes in residential unit sales for both the primary and secondary sales market on The Pearl Qatar. The office market continued to record decreases in rental rates,” it says.
Commenting on the results of the Q1 report Jed Wolfe, Associate Director, Regional – Saudi Arabia, Qatar, Bahrain – Asteco, said, “As rental rates drop, activity in the leasing market continues with tenants looking for increased value for money and better locations. We are witnessing a ‘flight to quality’. Properties that are professionally managed, well maintained and in good locations continue to attract strong demand. Landlords will need to be vigilant as to the type of property they want to lease as more options become available in the market.”
Wolfe added, “Now that some banks have begun to increase their loan-to-value ratios coupled with the reduction in sale prices, present market conditions offer purchasers real value opportunities. In the short to medium term, the Qatar market will see a greater diversification in pricing levels in both leasing and sales as the marlet progresses to the next stage of maturity.”
“Property fundamentals have become the key driver for setting price points, rather than the historic market-wide growth. Good quality assets in prime locations will outperform secondary locations and poorly managed properties. As the market matures yet further, this will encourage landlords to re-furbish older stock to increase asset performance,” he said.
Looking at offices, the Asteco report says there is an estimated 3.2 million square metres of office space in Qatar, 50% of which is in Doha’s premier office location – the Diplomatic District.
“In September 2009, The Urban Planning Authority barred the use of residential villas as commercial office space. Asteco expects, therefore, that a large number of businesses and companies will be forced to relocate into commercial districts, which could result in a slowdown in the decrease of rental rates towards the end of the year,” the report adds.
“Due to the fact that a large amount of office space is coming to the market, particularly in the Diplomatic District, it is likely that office rental rates will decrease further. However, an increase in infrastructure projects, along with major commercial and industrial projects, is set to commence in the next 12 months which will increase demand from both local and international companies and help to facilitate the stabilisation of office rents,” it says.
“Companies that are coming to the end of their tenancy contracts have more options to upgrade to a new building with better facilities, efficiency and improved location at rental levels better suited to the current market downturn,” it adds.
Examining the leasing residential market overall, the report says Qatar has seen a slight drop in rental prices compared with the previous quarter. With increased supply of villas and, in particular, apartments entering the market which are ready for occupation this has resulted in a marginal reduction in rental rates in certain parts of the capital.
“Other areas of Doha such as Umm Gwalina, Al Ghanem, Al Hitmi, Mansoura, Bin Mahmoud, Muntazah and Al Sadd are expected to have approximately 5,000 residential apartments entering the market over the next 18 to 24 months. This will undoubtedly affect the market and is likely to drive rental prices down further in due course,” the report adds.
“Looking ahead to the next quarter, the rental market is likely to dip further before it stabilises. However, the market will continue to be active due to the expansion of oil and gas companies and other government organisations, which will have a positive impact on the leasing market. In addition, a large proportion of tenants whose contracts are coming to an end will take advantage of lower rents and greater choice of properties that are becoming available on the market,” it says.
Sales prices for both the primary and secondary residential markets have remained relatively flat in the last quarter, says Asteco. “The secondary market continues to dominate due to the discounted values of certain projects. Locals and offshore investment companies have been the primary clients looking for property for investment or end use. Senior management and oil and gas management – with housing allowances equivalent to mortgage instalments – are expected to continue with property purchases.”
“Banks have become more flexible than they were in the previous quarter, with loan-to-value ratios increasing from 70% last year to 80%-85% this quarter. Islamic mortgages are also expected to grow with the increasing number of ready properties coming to the market,” it concludes.
Wednesday, April 21- 2010 @ 16:56 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.