Affordability issues prompting movement in Doha rental market
Statistics released by the Ministry of Justice (MoJ) reveal that Doha’s property market has grown substantially quarter-on-quarter, with a 29% increase in the number of transactions between Q4 2013 and Q1 2014, with the aggregate value of sales reflecting a 35% increase.
Land sales continue to dominate movement in Doha’s real estate sector, representing approximately 77% of all property transactions in the last three months, according the latest Asteco Qatar Q1 2014 report, with the total value topping QR7.35bn.
Qatar’s capital has also seen strong overall performance in the residential rental market despite a second wave of apartment releases on The Pearl-Qatar easing the pressure on rental rates slightly following stabilisation in Q4 2013.
“This is the second consecutive quarter in which we have seen existing apartment stock augmented and there is a definite rebalancing of prices for this hugelypopular location, despite evidence of increases in other areas of the city such as Al Sadd and Bin Mahmoud,” said Jan Crisp, General Manager, Asteco Qatar.
“Take-up of one and three-bedroom units on The Peal-Qatar remains strong, and is being driven by demand from people looking for more affordable accommodation with couples downgrading to smaller unitsand families opting for three-bedroom apartments instead of increasingly expensive villa rental prices,” she added.
The hotel and serviced apartment sector also continued to perform strongly with increased demand for one-bedroom units, which has fuelled the development of new projects.
A one-bedroom apartment located on The Pearl-Qatar currently rents for up to QAR 12,000 per month, the same as Q3 2013, down 2% on Q4 2013, with three-bedroom units renting for QAR 19,000 per month; but still showing a blanket 6% year-on-year increase.
The report also notes that increased rental rates in other areas such as compounds located close in neighbourhoods close to amenities and schools maintaining their desirability as supply failed to match demand, forcing up rental rates. Lease renewals for four and five-bedroom villas were also up by 2-4% on the previous quarter.
After a decrease in the overall value of property transactions in Q4 2013, the first three months of the year saw improvement in residential sales activity as aggregate vales increased by 19% quarter-on-quarter, although Asteco reports that due to the release of new stock on The Pearl-Qatar, values for this area levelled off.
“Towers with above-market-value prices are losing out in terms of sales transaction volume as price-conscious buyers take a more measure approach to investment. We have also seen a significant increase in mortgage enquiries recently, according to local bank reports,” said Crisp.
New apartments in Viva Bahriya continued to lead the equivalent units in Porto Arabia at QAR 17,800 versus QAR 16,000 per square metre for direct sales and QAR 16,700 versus QAR 12,500 for resales, with prices overall up between 5% and 10% quarter-on-quarter.
Leasing activity in the office market was limited in Q1 2014 with rental rates remaining flat after a busy Q4 2013. The majority of interest came from smaller businesses with just a handful of new lettings agreed for more than 1,000-square metres, and including relocations by companies seeking better quality office space.
Demand for 200-500-square metre facilities is primarily directed towards secondary locations, as private sector companies shy away from the QAR185 per square metre-plus rates in premium destinations like West Bay. Asteco also highlights the fact that vacancy levels in secondary locations remain high as much of the accommodation available is below the standard required by corporate tenants.
“The retail sector also merits a mention with the recent opening of both the Ezdan and Westgate Malls, and the imminent debut of The Pearl-Qatar’s Medina Centre proving highly attractive to retailers keen to expand their local operations, with reports of positive pre-letting figures. There are concerns re future oversupply, however, with organised retail floor space forecast to grow by more than 1.2 million square metres by 2017,” remarked Crisp.