Demand for real estate is not expected to grow as much as supply in Qatar this year, so market corrections are predicted to be pervasive across all real estate sectors during 2023, according to consulting group ValuStrat.
However, Qatar’s real estate market saw a “gainful” year despite a global slowdown in 2022, it said in a report.
There was a significant surge in supply in the residential market with the addition of at least 13,000 units, which majorly concentrated in Al Wukair, Lusail and The Pearl, ValuStrat said. The largest project launched was a master plan named Madinatna, in Al Wukair, to be developed by Barwa Real Estate, comprising 6,780 apartments and 20,000sq m of retail space.
Excess supply was outstripped by growth in demand arising from "Eskan leases" and a temporary increase in population. As a result, residential rents increased an estimated 15% annually. While home rents saw a substantial increase, residential sales stabilised; the ValuStrat Price Index recorded marginal declines during the first half of 2022.
The retail market saw significant growth in terms of supply. This includes opening a super-regional mall in Lusail, Place Vendome and regional and community malls in The Pearl, Msheireb and Lusail.
Additionally, new street shops were handed over notably on Lusail Boulevard, West Bay Beach, Qetaifan Island North, and Al Maha Island.
As a result, an increase in demand for retail was corroborated by the opening of new brands and expansion of existing brands in malls and street retail in Qatar.
However, by Q3, 2022, there was downward pressure on rents, with supply surpassing the demand.
Pawel Banach, ValuStrat Qatar general manager commented, "2022 was transformative for Qatar with a considerable influx of supply across all sectors. In H2, 2022, we saw the opening of no less than 40 hospitality projects and the addition of more than 10,000 residential units. The market conditions should have put downward pressure on rents. However, due to the hosting of FIFA World Cup 2022, there was upward movement in prices and rents across all sectors".
The International Monetary Fund (IMF) forecasted the real GDP of Qatar to grow by 2.4% during 2023, even though it expects a third of the world to go into recession amid the conflict in Ukraine. In addition, the demand for Qatari gas continues to rise, and the economy is projected to benefit from their ongoing major investments in energy infrastructure.
Consequently, Qatar's budget surplus is predicted to grow to QR70.3bn in 2023 (oil price assumed at $55 per barrel).
ValuStrat Qatar head (Research) Anum Hasan commented, "From a macroeconomic point of view, Qatar has a positive economic outlook for 2023. However, in the context of the real estate sector, the market will have to grapple with the huge influx of supply in 2022 resulting from the hosting FIFA World Cup 2022. Demand is not expected to grow as much as supply, so market corrections are predicted to be pervasive across all real estate sectors during 2023."