Rents stabilising in Qatar are a clear indication of the upbeat mood in the market about medium- to long-term national economic prospects.
In the last few months, many commercial and residential properties have come to the local market and many more are expected in the months ahead.
For investors, a key factor that drives their business strategy is the projected return on investments (ROI). Obviously, return on investments is decided by the demand and supply situation.
With Qatar economy witnessing rapid growth and many infrastructure projects being taken up, national economic prospects look good.
Population growth has been accelerating mainly because expatriates come to work on new infrastructure projects.
This is bound to put pressure on both commercial and residential properties with the result that rents may go up considerably.
Rents are likely to be a major swing factor in forecasts of consumer price inflation for 2013, experts have already warned.
Historically, from 2005 until 2013, Qatar’s inflation averaged 4.05% reaching an all time high of 16.59% in June 2008 and a record deflation of 9.96% in December 2009, a study by Standard Chartered Bank has shown.
According to QNB, overall inflation increased 3.6% year-on-year and 0.4% month-on-month to 2.4% in March this year.
Since the housing component has the largest weighting in the inflation basket (32.2%), escalating rents are sure to drive inflation in Qatar.
Rising inflation will certainly take the sheen off the real GDP growth, which no economy can afford.
In the past, when inflation surged and touched double digits, the government took very strong measures to contain it.
They included putting a ceiling on the annual rental increases and starting new low-cost residential projects. Many nationals and expatriates have then benefited from the pro-active measures taken by the government.
Although the property market is not red hot yet, effective measures will continue to ensure stability, benefiting both investors (property owners) and tenants.
The real estate market must be totally regulated and no unauthorised person must be allowed to sub-lease commercial properties or villas and apartments.
By avoiding middlemen, absolute fairness comes to play, providing optimum benefits to building owners and occupants alike.
During the last high inflation cycle (mostly between 2002 and 2008), many expatriates in the middle and low income classes were either forced to send their families home or share accommodation with other tenants. Certainly, this was not an enviable situation.
The situation was then compounded with demand for units outstripping supply, shortage of building materials and growing speculation over property prices.
At that time, the government had taken several measures to better regulate rents and control the then galloping inflation.
With government committed to rein in inflation, similar measures can certainly be expected, which will provide a stable property market, whose beneficiaries will be property owners and occupants.Last updated:
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Will Native Americans be counted in 2020 census?
Hunt is entitled to question Boris Johnson’s character
Water woes intensify as taps run dry in India
Congo, where foreign aid matters
Key development challenges facing the Arab world
Is immigrant-bashing a vote winner for the left?
Funds squeeze major challenge to contain Ebola
Stage set for G20 summit in Osaka