Residential rents have remained “relatively stable” in Qatar over the past three months after two years of decline, consultancy and research firm DTZ Qatar said in a report.
Overall, rental trends have declined by approximately 10% to 15% in the past year alone, as supply increases.
DTZ said it has seen an increase in leasing activity in the third quarter (Q3) of this year; however, the vast majority of new lettings are to existing residents of Qatar looking for reduced rents, rather than incoming residents.
The relative lack of new demand currently being generated means that oversupply continues to grow as new developments complete. Asking rents for vacant apartments in areas such as Al Sadd, Bin Mahmoud Al Mirqab and Bin Omran have fallen by up to 20% since 2016, although a number of new high-quality developments with high specification finishing still command relatively strong rents in these areas.
West Bay and the Pearl-Qatar have typically dropped by 10% to 15% over the past 12 months, with rent-free incentives of at least a month available on the majority of new leases. The recent drop in rent has restored a sense of affordability to the prime residential sector, following several years of escalating rents.
Lower rents have also encouraged residents to seek higher quality accommodation than may have previously been deemed affordable. The large pipeline of new prime apartment developments in neighbourhoods such as Pearl-Qatar and Lusail is likely to put further downward pressure on rents unless significant new demand is created.
DTZ expects new demand in Qatar to be largely generated by those in the service sector as construction projects complete prior to the FIFA World Cup. Developments such as ‘Ezdan Oasis’ in Al Wakrah now provide modern masterplanned residential neighbourhoods catering for this demand.
Rental levels of QR4,500 for a one-bedroom apartment up to QR6,500 for a three-bedroom apartment, are currently being sought in Ezdan Oasis, which has set the tone for mid-market rental levels.
The number of residential sales transactions for July and August increased by 9% on the same months in 2017, which reflected an overall increase in the value of house sales of 3%. “Values have continued their downward trend, which has been evident since 2016,” the report noted.
New apartments in the Pearl-Qatar are currently available for between QR12,000 and QR16,000 per square metre, depending on size and apartment type, while in the ‘second hand market’ recent transactions have typically reflected prices of between QR9,000 and QR11,000 per sqm, DTZ said.
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