Residential supply reached 290,000 units as of fourth quarter (Q4) 2018 with the delivery of 1,265 apartments and villas in The Pearl, Lusail, Umm Salal, Duhail and New Salata, the report said.
Qatar’s Residential ValuStrat Price Index (VPI) where a 100-point base was set in Q1 2016, now stands at 75 points, ValuStrat said. Countrywide residential capital values declined by 17.5% compared to the same quarter in 2016, 9.3% compared to Q4, 2017 and 1% compared to Q3, 2018.
The weighted average value of a residential unit stood at QR8,334 per sq m. More specifically, apartments were QR12,064 per sq m and villas stood at QR6,477 per sq m.
Values of freehold apartments have declined marginally by 1.2% on a quarterly basis, whereas values of villas fell by 1.1% QoQ. Compared to previous quarters, villas coped well and only a few clusters such as West Bay Lagoon, Al Waab, Fereej Soudan, Umm Salal Mohammad and Al Kharaitiyat experienced quarterly declines of up to 5%.
In Q3, 2018, gross residential yields averaged 4.9% for all unit types. Citywide residential asking rents declined 10.8% over the past 12 months and 2.2% since the third quarter of 2018. Due to influx of supply, apartment rents declined 10.6% annually and 2.3% quarterly. Similarly, corrections were observed in the villa market, as rents declined 12% compared to 2017 and 2% quarter-on-quarter (QoQ).
The fourth quarter 2018 review issued by ValuStrat showed “marginal” declines in performance across all sectors. Capital values and rents in the residential sector slightly weakened, rents continued to favour tenants in the office sector.
Falling Average Daily Rates (ADRs) have given rise to occupancy in all categories except 5-star hotels.
Headline rents for malls remained relatively stable.
ValuStrat general manager (Qatar) Pawel Banach said, “Qatar’s real estate sector during the final quarter of 2018 witnessed a continuation of the tough trading conditions experienced in Q3, however, the rate of decline continues to slow down.
“In 2019, we expect the market to continue to show resilience backed by additional foreign investment opportunities introduced by the government, robust public spending on construction and improvements in the non-hydrocarbon sector.”
ValuStrat market research analyst Anum Hasan said, “In 2018, overall gross yields remained relatively stable for all residential units. Residential performance of ‘The Pearl’ (for apartments) and ‘Al Wakrah’ (for villas) surpassed all other locations.
“Capital values of villas in Al Wakrah declined 19%, however, its rental values fell 7% causing gross yields to increase by 1%. In The Pearl, capital values and rents decreased by 8% and 5% respectively year-on-year. It will be interesting to see how interactions of capital values and rents will affect the yields in 2019.”