Qatar’s real estate may remain a “buyer-friendly market” over the next quarters of 2019 as "existing and upcoming supply this year will entail further softening of prices", a new report has shown.
The first quarter 2019 review issued by leading regional consulting firm ValuStrat reports the continuation of an overall correction phase where prices have become “more competitive”. Residential capital values and rents weakened and office rents continued to favour tenants. Falling Average Daily Rates (ADRs) have given rise to occupancy in all hotel categories. Industrial storage rents in the industrial sector decreased marginally, the report said.
ValuStrat’s general manager (Qatar) Pawel Banach said, “Prices and rents continue to fall, however, the rate of adjustment is slower, indicating they have reached a more representative level in several areas of Qatar. Competitive prices can partially explain the jump in transaction volume by 20% annually this quarter.
“Existing and upcoming supply in 2019 will entail further softening of prices, ensuring Qatar remains a buyer-friendly market over the next quarters of 2019. In a bid to entice tenants and buyers, a range of attractive incentives were offered by landlords. Furthermore, the recent law amendment of expanding freehold ownership in residential and commercial sectors have provided further incentives to foreign owners to have outright property ownership in Qatar.”
Qatar’s ValuStrat Price Index (VPI) for residential capital values is a 100-point valuation-based index with its base set in Q1, 2016, stood at 73.4 points. Countrywide residential capital values declined by 18.3% compared to the same quarter two years ago, down 9.9% year-on-year (y-o-y) and 2.2% (quarter-on-quarter).
The average capital value of a residential unit stood at QR8,186 per sq m, ValuStrat noted.
More specifically, apartments were QR11,934 per sq m and villas stood at QR6,320 per sq m. Compared to the previous quarter, apartment capital values softened by 0.8%, whereas villa values fell 2.5%.
Villas in West Bay Lagoon, Al Waab, Fereej Soudan, Ain Khalid Abu Hamour, Duhail and Muaither and Al Kharaitiyat experienced quarterly declines up to 10%.
In the residential rental market, the downward pressure on rents witnessed throughout 2018 carried over to Q1 2019, ValuStrat said. Citywide residential asking rents declined 10.3% over the past 12 months and 2% since the fourth quarter of 2018.
Secondary apartment and villa locations such as Al Wakrah, Al Khor, Muraikh, Old Airport, Al Gharrafa and Umm Salal Mohammad experienced annual rental falls of up to 10%.
“Capital values of villas in Ain Khaled declined 6% quarterly; however, its rental values dipped 1% causing gross yields to elevate to 3.8%. In Zig Zag Tower, capital values and rents declined by 4% and 0.6% respectively y-o-y leading to a gross yield of 6%. Overall gross yields increased to 5%. This trend is expected to prevail throughout 2019,” said Anum Hasan, senior market research analyst at ValuStrat.
Residential supply reached 293,000 units as of Q1 2019 with the delivery of 3,000 apartments and villas in The Pearl, Lusail, Abu Sidra, Al Wukair, Baaya, Al Hilal and Sakhama.
Projected completion for the remaining quarters of 2019 has been adjusted to 10,000 units, 67% of which is planned for Lusail and The Pearl, ValuStrat said.
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