The introduction of foreign investment-friendly laws such as legalisation of foreign ownership for various asset classes in some 10 locations has benefited Qatar’s real estate sector in 2019, a new report has shown.
Granting automatically renewable residence permit for a period of five years for expatriate owners and beneficiaries of real estate was also instrumental in bolstering the sector, research and consultancy firm ValuStrat said.
The 2019 housing market has been one of increasing supply, high demand and falling rents — particularly on the premium end of the market. Majority addition of apartment supply was seen in The Pearl, Lusail and Musheireb. In addition, residential compounds were added in peripheral areas of Al Rayyan (Abu Sidra, Abu Hamour, Al Wajba and Baaya), Al Wakrah (Al Wukair) Umm Salal and Al Khor.
Due to oversupply in some areas, landlords reduced rents to maximise occupancy, ValuStrat noted.
Citywide rental values decreased by 7% annually in addition to a 5% annual drop in capital values as per ValuStrat Price Index (VPI). Secondary locations experienced steeper annual declines up to 13% compared to prime locations such as The Pearl, West Bay and Lusail, which saw asking rental declines of 8% YoY.
As per ValuStrat research, occupancy in The Pearl increased as a result of declining rents as well as various incentives being offered.
Pawel Banach, ValuStrat general manager, said, “2019 has been an instrumental year for real estate of Qatar as a result of introduction of foreign investment-friendly laws such as a legalisation of foreign ownership for various asset classes in 10 locations and granting automatically renewable residence permit for a period of 5 years for expatriate owners and beneficiaries of real estate.
By November, real estate transactions reached 3,518 with a total value of QR21.2bn. In addition to improvement in the legal framework, falling mortgage rates and capital values made buying property for non-Qatari households easier than before.”
New office stock was added in Lusail, Mushiereb Downtown, Al Sadd, Old Al Ghanim, Old Salata, Fereej Bin Mahmoud and Fereej Bin Omran. Falling rents in West Bay forced secondary locations such as Al Sadd and Grand Hamad Avenue to experience highest annual fall in rents of up to 20%.
In addition, existing oversupply and the persistent influx of new commercial office spaces in Lusail, induced asking rents to fall by 18% YoY. An estimated stock of 750,000 sq m out of 2.1mn sqm GLA office spaces were vacant in Lusail and West Bay.
With the completion of Al Waddan Mall in Mesaieed and The Galleria and Department Store in Musheireb Downtown, organised retail supply totalled 1.89mn sq m GLA (Gross Leasable Area) this year.
Amid competition from newly opened and expected super-regional malls, relatively older shopping centres have reduced asking rents by an estimated 5% YoY and offering various incentives in order to maintain the tenancy. Average occupancy across malls was estimated at 80%.
As of September 2019, Qatar had some 26,778 hotel rooms and hotel apartments within 128 establishments.
A total of 1.49mn international guests (compared to 1.32mn last year) stayed an average of 3.47 nights per stay and spent an Average Daily Rate (ADR) of QR369.
“The first nine months saw occupancy rates averaging at 64% which is 5% higher than last year, though, ADR declined by 4%,” ValuStrat said.