Driven mainly by increased affordability in the mid and high-end categories, there has been a marked rise in tenant movement in Qatar’s residential segment in first (Q1) and second quarters (Q2) of this year, KPMG has said in a report.
Interestingly, the second quarter experienced signs of recovery on the rental index. This is positive news for a sector that has witnessed a constant decline since the beginning of 2016.
“This positive trend is driven by increased affordability in the mid and high-end categories coupled with increasing demand for larger living spaces, convenient access to recreational amenities, and private outdoor spaces. As per our research, centrally-located districts continue to be popular with tenant's keen on upscale properties,” KPMG said.
While the mid and affordable segment continues to experience stable asking rentals, the high-end segment registered a marginal decline of 1.4% on the rental index.
The decline for the high-end category was primarily driven by the apartments category (nearly 2%) located towards the north of Doha.
While the asking rentals for villas in the high-end category continue to remain stable, the mid and affordable segment villas experienced a further correction of close to 2%, KPMG noted.
In the residential segment, Q1 and Q2, 2021 exhibited stable leasing activity resulting in a marginal decline of 0.4% on the rental index as compared to 3.7% as witnessed during Q3 and Q4, 2020.
The same period (Q1 and Q2) during 2020 had experienced a decline by approximately 2.7%.
Research showed the office rentals in the central business district are witnessing promising signs of stability. With the uptick in the economic activity, a possible recovery can be expected over the short to middle term.
After witnessing a drop of 8.4% during the last two quarters (Q3 and Q4) of 2020, the rentals for the commercial office segment have experienced significant improvement with just a one percent decline on the rental index during Q1 and Q2, 2021.
Anurag Gupta, director and head (Strategy and Real Estate Advisory) at KPMG Qatar said, “The steep fall in monthly rentals post-pandemic compelled landlords/developers to re-think their strategies. Landlords maintain high rental returns during stable demand; however, it is also necessary to adjust with the low-demand scenario when required. Those landlords willing to adjust are witnessing increased traction in leasing activity with subsequent demand for their properties.
“Q1 and Q2, 2021 experienced a shift in the momentum with monthly rentals experiencing a relatively softer decline. This could be attributed to landlords offering value for money products along with other external factors such as government efforts in widespread vaccination, expected relaxation in employment related restrictions and gradual improvement in the overall economic activity.”
Sayantan Pande, associate director and head (Infrastructure, Financing and Real Estate Valuations) at KPMG Qatar said, “We are of the belief that Qatar’s real estate sector will sustain positive momentum in the second half of 2021. This is due to the successful Covid-19 vaccination efforts coupled with continuous measures from government to support the economy.”
“We have started experiencing increased interest from large regional developers in the Qatar market, reconfirming our view that the market remains attractive and will return to normal soon.”