JEDDAH: The number of transactions and inquiries is expected to continue rising this year with the supply/demand gap narrowing, says Asteco Qatar Q4, 2011 report.
Residential rental rates in Qatar were broadly stable across all locations in the fourth quarter of last year while the number of transactions and inquiries increased as demand picked up, leading property consultancy Asteco said in its latest report.
With the exception of some marginal rises, rents are likely to remain unchanged this year but demand is expected to continue rising.
While supply is set to outstrip demand, the supply/demand gap will decrease towards the end of the year.
"The performance of Qatar's property sector is likely to be similar to 2011, with sales prices and rental rates remaining relatively flat," said Jed Wolfe, managing director, Asteco Qatar.
"Bearing in mind 2011 was the third consecutive year of the global downturn experienced by the GCC markets, the Qatar real estate market performed relatively well, with pricing generally stabilizing across all sectors," added Wolfe.
Rental rates for a two-bedroom apartment in Al-Sadd and the Pearl-Qatar were on average QR6,250 and QR13,000 per month respectively in the fourth quarter.
There was a small decline in rents in the prime area of West Bay, but this was due largely to a small number of transactions rather than a market trend, while rents for compound villas rose slightly, with high quality luxury villas best performers.
Rents for good quality villas ranged between QR23,000 and QR40,000 per month.
Demand for prime villas that are maintained to high international standards marginally outstripped supply and this looks set to continue.
Demand in Qatar is generally expected to be focused on prime locations such as West Bay and may minimize the effect of increased supply.
There was a distinct increase in apartment sales transactions in the Pearl-Qatar over the last three months indicating that investor confidence is returning. Transactions largely occurred in the secondary market by investors looking for distressed sales.
"With prices having stabilized for the fourth consecutive quarter, there is now strong evidence to suggest that prices have finally bottomed out and will not decline further," said Wolfe.
Inquiry levels from both Qataris and expatriates for freehold apartments were distinctively higher than during the third quarter of last year, which may result in a more positive sales market in 2012.
Overall performance of the property market may improve this year depending on whether contracts for rail network, stadia and associated construction projects are awarded.
The fourth quarter witnessed the final lettings in Tornado Tower and Al-Fardan Commercial Tower, two of the most prestigious office towers in West Bay.
The commercial office market, however, continues to be oversupplied with several new developments approaching completion.
Asteco's research indicated a stabilization in both the residential and commercial leasing markets during 2011.
Rental rates in both sectors have experienced only minor fluctuations during the year.
Although demand was effectively outstripped by supply, a steady increase in demand was witnessed quarter-on-quarter, being sufficiently high to prevent further declines in rental rates.
One-bedroom apartments in prime locations proved most popular within the residential leasing market, whilst prime luxury villas of high quality performed the best during the year.
Demand for good quality, prime villas that are maintained to high international standards marginally outstripped supply and this looks set to continue.
In the commercial leasing market, the vast proportion of tenant inquiries were from international companies seeking 100 to 600 square meters of space.
Generally, tenants were not willing to spend large sums on fit-out, preferring to opt for fitted office space or buildings where fit-out costs were relatively low.
The report said 2011 saw renewed interest in locations around the airport as businesses benefited from lower rents than the Diplomatic Area and reduced travel times to and from the airport.
Overall, the residential sales market was relatively flat during 2011, with little improvement over 2010. However, inquiry and transaction levels were up in the latter part of the fourth quarter.
Bearing in mind 2011 was the third consecutive year of the global downturn experienced by the GCC markets, the Qatar real estate market performed relatively well, with pricing generally stabilizing across all sectors.
It is likely that there will be little or no increase in rental rates for both the residential and commercial leasing markets during 2012. However, we can expect a steady increase in demand.
Overall, supply is set to outstrip demand, but the supply/demand gap will decrease toward the end of the year.
The increased supply in certain micro markets and locations, such as prime West Bay, may have a more negative impact on rental levels. However, demand is expected to be focused on these locations, which may minimize the effect of continued supply.
Generally, performance of the Qatar real estate market is likely to be similar to 2011, with sales prices and rental rates remaining relatively flat, but with an increase in the number of transactions and inquiries.
Asteco's research indicates that major contracts surrounding the large infrastructure projects associated with FIFA 2022 are unlikely to be awarded in 2012.
Material growth in the real estate market will have a direct correlation to population growth and these major infrastructure projects will be the main source of this growth.
Finalizing the rail network plans, Stadia locations and awarding associated construction contracts will have a significant positive effect on the real estate market.
If indeed some of these contracts are awarded in 2012, performance will no doubt look significantly healthier than 2011.
© Arab News 2012
