DOHA: Qatar's real estate sector has enough room to adjust itself to the changing business cycles. The decline of QCB's real estate price index for the first time in eight months in December 2015 shows that the market is adjusting to short term-long term challenges, an expert panel noted yesterday.
At a media round table, leading real estate company DTZ's top experts said the number of real estate transactions in Qatar will continue to grow in 2016, but with a slight correction in terms of land prices and transaction value.
"Banks are reducing exposure to riskier markets. Land value will stablise overall with a reduction in some place in Qatar. We are also expecting a reduction in the speculate purchase," Richard Rayner, Senior Chartered Surveyor, DTZ said.
On the office market sector, Johny Archer, Associate Director, Consulting and Research, DTZ said approximately 300,000 sq m of new office accommodation is likely to complete in West Bay within the next 12.18 months, which will increase supply levels, however, over more than 200,000 sq m of this is at the QP District, which may not be available to the market. In the longer term, once developments complete in Lusail, the large supply pipeline may result in downward pressure on rental levels as landlords compete for new tenants.
"There has been a fall in demand for corporate lettings of entire residential blocks and compounds. Companies are increasingly look to provide a rental allowance rather than employee accommodation. This has resulted in a number of residential apartment blocks remaining vacant as some landlords prefer to secure corporate leases", said Mark Proudley, Director, Consultancy and Commercial Agency, DTZ.
On the Pearl-Qatar, DTZ estimates that new supply of apartments is likely to increase by between 30 percent and 40 percent in 2016 as up to thirteen new towers in Porto Arabia and Viva Bahriya near completion. This will have a significant impact on the prime residential market, and has potential to see rental levels reduce further if delivered as expected and demand remains stagnant.
In the hospitality sector, 1,900 hotel keys were added to Qatar's stock in 2015 although DTZ noted downward pressure on average daily rates (ADR's) with a drop of 12 percent compared to the same period in 2014. Pressure on performance metrics in the hospitality sector is likely to continue, as up to 80 new establishments are expected to increase supply by approximately 18,000 keys over the next 3 to 5 years, Mark said.
"In the final quarter of 2015, Qatar's real estate market started to show signs that the drop in hydro-carbon prices is really beginning to bite. We think this is likely to continue into 2016 and the sector needs to be ready for a few tough months. But the long-term trajectory for Qatar remains good with the government's significant infrastructure investment, valued at QR261bn," Mark added.
© The Peninsula 2016