Q2 2019 Qatar real estate market report: ValuStrat

Qatar realty to remain buyer's market in the Medium-Term

  

The second quarter 2019 review issued by leading regional consulting firm ValuStrat reports a continuing correction phase where the rental market shows a noticeable weakening. Residential rents and capital values softened, and office rents continued to cater to tenants.

Pawel Banach MRICS – ValuStrat’s General Manager, Qatar commented “…The sales transaction volume accumulated to QAR 9.5 billion in value during the first five months of 2019. Residential capital values have reduced, though the quarterly rate of decline has slowed. On the other hand, the rental market showed a relatively noticeable weakening, sector-wise rental rates continued to fall during the first half of 2019. This trend is expected to persist as oversupply will continue to favour tenants over landlords in the coming quarters. Consumers can take advantage of increasingly competitive prices and flexible payment plans available in Qatar. This coupled with government initiatives such as the introduction of freehold ownership law in the previous quarter could lead to more long-term investments by expatriates in Qatar…”

During Q2 2019, residential asking rents declined 5.6% over the past 12 months and 1.5% since the first quarter of 2019. An influx of supply has led to a fall in quarterly rents up to 3% in Al Mansoura, Lusail, Al Wakrah and The Pearl. 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 13%.

Qatar’s ValuStrat Price Index (VPI) a valuation-based index for residential capital values (100 points base set in Q1 2016), stood at 72.8 points as of Q2 2019. Countrywide residential capital values declined by 16.5% compared to the same quarter two years ago, down 6.3% YoY and 0.8% QoQ.

The average capital value of a residential unit stood at QAR 8,132 per sq m. More specifically, apartments were QAR 11,888 per sq m and villas stood at QAR 6,262 per sq m. In comparison to the previous quarter, apartment capital values softened by 0.4%, whereas villa values by 0.8%. Villas in Ain Khaled/Abu Hamour, Old Airport/Najma, Al Wakrah and Al Khor experienced quarterly depreciation of 1% to 3%.

Residential supply reached 294,700 units as of Q2 2019 with the delivery of 1,700 apartments and villas in The Pearl, Lusail, Fereej Bin Mahmoud, Old Ghanim, Fereej Abdul Aziz, Musheireb, Al Dafna, Al Kheesa, Al Wajba and Umm Salal Ali. Projected completion for the remaining quarters of 2019 has been adjusted to 9,000 units, 70% of which is planned for Lusail and The Pearl.

With the addition of 200,000 sq m Gross Leasable Area (GLA) total office stock totalled 4.54 million sq m GLA at end of Q2 2019. Downward rental pressure remains persistent countrywide as median rents fell 4% since Q1 2019 and 14% since Q2 2018. This is expected to continue as approximately 600,000 sq m GLA of offices are expected to be added by the end of this year. Highest quarterly falls were experienced in secondary locations such as Salwa Road and Grand Hamad Street where asking rents ranged from QAR 55 to QAR 110 per sq m.

“Demand for office market has been sluggish. Despite the recovery in oil prices, government and private organizations continue fiscal consolidations, moreover, new companies entering the market prefer smaller and flexible open spaces. As per ValuStrat’s research, countrywide occupancy of office space is estimated

at 65%. With the existing pipeline of supply, vacancies are projected to increase, and landlords may continue to offer even more favourable terms for tenants- said Ms Anum Hasan (Senior Market Research Analyst for ValuStrat)”

As of Q2 2019, a total number of 26,890 hotel rooms were available across 129 properties. There were no additions during the second quarter according to ValuStrat research. Till May 2019 visitor arrivals reached 922,132, up by 11% compared to the same period last year. Hotel operators continue to reduce room rates to attract more guests, Average Daily Rate (ADR) across all star categories on average declined 6% YoY for the first five months of 2019, a result of which led to hotel occupancy increasing to 66% from 60% last year.

Qatar’s organised retail stock reached 1.81 million sq m GLA as of Q2 2019, owing to new additions of neighbourhood retail centres in Lusail. Galeries Lafayette (4,350 sq m GLA) announced a soft opening of its flagship store within Katara Cultural Village. Amid competition from newly opened super regional malls, relatively older shopping centres have reduced asking rents by an estimated 5% YoY in order to maintain occupancy. Median monthly asking rent among street retail units in Doha stood at QAR 195 per sq m and outside Doha at QAR 180 per sq m.

An estimated 500,000 sq m GLA of warehousing space is projected to be completed by end of 2019. Median monthly asking rents for dry storage fell to QAR 34 per sq m, down 5% QoQ and 12% YoY. Average asking rents for temperature-controlled warehouses intended for food and chemical storage fell by 3% QoQ and 11% YoY.

-Ends-

About ValuStrat
ValuStrat Qatar is part of a leading consulting firm providing Advisory, Valuations, Research, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. With an office network providing services to over 1,000 corporate clients including financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm.

About the ValuStrat Price Index
The ValuStrat Price Index for Qatar’s residential capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical residential units within Qatar. The VPI applies weighted averages using data samples representing influential locations across the city and is built by our expert RICS Registered Valuers

© Press Release 2019

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