ValuStrat issues Q2 2021 Qatar Real Estate Market Report

Qatar real estate market shows signs of recovery

  

The second quarter 2021 review issued by leading regional consulting firm ValuStrat reported a surge in transactions volume and value compared to 2020 and 2019 (pre-COVID). Softer quarterly declines were recorded for prices and rents of villas. Hotel occupancy and ADRs improved compared to 2020 due to the boost from growing domestic tourism. Rents of warehouses also expanded during the quarter.

Pawel Banach MRICS – ValuStrat’s General Manager, Qatar commented “… At the beginning of the second quarter of 2021, restrictions were re-imposed limiting mobility amid rising COVID-19 cases. Operating capacities of commercial outlets were reduced and dine-in at F&B outlets was banned. However, the constraints did not hinder the recovery of the real estate market in Qatar. The volume of transactions surged 46% over one year and 34% over two years (pre-COVID-19). Moreover, there was an improvement in the performance of hotel, villa, and warehouse markets. This is evidence of improved buyer confidence stemming from several factors: increasing competitiveness of properties, the introduction of policies facilitating foreign investment, normalisation of relations with GCC countries, and positive reinforcements from holding of World Cup in 2022. The pandemic did exacerbate or in some cases prolong the trajectory of the decline of performance for certain sectors of the real estate market, but with the recent boost to expectations of stakeholders and lifting of restrictions we can expect stabilisation of rents and prices in certain sectors in the medium-term…”

Qatar’s ValuStrat Price Index (VPI) a valuation-based index (100 points base set in Q1 2016), that tracks the change in capital values for a representative fixed basket of properties, showed an overall 5.9% annual fall in capital values for the residential sector, with a marginal quarterly decline of just 1.1%.   

The average capital value of a residential unit stood at QAR 7,238 per sq m (QAR 672 per sq ft). More specifically, apartments were QAR 10,350 per sq m (QAR 960 per sq ft) and villas were QAR 5,689 per sq m (QAR 529 per sq ft).  Seven locations (Al Wakrah, Umm Salal Ali, Umm Salal Muhammad, Duhail, Al Dafna, Old Airport and Muaither) experienced a marginal change of less than 0.5% since the previous quarter. The highest quarterly depreciation of 4.7% in capital values was observed in the Ain Khaled cluster.

Housing stock totalled 306,515 units with the addition of 1,800 units during the second quarter of 2021. Projects handed over during the quarter were situated in Lusail (Fox Hills, Erkhyah and Marina District), The Pearl (Al Mutahidah towers and Abraj Bay Tower 2), Al Dafna, Luqta, Umm Ghuwailina and New Doha. 4,900 residential units are in the pipeline by the end of the year.

The median residential asking rent fell 5.1% over the past 12 months and 1.1% since the first quarter of 2021. Quoted median rents for apartments fell 1.2% QoQ, while for villas asking rents slightly reduced by 0.5% QoQ. Despite a continued influx of supply in The Pearl and Lusail, these areas experienced a relatively softer annual decline in rents due to faster absorption compared to secondary locations.

“The bulk of the supply is coming in the form of apartments, while we see comparatively marginal increases in the number of villas. This might partially explain a new trend we have experienced since beginning of the pandemic last year, where declines in villa rents were less compared to apartments. Moreover, the average quarterly drops for apartment rentals widened over the last 12 months when compared to villas, as quarterly falls in median rent were easing…” said Ms Anum Hasan (Market Research Manager for ValuStrat)

Office stock was estimated at 5.6 million sq m GLA with completion of 76,000 sq m GLA during Q2 2021. The citywide median asking rent for a typical office in the city stood at QAR 76 per sq m, declining 2.6% compared to Q1 2021 and 7.6% over a year. Take-up of office space has been estimated to be slow compared to the influx of supply, with oversupply estimated to exceed 2 million sq m GLA.

Cielo Hotel in Lusail, Banyan Tree Doha At La Cigale Mushaireb in Mushaireb, Marriot Executive Apartments City Centre Doha and Bentley Luxury Hotel & Suites in West Bay was unveiled adding a total of 1,096 keys to the total stock of 29,858 keys by end of Q2 2021.  Due to restrictions on inbound tourism, international arrivals totalled 76,130 visitors during the first five months of 2021, less by 86% compared to the same period in 2020. As of April 2021, 65 hotels were designated for travellers for quarantine upon return to Qatar. Domestic tourism has primarily led occupancy of hospitality properties with average occupancy during the first two months of 2021 was estimated at 56%, up 10% YoY. There was also a recovery in the Average Daily Rate (ADR) as hotels witnessed an increase of 26% compared to the same period last year.

There was no addition of organised retail space during Q2 2021. The stock of shopping centres was approximately 1.93 million sq m GLA. Msheireb Galleria officially opened comprising Monoprix as an anchor and at least 30 pop-up stores. Leniency in restrictions and promotions offered at malls has been observed driving footfall during the quarter. However, regional/community malls and unorganised retail spaces recuperated at a slower rate compared to super-regional malls. The median monthly asking rent for shopping centres shrunk 2.3% compared to the first quarter of 2021, however, overall street retail rents fell 1.8% QoQ. 

Mwani Qatar reported a surge of 22% YoY in Twenty-Foot Equivalent Units (TEUs) during H1 2021 in three ports: Hamad, Ruwais and Doha. Overall, average asking rents for dry/ambient warehouses was QAR 43 per sqm, increased 5% compared to Q1 2021 and 1% over one year.

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About ValuStrat

ValuStrat Qatar is part of a leading consulting firm providing valuation, research, advisory, due diligence and divestment 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.

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

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