The fourth quarter 2017 review issued by leading regional consulting firm ValuStrat – reports heightened supply activity in all sectors of real estate market. Housing prices showed signs of stabilising with a quarterly increase in transaction volume. On other hand, leasing rates continued to suffer in both residential and commercial sectors. The retail sector experienced less pressure, as average rents for mall space remained stable and shopping centres enjoyed a healthy footfall. Qatar’s tourism and hospitality segments continued to operate in a challenging market.

Pawel Banach MRICS – ValuStrat Qatar General Manager commented “…Amid regional challenges, 2017 ended on a high note with the value of real estate transactions reaching QAR 32.7 billion, 20% higher than 2016. Signs of stability were experienced in transacted prices of residential properties. All the subsectors of real estate market experienced notable increases in supply activity with retail sector expanding by 60% since 2016. However, the influx of supply continued to put downward pressure on rents in residential and commercial sectors. In the short term due to projected expansion in supply, both sectors may continue to incur market corrections. In the medium term, depending on anticipated oil price recovery and government support the downward trajectory may stabilise…"

A total of 6,625 housing units were delivered in 2017 bringing the total residential supply to 286,125 properties. Because of the surge in supply and stagnating population growth rate occupancy remained within 75-80% in 2017.  56% of 2018’s pipeline is expected to be delivered in prime locations such as The Pearl, West Bay and Lusail.

“…This quarter both trends of falling median transacted prices and rising transactional volumes were reversed. Median transacted prices remained stable over the last year and increased by 7% since the previous quarter. This increase in transacted prices can be attributed to larger ticket sizes of housing transactions experienced in northern and southern outskirts of central Doha. On the other hand, increased borrowing costs eroded transactional volume by 19% YoY...” said Anum Hasan, Market Research Analyst at ValuStrat Qatar

Citywide residential asking rents declined 15% over the past 12 months and 5% since the third quarter.  The influx of apartment buildings in secondary locations has triggered fall in rents by 8% compared to third quarter of 2017. While median asking rents for villas in prime locations such as West Bay Lagoon and Al Waab experienced a decline in quoted rents by 8% QoQ.

An estimated 750,000 sq m GLA of office space was projected for 2017, of which 52% was completed during the course of the year. Projections for 2018 has been upward adjusted to 940,000 sq m GLA due to delayed deliveries from 2016/17. Office asking rents fell 9% compared to last year and were 4% lower than the third quarter of 2017. Burgeoning supply in Al Sadd, along Salwa Road and C/D Ring Roads, triggered highest quarterly fall in rents compared to other areas.

In the hospitality sector, four hotel establishments (Time Rako, Al Thuraya Tower, Victoria Hotel and Golden Tulip Doha) were added during the quarter. As of the end of 2017, total supply has amounted to 26,550 keys and is projected to reach 33,450 keys by the end of 2018 provided there are no construction delays. Up till November 2017, occupancy of hotels averaged to 57%, registering an 8% fall compared to the same period last year. With 8% increase in hotel stock since last year, Average Daily Rate (ADR) and Hotel Revenue Per Available Room (RevPAR) declined by 7.5% and 15% respectively over the past 12 months.

2017 ended with the completion of Tawar Mall in Duhail, leading to total retail supply to reach 1.75 million sq m, recording a 60% increase since last year. Shopping centre GLA for Qatar reached to 664 sq m per 1000 capita. Monthly retail rents for line shops averaged at QAR 300 per sq m. Footfall remained stable in regional and super regional malls.

The government continued to support industrial properties through investment in industrial supply and policy initiatives such as reducing logistical rents of land by 50% in South of Doha.  Average monthly quoted rents stabilised at QAR 45 per sq m in Doha Industrial Area. Addition of government regulated warehousing zones continued to exert pressure on rents of non-subsidised warehouses. Average rentals for cold storage units reduced by 5% compared to third quarter 2017.

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About ValuStrat

ValuStrat Qatar is part of a leading consulting firm providing Advisory, Valuation, Research, Due Diligence, and Divestment services across a diverse range of industry sectors since 1977. With an office network providing services to over 800 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.

© Press Release 2018