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Qatar’s property market cools

28 June 2023

Recovery and growth for GCC real estate

After a period of heightened activity in 2022 due to the Fifa World Cup, Qatar’s real estate market in 2023 has seen a return to patterns reminiscent of 2020 and 2021, according to research from Cushman & Wakefield. 

Apartment rents, which soared due to a temporary shortage of accommodation last year, have begun to decline since February. Market predictions in January anticipated this downturn, yet tangible signs of softening rents only emerged from mid-February. 

The market now offers rent-free periods and all-inclusive deals once again, mirroring pre-2022 conditions. Provided new demand remains tepid in the coming months, apartment rents are anticipated to continue their descent.

The apartment supply has been augmented as properties that were reserved for the World Cup are now entering the market. This includes the Madinatna development on the G-Ring Road, adding nearly 7,000 units and offering robust competition to Ezdan Oasis and Mesaimeer City. The Pearl Qatar also witnessed new developments, with Floresta Gardens reporting strong uptake in recent months.

The villa market contrasts with the apartment sector, with vacancy rates remaining low, particularly in prime compounds. Villa rents experienced a 3-8 per cent increase last year with no significant reductions observed in the first quarter of 2023. 

Given high occupancy rates, it is expected that current rents will hold steady until supply and demand dynamics shift.

Despite an eventful 2022, residential sales transactions dipped by 25.5 per cent compared to 2021, with the slump continuing into the first quarter of 2023, reflecting a 34 per cent decline from the same period last year. This points towards a cooling residential property market after the initial surge that followed the introduction of a law in 2018 that allows foreign nationals to purchase and own real estate in Qatar.

Office leasing activity was relatively subdued in the first quarter of this year following a significant uptick in 2022. The Lusail area is becoming a major hub for office activity, with potential to become Qatar’s de facto financial district. 

While the options for premium quality fitted space need expansion, grade A stock typically leases for QR100-120 ($27.47-$32.96) a square metre a month, exclusive of service charges. 

In the hospitality sector, Qatar continues to add to its hotel supply, with 700 keys introduced in the first three months of 2023. The country’s tourism sector shows encouraging signs, with a significant year-on-year rise in tourist arrivals, fuelled by the success of the World Cup.

Finally, retail mall occupancy rates have been under pressure from increasing supply over the past decade. Despite this, demand for food and beverage units remains relatively healthy, and incentives to entice retailers are common. As the market continues to evolve, retail rents, particularly in secondary locations, are trending downward.

Read more on the GCC real estate markets

 

 

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Colin Foreman

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