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Qatar residential rental levels widen 7% y-o-y in 2015
Published in The Saudi Gazette on 15 - 03 - 2016

Despite the backdrop of ongoing economic uncertainty and a sustained period of low oil pricing, residential rental levels in Qatar continued to expand unabated during 2015, rising by approximately 7% year-on-year, according to the H2 2015 Qatar MarketView by global real estate consultancy firm CBRE.
"Albeit, this was down from the 14% annual growth achieved during the same period in 2014. Rental rate growth during the second half of the year was around 5%, although growth in the final quarter was measured at just 1%. Smaller apartment units, particularly those within central locations, remained in high demand, although rental growth was actually most evident for secondary and more affordable locations," said Mat Green, Head of Research & Consulting UAE, CBRE Middle East.
"There has been increasing evidence of tenant relocations and downsizing, with some occupiers moving into smaller units or choosing more affordable accommodation in less prominent areas of the city," added Green.
Housing options in locations such as Al Sadd, West Bay Lagoon and the Pearl Qatar continue to attract solid demand from higher income groups of expatriates. Typical monthly rents for one bedroom and two bedroom apartments in Al Sadd range from QR8,000–14,000/month, whilst West Bay Lagoon and Pearl Qatar range from QR14,000- QR20,000/month.
From a total housing stock of roughly 180,000 units during 2010, Doha's total housing stock has grown to reach in excess of 226,500 units at the end of 2015, translating into a circa 5% annual growth rate. The MarketView highlighted that a significant majority (80%) of future supply will cater to upper mid – high income segments, with estimated rental levels in excess of QR7,500/month, meaning a minimum household monthly income of around QR25,000/month would be required.
When looking at Qatar's office market, the CBRE report shows that the West Bay/Diplomatic area remains the primary choice for the majority of international and local office occupiers wishing to set up operations in the country. In addition to comprising roughly 60% of the total office stock, proximity to quality residential, retail, hospitality and entertainment facilities make the wider West Bay area more appealing to tenants. Whilst West Bay will remain at the epicenter of the commercial office market in the short to medium term at least, the country is gravitating northwards amidst massive new construction works in locations such as Lusail.
"In terms of the future office supply pipeline, over 32% of all office space set to be completed over the next five years will be completed in the Lusail area, versus around 29% in West Bay," said Green.
Prime rentals for Grade A office space remained steady during the second half of the year, with rates typically ranging from QR220-280/m2/month. In addition to the headline costs, the majority of commercial occupiers will also pay a service charge, which generally ranges between 10-25% of the annual base rentals. Although some new Grade A developments are starting to introduce an actual cost recovery method (e.g. Doha Tower). More price-sensitive occupiers tend to congregate around the C/D Ring Roads, where rentals are more affordable, ranging from QR120-220/m2/month. A significant portion of all Grade A office supply in the West Bay area is occupied by the public sector and oil and gas related companies - two areas facing an increasingly uncertain outlook amidst challenging economic conditions.
"With current market conditions in mind, landlords are also becoming more flexible and realistic in their leasing approach, with more acceptance towards accommodating demand for smaller office space, rather than only accepting the rental of whole floors, or whole buildings to Government related entities," added Green.
The CBRE report also highlights that according to figures released by the Qatar Tourism Authority (QTA), total foreign visitors to the country reached to 2.93 million during 2015, roughly 3.7% annual growth over the same period in 2014. Qatar's tourist arrivals came from a diverse set of international source markets, although the GCC accounted for a significant 44% of the total during 2015, recording 1.3 million visitors during the period. This reflected roughly 16% growth from 2014 figures.
Visitors from Kingdom of Saudi Arabia remained as the country's top source market accounting for 29% of the total arrivals and nearly 66% of all regional visitors. Qatar now has a total of 119 hotels and hotel apartments, offering 20,710 rooms at the end of 2015. Notable hotel completions during the year included Marsa Malaz Kempinski on the Pearl Qatar, Anantara Banana Island resort, Hilton Double Tree in Old Salata, Melia Doha and Shangri La in Dafna/West Bay area.
According to the CBRE report, in June 2015 the government forecasted Qatar's economy would grow by around 7.3% during 2015, down from an earlier estimate of 7.8%. However, in December, GDP growth forecasts were cut again, with an estimate of just 3.7% for 2015, with a further reduced output expected in 2016 and 2017.
"With the negative impact of lower hydrocarbon revenues becoming more evident, the country's economic growth will become increasingly reliant on the performance of the non-oil sector. During 2014, non-hydrocarbon revenues accounted for close to 60% of the national accounts, a figure that is expected to grow by around 10% during 2015."
"Qatar is set to experience a budget deficit, with the proposed budget for 2016 set around 8% lower than during the previous fiscal year for the first time in 15 years," Green noted. — SG


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