Apartment rents plummet in Q2 2023 to pre-World Cup levels
Johnny Archer, head of Consulting & Research at Cushman & Wakefield Qatar. PICTURE: Shaji Kayamkulam.
Apartment rents in Qatar have returned to or even below pre-World Cup levels in the second quarter of the year, according to Cushman & Wakefield Qatar’s ‘Q2 Real Estate Market Review’. The 2022 FIFA World Cup commanded a spike in demand but residential rents in Qatar “have been falling month-on-month since March” of this year amid a significant increase in the availability of vacant apartments in the first half of 2023, said Johnny Archer, head of Consulting & Research, citing the review, which was released during a seminar here Wednesday.
Archer reported that rents remained stable throughout the first quarter of 2023. However, additional apartment supply by Ezdan or under construction “will put further downward pressure on rents,” he noted.
The ‘Q2 Real Estate Market Review’ stated, “The addition of new apartment supply in recent months, including developments at La Plage South and Giardino Village on The Pearl Island and in Lusail has resulted in increasing availability of prime apartments, resulting in downward pressure on rents.
“Elsewhere, the release of almost 7,000 apartments in the Madinatna development in Al Wakra has significantly boosted the supply of modern and budget accommodation, providing direct competition for established residential neighbourhoods in Al Wakra and Mesaimeer.”
The review also stated, “While occupancy rates in Doha’s prime residential villa compounds remain strong, there has been an indication of growing vacancy in the compound villa sector overall, which coincides with the end of the school year. While rental levels have not fallen to the same degree as in the apartment sector, a return of rent-free incentives to attract new tenants suggests a fall in net-effective rents.”
It also reported that the majority of one-bedroom apartments in The Pearl Island can now be leased for between QR6,000 and QR8,500 per month, depending on the location and quality of the building. Most three-bedroom units on the island are now available for between QR13,000 and QR15,500 per month.
In Fox Hills, one-bedroom apartments are now typically available for between QR5,000 and QR6,500 per month, with three-bedroom units now commanding between QR8,500 and QR10,000 per month.
The number of residential sales fell by “22.6%” in April and May compared to the same months in 2022, the review also stated, citing figures released by the Planning and Statistics Authority (PSA). Archer said the imminent introduction of a Real Estate Regulatory Authority as announced by the Ministry of Municipality will increase transparency in the market and enhance statutory and legal protections for investors.
He said the Qatar Central Bank also announced a series of amendments to its real estate financing (mortgage) regulations. The amendments, aimed at protecting the financial sector and boosting the residential sales sector, have redefined the loan-to-value rates and maximum mortgage terms for Qatari nationals and expatriates.
While these measures are likely to attract investors and homeowners in the longer term, the impact is unlikely to be noticeable in the short term due to recent hikes in interest rates for mortgage customers, which has impacted the sales market, he said.
“The success of new regulations and market transparency will be dependent on a number of external factors: macro-economic performance/diversification of the economy, attracting new residents with good salaries and opportunities, international/regional competition, and interest rates (mortgages and affordability).
“Qatar real estate market’s most challenging period is likely to be in the coming two to three years as the market absorbs oversupply and we transition to a more stable supply-demand-driven development climate,” Archer said.
Source: Gulf Times