Quarterly Report Qatar Q2 2022: Residential Market Overview
Residential rents soar ahead of 2022 World Cup, with apartments seeing the highest increases.
Following growth of 5-7% in Q1, the pace of residential rent increases accelerated in April and May as landlords took advantage of a spike in demand related to the FIFA World Cup in November and December.
By June, Cushman and Wakefield estimate that apartment rents had, on average, increased by 30%+ on the same time last year.
Rental increases are being driven by demand for accommodation ahead of the World Cup, with tens of thousands of apartments being reserved both for fans and staff accommodation for companies providing World Cup-related services.
The impact of rental increases has been most evident in the apartment sector rents in prime districts. Typical two-bedroom, semi-furnished apartments in Porto Arabia, which had been available for QAR 10,000 – QAR 12,000 in 2021 are now leasing for QAR 13,000 – QAR 15,000.
In central districts such as Bin Mahmoud, apartment rents have typically increased by between QAR 2,000 and QAR 3,000 since 2021, reflecting an increase of more than 30% in some cases.
Villa compounds have also seen an increase in rents over recent months; however, as many of these properties already benefitted from high occupancy and long term tenants, rental increases have been more modest than in apartment buildings. Uplifts of between 3% and 10% have been common in recent lease renewals.
The surge in rent is based on a short-term World Cup-related spike in demand, with rents expected to fall again in 2023 as demand subsides and available properties return to the market. This has led to an increasing trend in landlords insisting on two-year leases for apartments over recent months.
There is also an increasing trend in tenants not having their leases renewed on request, as some landlords look to vacate their properties and capitalise on inflated World Cup rents.
According to statistics released by the Planning and Statistics Authority, the number of residential sales transactions fell by 19% over the first five months of the year compared to the corresponding period last year. This followed a year on year fall of 30% in December. These statistics indicate that the pace of residential property sales has slowed since an initial surge in activity following the introduction of Law No.16 of 2018, which saw non-Qatari’s take advantage of the changes to ownership laws in areas such as Lusail.