Quarterly Report Qatar Q2 2023: Residential Market Overview
Apartment rents reduce to the levels seen prior to the World Cup-related spike in demand.
The second quarter of the year saw a significant fall in most apartment rents and a return to the levels seen before the escalation in rents created by the FIFA World Cup.
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, budget accommodation, providing direct competition for established residential neighbourhoods in Al Wakra and Mesaimeer.
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.
The majority of one-bedroom apartments in The Pearl Island can now be leased for between QAR 6,000 and QAR 8,500 per month, depending on the location and quality of the building. Most three-bedroom units on the Island are now available for between QAR 13,000 and QAR 15,500 per month.
In Fox Hills, one-bedroom apartments are now typically available for between QAR 5,000 and QAR 6,500 per month, with three-bedroom units now commanding between QAR 8,500 and QAR 10,000 per month.
Residential sales transactions continued to decline in Q2. According to the Planning and Statistics Authority, the number of residential sales fell by 22.6% in April and May compared to the same months in 2022.
To help boost the residential sales market, several measures have been introduced in recent months to complement the ownership reforms introduced in 2019. The MME has announced the imminent introduction of a Real Estate Regulatory Authority which will increase transparency in the market and enhance statutory and legal protections for investors.
In addition, Qatar Central Bank recently 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.
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