Quarterly Report Qatar Q3 2020: Residential Market Overview
New demand for residential property falls due to COVID-19 related travel restrictions
Measures taken to stop the spread of COVID-19, including a restriction on entry into Qatar, has stifled new demand for residential property. Activity in the residential lettings market throughout Q3 has almost exclusively been limited to those re-locating within the country.
COVID-related lockdown measures and the associated fall in global oil prices has resulted in both private and public sector cutbacks, which started to filter through to residential occupancy rates in Q3.
Increasing vacancy rates has increased the flexibility of terms on offer to new tenants. Shorter-terms, including six-month leases, are now being offered by some landlords to secure tenants in an increasingly competitive market.
Following a period of relative stability, there have been signs of a fall in headline rents in recent months. Monthly rents for two-bedroom apartments on the Pearl-Qatar are now typically between QAR 9,500 and QAR 12,000, while rents for two-bedroom units in Al Sadd typically range from QAR 5,000 to QAR 6,500. Apartment rents increasingly include the payment of utility bills, reducing the net effective rent for those properties.
As supply increases, so too do tenants’ options. In recent months there has been a trend in tenants looking for managed apartment buildings rather than individually owned units, due to the availability of on-site management and maintenance. The share of tenants looking for furnished, rather than semi-furnished apartments, has also been increasing in recent months.
According to the PSA, the number of residential house sales increased by 61% over the first seven months of the year compared to the same period last year. Figures for July and August reflected a 138% increase.
Sales prices in the freehold market can vary significantly depending on size and quality. Sales prices for apartments in new buildings can achieve more than QAR 17,000 per sq m. Second-hand apartments in older towers in Porto Arabia, have been commanding prices of between QAR 10,000 and QAR 12,500; however, this reflects their larger floor plates compared to Qanat Quartier and Viva Bahriya.
As supply increases, we expect to see further downward pressure on residential rents. This trend will be interupted temporarily in 2022 by a sharp rise in demand due to the hosting of the 2022 FIFA World Cup.
Cushman & Wakefield Quarterly Report Qatar Q3 2020
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