Residential rents in Qatar to return to pre-2020 levels next year: Report
Doha: Qatar’s leading global real estate consultancy, Cushman & Wakefield, released its Q3 2022 Qatar real estate market report this week. Among many findings, Cushman & Wakefield identified the unprecedented demand created by the FIFA World Cup as being a major factor in the recent escalation of residential rents throughout Qatar.
While some apartment rents have increased by up to 40 percent in recent months, Cushman & Wakefield believe the changing dynamics of the real estate sector after the completion of the tournament will inevitably see rents returning to pre-2020 levels again in 2023.
Following an increase in real estate sales activity between 2019 and 2021, there has been a relative slowdown in sales in 2022. Cushman & Wakefield believe that many prospective purchasers have been employing a ‘wait and see approach’ until after the World Cup, when more clarity is expected to return to the market.
The commercial office sector in Qatar, as with other countries, has been feeling the impact of reduced annual take-up over recent years, which was exacerbated by the outbreak of COVID-19 and the increase in companies allowing staff to work from home. Cushman and Wakefield have, however, noted an increase in office leasing activity in 2022, with the majority of deals agreed in either Lusail or West Bay. The principal market drivers include the expansion within the hydrocarbon sector, and the growth of the Qatar Financial Centre and the establishment of the Qatar Free Zone Authority.
2022 has seen further growth in the retail real estate sector, most notably with the opening of Place Vendome in Lusail. Upcoming new developments such as Lusail Boulevard, MINA District, and Doha Oasis will also provide the residents of Qatar with new retail and F&B options in the coming months. While the quality of retail offering has improved significantly, Cushman & Wakefield has identified the rapid increase in supply as being the cause of increasing vacancy and falling rental income in some older developments.
The hospitality real estate market in Qatar has been impacted significantly by the World Cup. The tournament in November and December has been the catalyst for the unprecedented development of new hotels, with thousands of new rooms being added to the market in H2.
Overall performance in the sector in 2022 reflects the increase in visitor numbers since the COVID-affected period of 2020 and 2021. While visitor number to August increased by 67 percent, the numbers remain down on pre-pandemic levels. Estimates of more than 1 million people arriving in Qatar during the FIFA World Cup will ensure that tourist numbers reach unprecedented levels and ensure a boost to annual occupancy and hotel revenues for the year. Thereafter, the hospitality sector in Qatar will rely heavily on the sustainable growth of business and leisure tourism, the return of tourists from Saudi Arabia, and Qatar’s ongoing efforts to host major international events and exhibitions.
Johnny Archer, Head of Consulting and Research at Cushman & Wakefield Qatar stated: “The recent trend in escalating residential rents is a result of a spike in demand created by Qatar’s hosting of the World Cup. We expect this trend to reverse in 2023 as apartment buildings and new master planned developments are released to the wider market.
“Recent activity in the commercial office market has been encouraging following the COVID-19 affected years of 2020 and 2021; however, further take-up of commercial real estate will rely upon further diversification of the economy and the continued growth of the private sector,” he added.
Source: The Peninsula