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The cost of renting a luxury apartment or villa in Qatar dropped between QR1,000 to QR3,000 a month in the second quarter of this year, a new report has found.
According to real estate company DTZ’s Q2 2016 Qatar Market Report, an exodus of white-collar employees has contributed to the plunging prices.
This has created vacancy rates for prime residential property of between 5 percent and 10 percent, prompting some landlords to offer incentives such as a month or two free rent to woo tenants.
Peter Kovessy
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However, mid-range units did not experience the same discounts, and rental reductions were less evident in the second quarter.
That said, Qatar saw its first month-over-month decline in housing expenses since 2013 in April, and rental costs have remained largely flat since then.
This suggests some changes are afoot.
Speaking to Doha News, Johnny Archer, associate director of research and consulting, said:
“While we have not seen a significant increase in people ‘upgrading,’ we may see signs of this as more existing tenancies come up for renewal.”
Looking ahead
According to DTZ, it is likely that rents will continue to soften at least in the luxury market due to more supply.
This will reverse the trend of high increases experienced between 2011 and 2015.
According to Archer, whether rents fall in the overall market in the coming years “will depend on the amount of new demand created by Qatar’s economic growth, and the demographic of new arrivals to the country.”
Reem Saad / Doha News
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Though thousands of people left Qatar for good due to layoffs and other reasons this year, the overall population has increased by some 9 percent over the past 12 months.
This growth has been fueled by the blue-collar population, however, which has helped keep the cost of labor housing buoyant.
Office oversupply
Finally, in terms of commercial real estate, demand for offices in Q2 2016 came almost exclusively from the private sector, with many firms looking to relocate within Doha to take advantage of falling rents.
According to the report, more offices in West Bay have come online this year, but demand has also fallen particularly in the oil and gas sector.
Chantelle D'mello / Doha News
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“This has resulted in a year-on-year fall in prime rents by up to 15 percent,” it said.
Archer added that in the future, the level of oversupply will depend on “the degree to which economic growth and diversification creates new demand for offices in the private sector. If a large oversupply of offices does emerge in the coming years, it is likely that rents will reduce further.”
Thoughts?
(The post Report: High-end housing costs in Qatar fall in Q2 of 2016 is from Doha News.)