The housing market in Qatar faces challenges as a fall in demand for residential properties is coupled with a rise in supply following the construction boom linked to the FIFA World Cup 2022, accorrding to leading global real estate consultancy Knight Frank. 

 

With rents dropping in majority of the districts, Lusail’s Waterfront and Fox Hills districts experienced the highest quarterly depreciation of 23% and 18%, respectively, in the average quoted rents for apartments, stated Knight Frank in  its Qatar Real Estate Market Review for Spring-Summer 2023.

 

The municipalities of capital Doha and Al Rayyan recorded the highest volume of residential transactions during the second quarter, it added.

 

Faisal Durrani, Partner, the Head of Research, Middle East and North Africa, said: "The supply-demand imbalance, rising interest rates, and affordability challenges are contributing to a shrinking mortgage market and impacting the volume of home sales, while also undermining residential values."

 

"Indeed, the total number of residential sales transactions has fallen by 36% over the last 12-months. Simultaneously, the total value of residential transactions has declined by 24%," he stated. 

 

Durrani pointed out that the sharp decline in rents would undoubtedly put landlords under pressure to remain competitive, particularly as the Knight Frank's 2023 Destination Qatar report shows that Qatari high net worth individuals most prefer Lusail for a residential acquisition, with an average budget of $1.8 million. 

 

"Among the HNWI we spoke to, 71% already own a home in Lusail. Additionally, Lusail Marina and Lusail Waterfront were identified as the two most favoured locations for residential real estate acquisition," revealed Durrani.

 

"Moving on to rental yields, during Q2 2023, the gross single-let rental yield for residential properties in Qatar averaged 6%. Apartments had a higher yield of 6.4%, while villas yielded slightly lower at 4%," he added.

 

On its office market, Knight Frank said there were challenges in this sector too, which is experiencing a widespread drop in average rental rates.

 

"Despite strong demand from the public sector and oil and gas industries, the Qatari office market’s biggest challenge is an oversupply of office space, which is undermining rents, leaving occupiers firmly in the driving seat," remarked Adam Stewart, the Partner and Head of Qatar.  

 

"Notably, the public sector is driving most of the activity in Qatar, particularly in Lusail," he stated. 

 

A recent example of a substantial lease is Qatari Diar’s 6,200 sqm lease at The Qatar Financial Centre Authority’s (QFCA) ) Lusail Boulevard. 

 

"With a concerted effort by authorities to relocate public sector entities to Lusail, we expect leasing activity in Lusail to continue rising," added Stewart.

 

Following the successful hosting of the 2022 Fifa World Cup, the tourism sector in Qatar continues to show promising growth, with a significant increase of 206% in visitor numbers reaching 1.77 million during the first five months of 2023, compared to the same period last year, Knight Frank says, highlighting data from STR.

 

Turab Saleem, Partner, Head of Hospitality, Tourism and Leisure Advisory for Mena, said: "Despite increased visitor arrivals, average occupancy fell from 58% to 53% over the year's first six months."

 

This shows that both rising hotel stock, combined with the supply overhang from the World Cup remains ahead of demand, he added.-TradeArabia News Service