An increase in residential stock has turned Qatar into a tenants' market, forcing apartment rents down almost 4% during the second quarter this year, but the market is showing signs of stabilising compared to the first quarter when rents dropped 11%, according to the latest report from leading regional and international real estate services firm Asteco.
The Qatar Report Q2 2010, published today (12 July 2010), also showed that this influx of housing has been particularly felt in freehold areas, with apartments recording the biggest declines.
High-end villas, especially in West Bay Lagoon remain in strong rental demand due to limited availability. The price of three-bedroom properties remains unchanged from the first quarter while four- and five-bedroom villas decreased just one and 3% respectively.
"Overall, the downturn in the rental market has provided prospective tenants with more choice of accommodation while landlords are becoming more flexible with their rents and in some cases offer incentives such as rent free periods. One and three bedroom units throughout Qatar have seen minimal rental movements. However, studio units have seen the steepest decline," the report said, adding that with even more units due to come online into 2011, landlords will continue to face reduced rental yields.
On the sales side, transactions have remained flat, which Asteco says could indicate the market bottoming out. The secondary market has seen the most activity as both investors and owner-occupiers look for value for money over off-plan properties. Expats, in particular, are looking to buy in the Pearl-Qatar rather than continuing to rent. However Asteco believes relaxing mortgage requirements will go a long way towards helping the market recover.
"Major banks in Qatar have started to promote retail mortgage products aimed at Qataris and expatriates, looking to buy property at The Pearl-Qatar. Although the restrictions on mortgages remain stringent, there are signs that banks are becoming more flexible with their lending requirements," said Jed Wolfe, Associate Director, Regional - Saudi Arabia, Qatar, Bahrain – Asteco.
Looking at offices, the report found the oversupply of space has forced rental prices down by as much as 20 to 30%, increasing interest in prime areas such as the Business District but will, in turn, put downward pressure on lower grade stock.
"The oversupply scenario in the Business District and other parts of Doha such as the B Ring Road and C Ring Road is set to continue as more office space is expected to be handed over in the second half of 2010. This will continue to impact negatively on rental rates," added Wolfe.