Qatar Real Estate News
Experts note re-adjustments in Qatar realty sector
The global financial crisis did not lead to decline in prices within the Qatari property sector. Rather, the fall was a re-adjustment which took place following an unhealthy rise in residential and commercial rents by 144 percent between 2005 and 2008, according to experts.
The Research Director at DTZ, one of the leading international real estate advisory company, Edd Brooks, said that the re-adjustment which occurred in Qatari realty sector, was largely due to increase in commercial and residential rents between 2005 and 2008, which was unsustainable and unaffordable.
With more residential and commercial properties hitting the market, and with the formation of a new rental committee in 2007, which restricted rent of ministries and government bodies, a re-bouncing of demand and supply has been noticed.
However, things have stabilized and there is a growing demand for new companies in Qatar, may lead to a fairly stable price increase of 3 to 4 percent a year, but not like the way it was before, said expert.
Speaking about the impact of locations on the surge in prices, expert pointed out to emergence of a secondary market. There is a differentiation between prime property such as Diplomatic Area or apartments in the West Bay and secondary areas such as Al-Sad or offices at C and D Ring Roads, he said.
Brooks highlighted other re-adjustment aspects as being used to a rapidly rising market, the owners are now unhappy and nervous about granting leases on long-term. A couple of years ago, there were only short-term leases wherein rents could be increased often. This is an unhealthy trend. But now, people are looking to long-term and are considering five to ten year leases, which is a healthy sign.
Brooks also noted that Qatari market was maturing quickly, and is more transparent now than it was three years ago.
The Business Manager at DTZ, Nusair al-Ejli said that Qatar economy was not affected by the financial crisis, as rapid rise was not a priority to the market.
The real estate boom was not strong, compared to Dubai, but was thoroughly studied, which has helped Qatari market to remain unaffected.
Al-Ejli said that currently Qatar has about 150,000sqm of space ready for rent, but with only few tenants. Majority of the West Bay area are occupied by government institutions and ministries, apart from oil and gas companies and few international firms.
The owners are hesitant to lease to government departments, as they fear that they may not be the ideal tenant, given the QR150per sqm limit on rent price, despite the advantage of them being a long-term trusted tenant. Rather, the owners prefer to lease out to oil companies, due to their ability to pay huge rents. However, the energy companies mostly own land in Energy City, as the companies fear that they may be forced to shift by the government if they own a property in such locations.
Al-Ejli continued that the only aspect when the property market felt the impact of financial crunch was when international firms were compelled not to expand or reduce leased space by their headquarters.
DTZ Research report also noted that despite the miserable economic conditions in most parts of the developed world, Qatar enjoyed a 7 to 9 percent growth rate in 2009. It remained the best performing economy in the Gulf region, with the increase in natural gas production, public spending, and influx of people and capital.
The Qatari population has also doubled, touching 1.7mn in just five years, while inflation averaged 11.3% each year during 2004-08 which has been subdued.
The report further states that prime rental rates have fallen by 20 to 30 percent for offices in 2009, owing to global recession. This could also be considered as a positive sign, as office rentals in the country were quite high.
Posted on 21/2/2010
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