Qatar’s real estate transaction volume rises in Q2: ValuStrat

DOHA: The Qatar real estate review for second quarter (Q2, 18) issued by leading regional consulting firm ValuStrat reports increased affordability across all sectors in Qatar. The Q2 ValuStrat Price Index (VPI) declined by 4.5 percent since first quarter of 2018 and was down 10.9 percent from the same period last year.

While apartment values declined only marginally, the VPI was mostly dragged down by falling villa values during the period. However, this decrease in values may have triggered increases in transactional volumes across the board. Residential rents have become more competitive and office rents experienced modest quarterly falls. Increasing supply in the retail sector encouraged landlords to reduce service charges to remain competitive. Falling ADRs (average daily rates) led to improved occupancy rates for hotel apartments and 1-3-star hotels.

Pawel Banach MRICS – ValuStrat Qatar General Manager commented: “…Affordability has become pervasive across all real estate sectors in Qatar. Falling commercial rents are favouring tenants who are budget oriented and prefer smaller units. On the residential front, developers are offering high-quality apartments at competitive rents to try and secure deals. This increased affordability has improved competitiveness in the real estate market and may partially explain a rise in transaction volumes, amounting to more than QR5bn this quarter. We are expecting these market corrections to continue in the medium term…”

Qatar’s VPI-Residential with a 100-point base set from Q1 2016, now stands at 77.7 points. House prices fell in Q2 2018 as falling population figures, subdued economic growth and a rise in interest rates impacted the market.

Countrywide residential capital values have declined by 19.3 percent compared to the same quarter 2016, 10.9 percent down as compared to Q2 2017 and 4.5 percent less than Q1 2018.

The weighted average value per sq m of residential space stood at QR8,650. More specifically, apartments were QR12,571 and villas QR6,698 per sq m. Values for freehold apartments have been stabilising as prices declined only marginally by 1 percent on a quarterly basis, while values of villas fell by 5.2 percent since the previous 3 months.

Villas in certain clusters of Al Wakrah/Wukair, West Bay Lagoon, Al Khor and Old Airport/Najma experienced declines up to 12.5 percent quarterly. As of Q2 2018, gross yields averaged 4.9 percent for all residential unit types.

Citywide residential asking rents declined 12.4 percent over the past 12 months and 2.5 percent since the first quarter of 2018. Rents for apartments declined by 3 percent on a quarterly basis driven by rent reductions in Al Mansoura, Fereej Bin Mahmoud and Al Sadd. While rentals rates for villas declined by 2 percent quarterly, villas located in peripheral areas of the City Centre experiencing the highest quarterly declines of up to 8 percent.