An arbitrary increase in the rents of commercial properties by landlords has pushed many small businesses out of business and has hit potential investors.

Enquiries by The Peninsula have revealed that some small businesses have been forced to shut down due to heavy rentals.

Abdullah Salim, who was recently compelled to close his restaurant in Al Sadd area due to a 200 percent hike in rents, said: “Increasing the rents has become the hobby of some landlords. The owner of my shop raised the rent to QR30,000 from QR10,000 per month, in one go. Despite all my efforts, nothing worked and finally I had to quit the business.”

A popular Asian restaurant in Najma was also forced to close down a couple of months ago after the property owner imposed a huge hike in rents.

“The rentals have witnessed a sharp increase across all sectors including residential units, shops and office space. Many small businesses, who could not afford to pay more, have either gone bankrupt or out of business,” Mohammed Ali, a Qatari, was quoted by Al Sharq as saying yesterday. “Some greedy landlords, who want to get more and more, are just exploiting the situation of short supply and high demand,” said another citizen, Ahmad Al Sada.

In some areas, small shops of the size of 4x4 metres, whose rents were ranging from QR5,000 to QR7,000, have now jumped to QR20,000 and QR30,000, per month, Al Sharq reported.

A cross-section of people Al Sharq interviewed called for urgent market intervention by the authorities to check the unprecedented increase in rentals, which is hampering the growth of existing businesses and discouraging fresh investments. People are feeling the pinch of rising rentals both for commercial and residential units, they said.

An Asian expatriate who runs a motor garage at Barwa Village, told The Peninsula: “Due to high rents and low turnout of customers, things are becoming increasingly difficult for us. During winter, there are several days when we do not get even a single customer, but ends up paying huge rents.”

Abdullah Jubara Al Rumaihi, the CEO of Waseef, the property maintenance arm of Barwa Real Estate Company, told an Arabic daily: “The demand in the real estate sector, especially the plots, will continue to grow in the second quarter of 2014 as more and more developers are starting residential and commercial projects.”

He said the combined value of sales of real estate properties in the first quarter of 2014 reached QR13.17bn, witnessing a a sharp increase of 67 percent compared to QR8.84bn in the first quarter of 2013. In last March alone, the value of total sales reached QR5.53bn against QR2.91bn in March 2013. Going by the latest official data, rentals (coupled with fuel and energy prices) have pushed up living costs 5.7 percent over the past one year.

Rentals have grown steadily over the last several months. In March 2014 alone, rents increased by 0.6 percent compared to February 2014, according to the Ministry of Development Planning and Statistics. Citing the country’s projected population growth and the spiralling land value, market experts warn the rent-induced inflation is set to go up in the coming months, pushing up living expenses further.

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