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Posted On: 8 June 2009 09:09 am
Updated On: 12 November 2020 02:09 pm

Real estate mart is set for stable growth: study

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Qatar’s real estate market is set to have a stable growth across the residential, commercial, industrial and retail sectors, top global real estate firm DTZ has predicted in its second market report on the country. This is a result of easing inflationary pressures due to the global economic situation and the release of a number of new real estate projects this year, alleviating excess demand. Apartment and villa rental prices are likely to experience a slight decline between 5% and 10% as more residential properties are released to the Doha market. According to the report, Qatar’s office market has posted healthy growth in recent years which has been sustained by both existing and new government institutions and departments to support the country’s development. However, with the substantial increase in new office stock, especially in the diplomatic district, and reduced demand in response to the current global economic situation, DTZ does not anticipate any rental growth in the prime commercial sector until the end of 2010. Average prime rental rates for Q1 2009 in the diplomatic district were recorded at QR250 per sq m per month, excluding service charge. Office buildings in the diplomatic district generally command a premium over other locations, as demand preference for Grade A offices in the new CBD remains strong across all business sectors. The secondary locations of the C and D Ring Roads, Grand Hamad Street and Al Sadd command an average rental rate ranging from QR150 - 180 per sq m per month. “As the market continues to grow and mature, greater levels of stock will offer potential occupiers a choice of accommodation and lead to the development of a two-tier office market,” DTZ’s country manager and Middle East operations deputy managing director Nick Witty said. High quality, modern offices, designed and built to meet occupier’s requirements will command a premium over lower quality stock which will lead to increasing levels of vacancy in the secondary stock,” he observed. The residential market is expected to continue to experience relatively strong demand over the medium term as the economy remains stable and the country’s population continues to grow. As residential supply increases substantially, DTZ envisage a price correction instead of a drastic fall in prices bringing the market towards a more sustainable level. Apartment and villa rental prices in Doha have stabilised since Q4 2008 without any further sharp price increases as experienced in early 2008. “The average rental rates for villas and apartments in Doha’s main residential areas did not record any significant decline in Q1 2009,” the report said. Rental prices for prime residential areas such as Dafna, Al Wa’ab, West Bay Lagoon and the diplomatic district continue to command a premium over other residential areas. Residential sales at The Pearl-Qatar, a mixed-use development built on 4mn sq m of reclaimed land off the eastern coast close to West Bay Lagoon, dominate the freehold market. Average apartment sales prices at The Pearl-Qatar peaked at rates of QR18,000 per sq m in Q2 of 2008, according to the report. “We do not expect prices in Qatar to reduce significantly due to limited speculation activity in the market in comparison to countries like Dubai,” Witty maintained. Pointing out that the retail sector has grown considerably in recent years, the report predicts that it is likely to continue to do so as Qatar aims to attract about 1.4mn international tourists per annum by 2011 – with a targeted increase in average spend per trip, per visitor from $395 to $700. Most existing malls boast full occupancy with waiting lists of potential tenants. Landmark, City Centre and Villaggio shopping malls command the highest average rental rates ranging from QR180 to QR225 per sqm per month for standard units due to their location and popularity among residents.