The rental market in Qatar may be heading towards a plateau in terms of rates over coming months, according to local industry experts who said that accommodation prices will probably not drop much more in the future.
“Essentially prices in the rental market are showing signs of stabilising,” said associate director of real estate company DTZ, Mark Proudley, adding: “The downward trend has persisted over the first half of 2010 – primarily because of the continued over supply in the market, but the rental declines have not been as considerable as those recorded over 2009.”
“Demand is showing signs of picking up due to the strong economic environment, which will lead to prices stabilising. The beginning of the school year always increases the number of people seeking to rent accommodation,” he said.
Proudley explained that the most over-supplied area of the market is the luxury apartment sector, with many properties coming to the rental market under a number of different landlords.
He noted that investors who purchased apartments at projects such as Lagoon Plaza and the Pearl-Qatar are now seeking tenants for their properties and are undercutting each other to secure them, which has led to a reduction in rental rates.
Whereas luxury apartments used to be limited to approximately 6,500 in the diplomatic area, these new developments have seen that number nearly double, leading to a dramatic drop in prices.
In fact, rental rates have dropped as much as 30% since the peak period in the middle of 2008, as a result of increased competition and supply, explained Proudley.
However, despite the remaining over-supply, the luxury apartment market is also experiencing the highest demand, and with supply and demand becoming more aligned than in recent years, Proudley predicted prices to remain around the same level in the coming months.
Whilst prices reach something of a plateau, the rental market in Qatar could be set to witness another significant change in the near future, as plans to relocate bachelors from residential areas of Doha have been confirmed by government authorities.
Whereas Proudley predicted that the changes will not affect the market in any meaningful manner, others have suggested the number of new customers will impact the sector.
He predicted that the majority of the villas set to be vacated will undergo redevelopment as part of various projects, and tenants will be encouraged to move to other large-scale housing projects.
However, another local real estate expert claimed that the move may have other implications for the rental market here.
“I’m not sure if this is just something to placate people who have been complaining, or whether it is something that will be brought in across the board,” he said, adding: “But I am sure it will be applied in some way.”
“It will have the effect of a surge of people coming into the market, as all the bachelors who have been living in these villas will now be looking for smaller apartments,” he noted.
“People moving out of these large villas which house up to 20 people will need to find other places, and this will affect landlords as well – there will be a lot of empty properties as these sort of houses are hard to fill nowadays,” he added.
“I think this plan is to knock out the really low end of the market – I don’t think Western bachelors will have the same problem,” he said, adding: “This will happen, but I just don’t know how.”
But as long as prices continue to drop, or at least remain at a lower level than previous years, then tenants hoping to relocate from either outside or within Qatar are reaping the benefits.
One expatriate bachelor who has lived in Doha for five years explained that he has seen a lot of change in the market over the past year or so.
“I have been looking at moving into a new flat over the past year-and-a-half,” he said, adding: “prices have been fluctuating a lot and have generally been going down in recent months.”
“It was definitely something that needed to happen as some of the rental prices for one and two bedroom apartments were getting out of hand – now they are not exactly cheap but they are certainly more affordable, and I hope they remain like this until I find a place!” he added.
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