Research: Increase in sales activity in 2018 as investors take advantage of lower real estate prices

Qatar’s leading global real estate company, DTZ/Cushman & Wakefield, released its Q4 2018 Qatar market report this week. Among many findings, DTZ’s research team identified an increase in sales activity in the residential freehold market, as investors look to take advantage of the fall in real estate prices.

In the residential market, the falling rents over the past 3 years have levelled off somewhat in recent months. An overall fall in rents of between 15% and 20% since 2015 has restored a sense of value to the residential market, and DTZ have seen an increase in the number of residents ‘trading-up’ to take advantage of the reduced rents. 

In the commercial market, the development of new office buildings in Lusail has added to overall supply. This has resulted in rental levels falling by between 7 and 10% in the past year. Recent government initiatives to stimulate growth in the private sector, such as the introduction or Law No.1 of 2019, which relates to foreign ownership, are very welcome. While these measures are likely to benefit the SME sector and ‘start-ups’, it may take time before we see a significant increase in absorption levels in the commercial office sector. 

In the hospitality sector, overall supply of hotel keys has increased by more than 1,000 rooms in the past year. While this has had an impact on room revenues, occupancy rates have remained relatively stable due to the increase in domestic tourism and the increasing popularity of hotel apartments for ‘long-stay’ guests. Commenting on the findings of DTZ’s latest report, Johnny Archer, Head of Consulting and Research, DTZ/Cushman & Wakefield, stated: “In the second half of 2018 the fall in residential rents has decelerated as a perception of value has returned to the market. The fall in rental levels has been welcomed in many quarters, after a period of strong growth between 2010 and 2015 had elevated rents to unsustainable levels.

Government initiatives to stimulate the private sector over the past two years have been very welcome. These initiatives, together with the completion of Doha’s major infrastructural projects are likely to facilitate growth in the private sector and the diversification of the economy away from oil and gas.  This is positive news for the real estate sector; however, oversupply remains a concern in many areas.”