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Satyendra Pathak
Doha
Rents of prime residential apartments in Qatar have dropped by up to 10 percent in the second quarter of 2016 over the same period last year, according to a new report by real estate firm DTZ Qatar.
DTZ Associate Director Johnny Archer said many prime apartments saw rents falling by QR1,000 to QR1500, while rents of villas dropped by up to QR2000-QR3000 per month.
Archer attributed the fall in rents to increased vacancy rates in recent months as a large number of white-collar workers are leaving the country.
While the population of Qatar increased by some 9 percent over the past 12 months, the vast majority of new arrivals have been made up of low-paid construction workers.
"While this has kept the tertiary sector buoyant, demand for prime and mid-range residential accommodations have dropped due to exit of a significant number of white- collar workers," he said.
Rental reductions were less evident for mid-range apartments and villas in the second quarter. He, however, said there may be a softening in rents in this segment in the third quarter as new supply comes to the market in areas such as Bin Mahmoud and Al Mansoura.
Prime residential apartment supply is also expected to increase significantly in the coming days, with more than 3,000 new housing units nearing completion in West Bay and The Pearl-Qatar.
It is likely that new supply will see rents continue to soften, reversing the trend of high increases experienced between 2011 and 2015.
Among many findings, the DTZ's research team has also identified reduction in Grade A office rents of between 10 percent and 15 percent since the start of the year with the majority of enquiries being made for space of less than 250sqm.
Office supply in West Bay currently stands at almost 1.7 million sqm, with approximately 0.25 million sqm currently available to lease. By 2017, it is estimated that a further 385,000 sqm will be added to the Grade A office space.
Vacancy rates of Grade A office accommodation in West Bay have increased by approximately 5 percent over the last six months, resulting in opportunities for tenants to negotiate better terms.
There has been a continious fall in demand for corporate residential lettings for apartment blocks and compounds with more companies now preferring to provide rental allowances rather than paying for employee accommodation.
In the hospitality sector, the report says almost 5,000 hotel keys have been added to Qatar's stock over the past 18 months. This additional supply started to impact on performance measures in the second quarter.
