Qatar to add 12.6K housing units in fourth quarter of 2022: ValuStrat

November 25, 2022

Approximately 12,600 units are in the pipeline to be added to Qatar’s housing market in the fourth quarter of 2022, ValuStrat has said in a report published recently.

According to ValuStrat’s Qatar Real Estate MarkeQ3 Review report, Almost 72 percent of this additional supply will come from two master projects in Al Wukair.

Residential stock exceeded 310,700 units in Qatar with the addition of 600 homes during the third quarter of 2022. The report said that new additions during the quarter included low-rise residential projects in The Pearl, Lusail, Duhail, Al Wakrah, Old Ghanim, AlSadd and Umm Ghuwailina.

Ezdan Real Estate launched Al Janoub Gardens this quarter, projected to add 2,368 fully furnished apartments once completed by the end of 2022, it said.

In the third quarter of 2022, ValuStrat Price Index (VPI) – Residential increased to 65.3 points. The index grew by 0.8 percent over the previous quarter, recovering back to a level last seen in Q3 2021. The VPI is a valuation-based price index with a base of 100 points as of the first quarter of 2016.

The apartment market appreciated 0.9 percent compared to the previous quarter. Units in The Pearl and West Bay Lagoon saw capital gains of 1.6 percent and 2.2 percent QoQ, respectively. Conversely, prices of apartments in Lusail declined by 0.5 percent compared to Q2 2022.

Like the apartment market, the report said, the villa market also grew 0.7 percent this quarter, indicating a slight market recovery.

This growth is mainly attributed to units in Muaither and Al Khor, whose capital values increased by 3 percent and 2.9 percent. Similarly, villas in Ain Khaled, Al Thumama, Onaiza, Al Khairtiyat, Umm Salal Ali, and Al Wakra also exhibited gains of up to 0.8 percent. Old Airport and Duhail were the only areas whose capital values receded 0.6 percent and 0.2 percent.

Villas in The Pearl, West Bay Lagoon & Al Waab showed no price movement thisquarter. Gross yields for residential units exhibited an increase of 6.5 percent this quarter. Apartments recorded 9.6 percent whilst villas accounted for 5 percent. Price-to-rent ratio averaged 17.5 years for residential units.

Transaction volumes witnessed substantial declines this quarter, down 44 percent QoQ and 39 percent YoY.

The median transacted ticket size for houses was QR2.6 million, up by 6 percent QoQ, but 1.9 percent lower than in the third quarter of 2021.

Al Wakra, Muaither, and Al Khor had the highest volume of transactions of residential houses during the third quarter of 2022. As many as 41 transactions for residential buildings were recorded as of the third quarter of 2022, with 50 percent concentrated in Fereej Bin Mahmoud, Umm Ghuwailina, and Old Airport.

Value and volume of transactions in The Pearl and Al Qassar surged by 11.6 percent and 4.6 percent in the year to the third quarter of 2022.

As per the report, upward pressure on leasing rates continued with the median asking rents up 5.2 percent QoQ and 15 percent YoY.

“We have observed landlords pre-leasing their units for January 2023, quoting rents 10 percent lower than the average asking rent of comparable units during the third quarter of 2022. The median listed rent for apartments grew by 5 percent QoQ and 16.4 percent YoY with median rent for 2-bedroom apartments experiencing the highest quarterly increase of up to 9 percent,” the report said.

Three-bedroom villas experienced the highest increase in median rent of 9 percent QoQ compared to other bedroom types. A minimum contract of 2 years, with up to 5 percent discount on average rent, is commonplace.

About the office supply during the third quarter of 2022, the report said, “The total office stock was estimated to be nearly 5.8 million sq m GLA including an additional 70,000 sq m GLA added this quarter.”

Al Janoub Square in Al Wakrah and Concord Qatar’s new office building in Rawdat Al Khail, among other projects, was completed this quarter; the two projects added 12,400 sq m GLA to the total supply.

Nearly 1.5 million sq m GLA is in the pipeline till 2023; 800,000 sq m GLA is expected till the end of 2022 while the rest is due to be completed during 2023, it said.

According to the report, the third quarter of 2022 experienced a trend reversal as the citywide median asking rent for offices increased quarterly for the first time since 2016. It is 1.4 percent higher than the previous quarter but lower by 2.7 percent YoY.

Median asking rents for offices in West Bay, Lusail, and Salwa Road grew up to 2.9 percent, with Salwa Road increasing the most (to QR 70 per sq m). However, rates for offices along Grand Hamad Street and C/D Ring Road fell by 1.5 percent & 2.7 percent, respectively.

Despite improvements in office sector performance due to nearing FIFA 2022 World Cup, medium-term rental rates are projected to decline due to o expected demand/supply gap expansion.

About retail supply in the third quarter of 2022, the report said, “Retail stock of shopping centres stood at 2.1 million sq m, the same as the previous quarter. Almost 363,000 sq m GLA is in the pipeline till 2023; this includes Printemps in the Doha Oasis Project (Musheireb) and the Giardino Mall (The Pearl)

While Lusail Commercial Boulevard, a 1.3 sq km avenue boasting 760,000 sq m of retail, office and residential space, was inaugurated in early November 2022, the report said, Barwa Real Estate projects, Madinatna and Barahat Al Janoub in Al Wakra launched retail shops for leasing this quarter, adding approximately 14,000 sq m GLA to the total supply.

Carrefour unveiled its 10th branch in Qatar: a 2,700 sq m store in Lagoona Mall and Aura group announced 36 F&B outlets across Lusail Boulevard, Al Maha Island, and Hamad International Airport.

Median monthly mall rents were reduced to QR210 per sq m, recording a 2.3 percent decrease both quarterly and annually.

The median monthly asking rent for street retail within Doha fell to QR156 per sq m, down 3.7 percent QoQ and 2.5 percent lower compared to the third quarter of 2021.

Similarly, the median monthly asking rent for street retail outside Doha municipality receded to QR148 per sq m, down by 2.6 percent compared to both the previous quarter and last year.

In anticipation of the FIFA World Cup 2022, there has been a significant increase in demand and supply of retail, especially in the F&B sector.

However, with supply currently outstripping demand there is now a downward pressure on leasing rates, the report said. About the hospitality supply, the report said, “Qatar tourism, total hospitality stock was estimated at 30,467 keys (22,652 hotel keys and 7,815 hotel apartments), 2.7 percent greater than the first half of 2021.

Notable hospitality additions during the third quarter of 2022 include St Regis Marsa Arabia Island in The Pearl (207 apartments & 245 residences), Rixos Gulf Hotel in Ras Bu Abboud (250 keys), and the Waldorf Astoria in Lusail (203 suites and 110 deluxe apartments).

Pipeline supply for the remainder of 2022 consists of 7,670 keys, including Velero Hotel in Lusail, Andaz Hotel in West Bay, and Rixos Qetaifan Island North Doha in Lusail.

As of August 2022, total foreign arrivals jumped to 1,023,912 visitors, 410 percent greater than the same period in 2021, the report said adding that tourists from Asia and GCC countries accounted for 68 percent of total foreign arrivals.

As per STR data, hotel bookings are reported to rise ahead of World Cup 2022 with occupancies expected to average 70 percent from November 20 to December 18, 2022.

Average hotel/hotel apartment occupancy excluding keys used for quarantine was 55 percent, which is 6 percent lower than in the same period in 2021.

In the third quarter of 2022, the report said, the Average Daily Rate (ADR) for hotels and hotel apartments was QR456, up 11.2 percent YoY.

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