Doha residential realty market remains stable

By Santhosh V  Perumal

Business Reporter

The residential property market in Doha appears to be stable and may see steady growth both in outright sales and rentals in the upcoming quarters, according to Al Asmakh Real Estate report.

Qatar’s population was at 1.92mn as of March 31, 2013 with year-on-year growth of 8.5%, which may realise higher demand for new housing units, especially from expatriate population. Doha and Al Rayyan municipalities remain as main hub for new supply, it said in its first quarter report.

Since the  last quarter, sales prices remain more or less stable; however in few localities, about 3-5% appreciation have been recognised, it found.

The Pearl remained as preferable location for the outsider retail investors. Localities as Al Sadd, Bin Mahmoud, and Al Nasr, however, may fetch equal demand due to approachability and ‘Usufruct’ status, it said.

Usufruct is a right of enjoyment, enabling a holder to derive profit or benefit from property that either is titled to another person or which is held in common ownership, as long as the property is not damaged or destroyed.

The Pearl contributes the highest supply in residential market followed by West Bay, it said, adding minor appreciation have been seen in the sale prices; currently, freehold and ‘Usufruct’ properties are available in the range of QR10,000 to QR14,000 per sq m on net saleable area.

Noticing that rents have surged in last quarter, Al Asmakh said this appreciation was noticed across Doha and in peripheral areas, including both apartment and villa segments.

The average monthly rentals for two-bedroom apartments within Doha limit are in the range of QR8,000 to QR14,000. The Pearl and Diplomat district as usual, command higher rental than other localities.

The monthly rentals in villas with 3BR-4BR accommodation range from QR13,000 to QR18,000, it said, adding Al Waab, Al Mamoura, Al Gharaffa and Al Hilal remain the favourable locations among expatriate segment.

“Due to limited supply in compound development, the pressure on supply side has been increasing especially in terms of rentals,” it said.

Many companies have been moving their employee accommodations to nearby areas such as Al Wakrah, Al Aziziyah, and Umm Salal. Due to better connectivity to the city center areas, development of local shopping complexes and ever increasing rentals within Doha city limits, these locations are becoming favourable choices for companies, according to the report.

The report also found that during Q1 2013, the land market remained “dynamic” across all the segments of real estate, but the major inclination was persistently towards residential developments as a result of strong demand for new residential units.

Owing to enhanced approachability and self sustainability, peripheral areas such as Al Shamal road, Salwa road beyond D-Ring road, Al Wakrah and Umm Salal have been coming up and would become primary choices for international as well as local investors, it said.

The favourable areas for villa development are Al Waab, Duhail, Ain Khalid, Madinat Khalifa and Al Hilal. The average price of lands within these areas is in the range of QR320 to QR480 per sq ft.

On the office market segment, it said although West Bay has been tagged as new commercial business district, the major inclination from new companies have been towards old CBD areas such as Grand Hamad Street, C/D Ring roads.

The reasons are moderate sizes, low rentals and approachability to Doha city center areas, it found.

Office rentals within the West Bay is in the range of QR200 to QR250 per sq m per month, whereas, those in C/D ring road are in between QR120 to QR150 per sq m per month.

The average appreciation in rentals within last quarter across the Doha offices market was around 6%. The highest appreciation of 11% was noticed in Westbay area, even as Old Salata area witnessed stable office rentals.

The highest occupancy has been seen on Grand Hamad Street followed by C/D ring road, it said.

Observing that the commencement of Salwa Road underpasses has increased the demand for commercial places in the surrounding areas, Al Asmakh said average office space around 150 sq m size may be available to lease with average rental of QR110 per sq m.

Firms adopt ‘virtual office’ concept

Higher fixed costs on office rents are prompting smaller companies to adopt “virtual office” concept, according to Al Asmakh.

Bigger international players such as Regus and Servcorp have been offering various sizes of offices. Moreover, in the last quarter, around 2,000 sq m office space on Grand Hamad Road was taken by another international player to open such ready to use offices.

Promising support from the Qatar government encourage international players to come to Qatar, it said, adding MasterCard decided to open their third region office within Qatar after Dubai and Riyadh.

In  the first quarter of this year, Al Asmakh said it has experienced demands from many international players to acquire lands to establish their operations. These demands are mainly for the lands located either on Salwa Road or on Al Shamal road.

The report said owing to higher demand for the organised retail; the construction of  several Malls has been restarted. For upcoming Malls, such as Al Mirqab Mall, the construction activity is on full swing which is likely to be completed by Q1 2014.

Within last quarter, Ezdan Mall launched which has added about 40,000 sq m leasable area on Al Shamal road. As a part of primary phase of Doha Festival City, IKEA has resumed its first outlet within Qatar. Within Doha city limit, Al Sadd Mall which offers around 9,500 sq m leasable area has began its leasing activity.

The average rental in Landmark Mall is around QR275 per sq m per month. However, leasing in Ezdan Mall may cost in the range of QR200 to QR250 per sq m per month. The expected rental in Dar Al Salam Mall, which is in Al Mamoura and mainly developed to cater to surrounding villa compounds, is around QR200 to QR225.

Occupancy in major Malls such as City Center, Landmark, Villaggio, Centerpoint and The Center are up to 80%, with quarter-on-quarter appreciation of 5% to 7% on rental prices. Occupancy in smaller malls is in the range of 40% to 50%. The major reason for such low occupancy is their locations.

Although the new malls have been coming up, it said the major retail activities still remain within old souqs and scattered retails shops near city center areas of Doha. However, such activities are largely into non-luxury, wholesale, and trading segments.

On the hospitality sector, Al Asmakh report said first quarter of this year was overall decent enough for the segment owing to increase in business activities, and favourable weather conditions for traveling to Qatar during this time of the year.

Thanks to deliberate efforts from Qatar government to enhance tourism sector, a little increase has been seen in last quarter on the occupancy side, it said, adding many companies and individuals within the Arab region, prefer non-alcoholic hotel for a stay.