Cushman & Wakefield Real Estate Consulting said in its Qatar Real Estate Market Report for Q2 2024 that statistics indicate that the supply of apartments and villas in Qatar has grown to more than 400,000 units by the end of last June – a compound annual growth rate in supply of more than 6 percent over the past decade.
Cushman & Wakefield confirmed that residential rental rates in Doha witnessed stability during the first six months of 2024, especially with the introduction of more units in several areas, which contributed to the decline in rental rates and their variation by area, noting that large residential projects in Doha and Al Wakra, including Madinatna and Gardens of the South, contributed to a significant increase in supply and pressure on occupancy rates and rents in the middle market as developers compete to attract tenants. In these major developments, rents have been reduced compared to 2022 and currently range between QAR 3,500 for a one-bedroom apartment and QAR 5,800 for a three-bedroom apartment.
Strong demand
The real estate consultancy’s report on the Qatar residential market overview indicated that there is strong demand for apartments in newly constructed buildings with higher specifications, thanks to the decline in rents in the areas of Viva Bahriya and Floresta Gardens, where tenants are attracted by the high quality of finishes, property management services, and inclusive rents offered by building owners.
This demand means that many new buildings in good locations often reach full occupancy within three months. At the premium end of the market, there has been a noticeable trend of tenants moving from older towers in The Pearl to new buildings. This has led to a disparity in occupancy rates between buildings based on their age and type.
The report stated that occupancy rates tend to be higher in the Porto Arabia area, in particular, in the older towers, where apartments are often owned by individual owners.
In Lusail, occupancy rates are highest in the Marina area, where new towers typically drive demand, and the amount of new apartments in areas such as Fox Hills and Al Arkaiya means vacancy rates are higher, with more flexible rental incentives available.
On the premium side of the market, there has been a noticeable trend of tenants moving from older towers in The Pearl to newer buildings. This has led to a disparity in occupancy rates between buildings based on their age and type.
Villa complexes
Villa compounds continue to enjoy high occupancy rates and rents are stable across most of Doha. This is due to the relative lack of availability compared to residential units, which has led to upward pressure on rents in some of Doha’s most popular compounds. While rents have remained broadly stable so far this year, compounds no longer offer rental incentives to new tenants, which have been common in recent years.
Residential unit sales
According to the latest statistics issued by the Planning and Statistics Authority, the number of residential unit sales transactions increased by 16.4% during the first five months of the year compared to 2023.
The report also highlighted that individuals still dominate the buying, not investors. Individuals looking to secure housing and residency permits and avoid paying rent are driving residential apartment sales. These purchases are encouraged by the increasing flexibility of payment plans offered by many developers in different residential areas of Lusail City.
The pace of new construction is reportedly expected to slow somewhat in the coming years, with the largest amount of new housing concentrated in various master-planned areas of Lusail City.
Office and space rental
Cushman & Wakefield estimates that approximately 120,000 square metres of gross leasable office space was leased or placed under supply in the first half of the year, split primarily between Msheireb Downtown Doha and West Bay.
According to the report, the most significant deal in the second quarter was the government-approved lease for the World Trade Center Tower on the Corniche, which Qatar Energy vacated in 2022. The building provides approximately 58,000 square meters of Grade A office space.
The Cushman & Wakefield report also showed that the amount of office space available in the West Bay area has decreased to approximately 160,000 square metres, reducing the vacancy rate in the area to less than 10%.
Other areas in Msheireb Downtown witnessed a high demand, with availability falling to less than 5%, and there is also rental activity in different areas of Lusail.
The report revealed that overall availability in prime office areas has fallen to less than 15%, which is in contrast to the real estate market in central and southern Doha, where availability rates are much higher. Much of the availability of rental space in these areas is due to the expansion and relocation of government departments from older buildings in Doha to other areas. This is expected to lead to more vacancy in some areas when current leases expire.
Leasing trends have created a two-tier market based on the size of Grade A space, while previously supply was fueled by long-term vacancy with limited new demand.
With occupancy rates rising across prime locations, upward pressure on rents is beginning to re-emerge for the first time since 2015. While the majority of prime office space in West Bay and Lusail can be found renting for between QAR100 and QAR130 per sq m per month, excluding service charges, a select number of higher-spec buildings are looking to increase, while vacant space in other areas has been rented for QAR50-60 per sq m per month.