House rents in Doha are expected to rise over the next 12 -24 months despite sliding oil prices, according a real estate consultancy firm DTZ. The rise in rents, expected to be in the range of five-ten percent, will be driven by increasing population.
“We have seen a rise of five-ten percent in the last six months driven by rise in demand because of increasing population. This upward pressure (on rents) is expected to continue in the next 12-24 months,” said Johnny Archer, Associate Director, Consulting and Research, DTZ, in a press conference. “We do not see relief from high rents in the near term,” he added. However, the firm says rents may see downward pressure if oil prices remain low for longer period.
“The recent fall in oil prices has resulted in some of the major oil and gas companies putting their requirements for new residential accommodation on hold. While this has not had a significant impact on overall demand levels, a prolonged period of lower oil prices may lead to a wider market reduction in demand overtime, easing the pressure on supply and rental levels,” said Edd Brookes, Senior Director, General Manager, DTZ.
The projection for rents by DTZ is only for Doha, clarified the officials. DTZ expects that up to four more residential towers at the Pearl Qatar could potentially be completed and made available to the market in the second quarter of 2015 — subject to approval being received from the civil defence requirements — increasing supply by more than 700 apartment units.
Unlike residential market, the commercial real estate market has begun to see stability in rents.
“The office leasing market has recorded a slow start to the year, with few major transactions of note in the first three months of 2015,” said Archer.
“We estimate that there is currently in the region of 1.637 million square metre (sq m) of purpose built office space in West Bay, representing approximately 42 percent of all supply in Doha. A further 300,000 sq m of office accommodation is likely to come to the market in West Bay and Lusail by the end of 2015, which will increase vacancy levels and ease the upward pressure on rents that was witnessed in 2014,” he said.
As new office buildings in West Bay, Al Sadd, and Lusail come to the market, DTZ forecasts that higher vacancy levels will see rents remain at current levels, with more attractive deals potentially available for larger space users. Hospitality sector in Qatar will see robust growth in the coming years. “According to data from QTA (Qatar Tourism Authority), approvals are in place for a further 124 hotel establishments in Qatar, which if realised will increase the level of supply to approximately 35,000 keys,” said Archer.
“DTZ’s own research has identified 32 new hospitality led developments that are under construction and should increase supply in the market by approximately 10,000 keys over the next three years,” he said.
The consultancy firm expects retail market to see opening of 12 new shopping malls by the end of 2019. “DTZ estimates that more than 1.2 million sq m of retail space in 12 new shopping malls is currently at various stages of design or construction and may be opened by 2019,” said Archer.
