Real estate market continues to face a period of contraction

Doha: KPMG recently released its Qatar Real Estate Rental Index Q1 2016 – Q4 2020, which tracks quarterly changes in the real estate rental market covering three core asset categories: KPMG Office Rental Index (K-ORI), KPMG Residential Rental Index (K-RRI) and KPMG Mall Rental Index (K-MRI). 

Anurag Gupta, Director and Head of Strategy and Real Estate Advisory at KPMG in Qatar said: “The real estate market continues to face a period of contraction in both volume and price.  

Following the large drop in the quarterly rentals due to the pandemic, real estate activity exhibited signs of improvement towards the end of 2020. With blockade coming to an end and the regional trade activity showing signs of normalization, Qatar economy is expected to grow rapidly post the pandemic situation.” 

Research showed the drop in rental for residential developments, which was still lower than other core asset categories, including commercial office and organized retail mall. 

Rentals in the affordable housing category continue to stay afloat while maintaining stable occupancy levels. The middle-income housing segment continues to experience active demand primarily due to movement of tenants seeking better value proposition which includes locational advantages, superior offering at competitive rental due to added incentives such as rent-free periods of 1 to 2 months, free utility bills and better services as well as upliftment in amenities. 

While the drop in the rentals for the high-end housing segment has been primarily due to competitive landscape, there has been increase in enquiries especially for the developments at The Pearl and Lusail. Overall, Q3 and Q4 2020 witnessed a combined drop of 3.63 percent on the residential rental index compared to 2.53 percent as witnessed during Q1 and Q2 2020. 

For the Commercial Office market, the impact of COVID-19 was comparatively higher than residential segment. 

Q3 and Q4 2020 witnessed a cumulative decline of 7.63 percent on the rental index compared to 1.56 percent experienced during the initial two quarters of 2020. 

On the Organized Retail Mall front, the COVID-19 pandemic led to a significant decline in rentals. The rental index experienced a further drop of 8.77 percent over the last two quarters of 2020 from 2.36 percent as witnessed during Q1 and Q2 2020.

Sayantan Pande, Associate Director and Head of Infrastructure, Financing and Real Estate Valuations at KPMG Qatar said: “Going forward, it is essential to assess pain points and challenges while designing integrated value-propositions thereby curating a differential offering for all stakeholders.”

As seen on Peninsula Qatar  Image Credits Peninsula Qatar