Qatar has seen some 500 residential units being added in the second quarter of this year, bringing the total supply to 281,500 units, a new report has shown.
Approximately 80% of the expected supply during the quarter has been pushed to second half of the year, according to consulting firm ValuStrat.
“The rate of decline in transaction prices for bungalows has slowed to 6% this quarter when compared to the previous year, while on a quarterly level, prices remained unchanged. Transaction volume increased annually for bungalows and residential buildings, however transaction volume declined quarterly, partially indicating that demand growth might have been offset by rise in borrowing costs”, said Anum Hasan, Market Research analyst at ValuStrat Doha.
Median monthly asking rents for villas and apartments declined 14% annually and 6% quarterly. However, Al Wakrah, Muaither, Al Aziziya and Freej Bin Mahmoud experienced stable rents. The fall in average rents can be attributed to a reduction in demand for high-end units in locations such as The Pearl and West Bay. This trend is expected to continue as more supply in this category comes into the market.
An estimated 50,000 sq m Gross Leasable Area (GLA) of office space was added, bringing total office stock to 3.65mn sq m. Nearly 130,000 sq m expected during the quarter was delayed to the second half of 2017.
Despite the deceleration in supply, office rents struggled, recording a 10% annual decline and a 3.5% quarterly dip. An exception to this was office spaces in C and D Ring Roads, which saw a negligible quarterly change in median rents, ValuStrat said.
Four hotels were launched, increasing total supply to approximately 25,000 keys within 138 properties. An additional 550 keys were held back from launch this quarter.
During the first five months of 2017, hotel visitors increased by 7% YoY amounting to 1.37mn. Despite the annual growth, average occupancy dipped by 3% compared to the same period last year.
With new supply and decreasing occupancy, Average Daily Rate (ADR) and Hotel Revenue Per Available Room (RevPAR) declined by 11% YoY. However, 3-star hotels experienced an increase in occupancy of 13% compared to the same period of 2016 with ADR and RevPAR remaining static, indicating an increase in preference for affordable mid-market hotels.
Pawel Banach, ValuStrat Qatar general manager said, “Overall in all sectors, we have observed delays in supply during the second quarter. It is predictable as conditions in the market slowdown due to summer vacations and Ramadan. However, in terms of residential and commercial transaction volume, we observed continued recovery since the beginning of the year.
“In retrospect of the current geopolitical situation, future performance of real estate sector has become contingent on numerous supply and demand factors. In the medium term, we are expecting construction delays to stagnate unless supply chain and logistical challenges are overcome. The medium-term trajectory of demand fundamentals will depend on the recovery of oil prices and population growth. With the release of the second edition of our quarterly report, we aim to continuously inform and assist all stakeholders in understanding essentials of the Qatari real estate market so they can make more informed decisions.”