Qatar real estate prices have witnessed market corrections, according to ValuStrat’s Q2 2023 Qatar Real Estate Market Overview.
Price adjustments were recorded across all rental sectors, with median rental rates in the residential segment declining to reach Q2 2022 levels. The same trend was observed in the commercial and industrial segments.
Pawel Banach, MRICS – ValuStrat’s general manager, Qatar, commented, “We expect market corrections to continue across all segments of the real estate sector through the end of 2023. Qatar’s economy experienced an exceptional year in 2022, and the sudden fall in demand in the first half of 2023 widened the oversupply gap.”
This meant a consequent decline in rents and prices that improved affordability for tenants and buyers. “As supply expands in all real estate sectors, the extent of market adjustments directly depends on initiatives taken within the private and public sectors to mitigate a long-term detrimental response,” added Banach.
The ValuStrat Price Index (VPI) for Q2 2023 recorded a mild 0.3 percent quarterly decrease, standing at 64.8 points. This corresponds to the level of prices in Q2 2022. The VPI is a valuation-based price index set at 100 points as of Q1 2016.
Qatar real estate supply-demand dynamics
ValuStrat estimates that 4,700 apartments and villas were added during Q2 2023. This increased the residential stock to 341,140 units.
Compared to last year, median monthly rental rates reduced by 2.4 percent quarterly to QAR9,000. Market corrections have been more prominent in the apartment sub-market, according to the report. Median monthly asking rent fell by 5.3 percent year-on-year (YoY) and 2.2 percent quarter-on-quarter (QoQ), standing at QAR6,250.
Meanwhile, asking rents in the villa sub-market remain 1.6 percent higher than in the same period last year. The median quoted monthly rent for this segment stood at QAR11,000. This is still 3.3 percent lower relative to the previous quarter.
In other segments, office stock increased to 6.8 mn sqm, after the completion of 25,000 sqm gross leasable area (GLA) in Q2 2023. An estimated 465,000 sqm GLA remains in the pipeline for the second half of 2023.
Overall, the citywide median monthly asking rent for offices recorded a quarterly reduction of two percent, valued at QAR69 per sqm. This is 3.5 percent lower than in Q2 2022.
Retail rentals stable
ValuStrat also observed a supply growth in retail spaces over the last quarter. The addition of 04 Mall (6,000 sqm GLA) in The Pearl Island contributed to this growth. No new shopping centers are in the pipeline for 2023.
Therefore, median monthly rents for shopping centers experienced no quarterly change, standing at QAR200 sqm. This represents a seven percent decline YoY. For street retail, rental rates within Doha softened to QAR152 per sqm. This indicates a 1.3 percent decline QoQ and a 6.2 percent softening YoY.
Farah Ali – ValuStrat Qatar research analyst, commented, “Despite the general downward trend in all leasing markets within the real estate sector, we anticipate a reduced rate of decline in rental rates for the second half of 2023.”
Ali noted that projects across various segments of the real estate sector, particularly in the retail and office markets, are either being put on hold or experiencing delivery delays. “As a result, occupancy levels of commercial projects will improve in the medium term,” he added.
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