Photo by Baher Amin | The Peninsula
Approximately 60 percent of the new additions for residential supply in Qatar during the first quarter of the year (Q1 2020) came from Lusail, with the completion of Maison Blanches compound and towers in Al Kharaej district and Al Erkyah district, consulting firm ValuStrat Qatar has said in its latest quarterly report ‘COVID-19 & The Qatar Housing Market’.
Total housing stock by the end of the first quarter was approximately 299,100 units with the addition of 900 apartments and 500 villas during the quarter. All new additions were during the first two months of 2020.
Approximately, 8,600 units are projected to be added during the remaining quarters of the year, assuming there are no construction delays, the report added.
Overall, during the first quarter, transactional volumes of residential houses decreased by 13 percent Y-o-Y and no change compared to the fourth quarter of 2019. However, this fall cannot be fully attributed towards the advent of COVID-19 as transactional volumes have been dipping annually since the second quarter of 2019.
As observed in previous years (2016-2019), volume has always picked up in March compared to January and February, though not in the first quarter of 2020, where a notable fall in March 2020 was observed.
Median transacted size for residential houses was QR2.5m where the five largest ticket sizes exceeding QR30m were seen in Muraikh, The Pearl, Al Waab, Old Airport and Umm Salal Muhammed. Majority of the largest transactions during the first quarter occurred in March.
During the first quarter, The Pearl and West Bay Lagoon (freehold areas) saw transactional volume decrease by 3 percent Y-o-Y and this can be attributed to a notable fall in volume in March. During the first two months of the year, volume was higher by 16 percent Y-o-Y compared to 2019.
Qatar’s ValuStrat Price Index (VPI), a valuation-based index (100 points base set in Q1 2016), that tracks change in capital values for a representative fixed basket of properties, showed an overall 3.4 percent annual dip in capital values for residential sector, with trivial quarterly fall of 0.5 percent.
The average capital value of a residential unit stood at QR7,876 per sqm. More specifically, apartments were QR11,435 per sqm and villas QR6,105 per sqm
All freehold apartment locations monitored by the VPI saw capital values quarterly decline of less than 1 percent. For villas, six locations out of 13 clusters (Al Khor, Umm Salal Ali, Duhail, Umm Salal Muhammed , Muaither and Al Waab) saw no quarterly change in capital values, except for Al Wakrah which saw a fall of 4 percent Q-o-Q.
The remaining clusters saw capital values decline by less than 1 percent Q-o-Q. The report noted that Qatar’s VPI for residential sector and rents were falling quarterly by an average of 1.5 percent in residential sector prior to the COVID-19 crisis.
However, any substantial fall in capital values or rents different from this trend will only occur if there are significant increases in vacancy over time stemming from various adverse economic effects of the pandemic. Therefore, at least in the short term, there is no predicted notable decline in prices or rent.
Depending on the length of the crisis, noticeable fall in prices and rents might occur with a lag. Residential projects with high vacancy rate likely will be the first to change prices or rent. While, resistance to repricing of new construction and highly renovated redevelopment projects is expected.
Pawel Banach, General Manager at ValuStrat Qatar, said: “It is too soon to predict the extent to which the market will react, given we don’t know how long the crisis will sustain in Qatar or abroad. It is important to remember that there has been some positive signs.
ValuStrat analysis of Chinese property market-the first country to be affected by COVID-19-shows that after an initial hard shock, it has bounced back relatively rapidly.
In addition, analysis of previous SARS pandemic of early 2000s indicate similar trajectory, where there is cautious optimism that a strong public response to slow the spread of the virus and provision of financial support to affected households and businesses can counter the projected economic fallout to a certain degree”
