Landlords who are still bullish with rentals which spiked sharply in the run-up to the FIFA World Cup 2022 will fall in line with the rental prices that would see a correction in due course said real estate industry officials.
Partner - Head of Qatar, Knight Frank, Adam Stewart said the real estate market has certainly been sluggish over the last two quarters. The fourth quarter (Q4) of 2022 saw a 47 percent reduction in the number of transactions compared to the previous year and the first quarter (Q1) of 2023 saw a 40 percent reduction.
The slowdown in Q4 is almost directly attributable to the World Cup; however, the slowdown in Q1 is most likely a combination of post world cup blues and rising interest rates which is dampening real estate appetite globally, Stewart said.
However, he noted that landlords certainly enjoyed increased rents in the run-up to the World Cup and they are still feeling bullish. Fundamentally, supply still outweighs demand, so we expect a correction in rental prices in due course.
Al Manzil Residence and Suites of Doha Operations Manager Kashif Javed Khan said landlords don’t mind keeping their apartments empty than having some revenue with low rates.
“There will not be a change in rentals immediately and most likely high housing rentals will remain for the rest of the year,” he said adding that hopefully by next year there could be some improvement in the real estate business benefitting everyone.
The size of the residential real estate market in Qatar is currently around $4.28bn and is anticipated to register a CAGR of over 6.24 percent during the forecast period of 2023-2028 according to statistics.
“Neither there will be an upward nor downward revision in the rents immediately as most apartment owners are following a cautious approach in renting out units,” Ajaz Hussen, an apartment owner in Corniche said.
Market analysts are of the view that the current status quo with regard to apartment rates would continue for some time as lessors anticipate a knock-on effect of the global economic crisis on household income in Qatar.
However, according to global multilateral bodies and think tanks Qatar is one of the fastest growing economies the Middle East with a GDP expected to grow at around 3.3 percent this year.
The high GDP growth rate and the population influx backed by job opportunities and government legislation will be some of the major drivers propelling the country’s residential real estate market forward, market analysts said.
According to the World Bank’s latest report Qatar is expected to post a fiscal surplus of 6.5 percent in 2023 and 5.3percent next year. The current account balance will be 15.9 percent this year and 12.1 percent in 2024 and the real GDP of Qatar has been forecast to grow at 3.3 percent this year and 2.9 percent in 2024 by the bank.
The high net worth of the ordinary Qatari inhabitant, both local and expatriate, considerably impacts the construction industry, increasing the demand for luxury and well-organized residential areas.
The population growth rate, combined with a steady supply of expatriate workers, is expected to generate further demand in the medium to long term.
Total population of Qatar increased from 2.83 million at March 2022 to 3.01 million in March this year at an annual rate of change of 6.3 percent, and it increased monthly by 0.8 percent (compared to February 2023).
