A file photo of Al Hilal area Pic: Qassim Rahmatullah
Upcoming apartment supply in Qatar’s residential real estate sector will be dominated by smaller sized units, such as studios and one-bedrooms, leading real estate consultant Cushman and Wakefield Qatar has said.
Fewer three-bedroom apartments are currently being constructed in the country, which may result in less availability, and create an upward pressure on rents. On the other hand, rents on studio and one-bedroom apartments are expected to continue to fall in the coming years, Cushman and Wakefield Qatar said in its second quarter residential market overview.
“In terms of forecasting, what we do see is there being a change in the dynamics in terms of rental trends. In terms of the pipeline supply over the next two years, we think there’s going to be a bit of flood of one-bedroom and studio apartments being delivered in the market, compared to two-bedroom or three-bedroom apartments. So we probably see rents continue to fall for one-bedroom apartments, and stabilise and grow for two-bedroom and three-bedroom apartments,” said Johnny Archer, Director of Consulting & Research at Cushman and Wakefield Qatar, while presenting a market review in Doha recently.
He added that the increasing supply of studio and one-bedroom apartments will also be available for a huge number of people expected to come to Qatar on temporary work contracts for the upcoming Fifa World Cup 2022.
As Qatar prepares to host the mega-sporting event, the Supreme Council for Delivery and Legacy (SC) will also need residential accommodation for a huge number of people it will hire to run the operations for the event.
The SC in February has invited property owners and developers to submit expressions of interest in providing residential accommodation during the 2022 World Cup, on a basis of six-month contract, 12 month contract, and 18 month contract, said Archer.
He added: “One of the topics we’ve talked about over the last few quarters is the oversupply of residential apartments coming on board. In a way, that’s possibly a blessing in disguise for the SC, because they need accommodation for the World Cup. The temporary oversupply is going to assist in that point of view. We’ll see a sharp increase in demand which is going to be a short term thing. So we’ll probably see rents increase temporarily as the SC take these apartments, and there’s not as much stock available in the open market”.
Archer added that the hosting of the World Cup also changes the dynamics of the real estate market in Qatar. “We still don’t know how it’s going to work, because it’s unprecedented. There may be a sort of an increase of uncertainty from tenants, in terms of if their landlord is going to look for vacant possession and provide the entire building for the World Cup.
From a landlord’s point of view, they’re going to be faced with a choice in the next few months. Do they want to deliver a building to the SC with vacant possession and get certain income for short period of time? But then they’re faced with going back to the market with an empty building in 2023. Another question, should tenants be looking to get longer term leases just to secure their accommodation for the World Cup period. There’s no answer to this in terms of what’s the right thing or the wrong thing,” Archer added.
