‘Demand for rental rates to soften further’

Doha, Qatar: The housing market witnessed a sudden spike in rents during the third quarter as indicated by several reports. Market experts expressed optimism about easing demand for rental rates in the quarters ahead.

The Peninsula explored the current market trends and reasons for this surge, which heavily impacted tenants across the country. Serban Spirea, Chief Executive Officer of FG Realty said: “One of the significant trends we have observed is that many tenants are now transitioning into homeowners, driven by favorable property prices and financing options.”

He noted that “As more people take advantage of ownership opportunities, it’s possible that demand for rentals in these segments will soften further, which could lead to a continued decrease in mid-tier rents while the high-end market remains competitive.”

However, post-World Cup, the oversupply of properties in Qatar has provided tenants with more options, leading to stabilization of rents for high-end properties and a decline in mid and low-tier rents.

Simultaneously, the official also elucidated that the largest gas project expansion in the GCC has increased housing demand in premium areas, which helps to sustain rental prices for high-end properties. Inflationary pressures and rising construction costs also continue to affect premium rentals.

Spirea added “Looking ahead, I expect the Q4 2024 market to see stability in high-end rental prices with a slight chance of increases as demand rises due to the influx of professionals working on the gas expansion project. However, the trend of tenants purchasing homes is likely to keep mid- and low-tier rental prices under downward pressure.”

The government, on the other hand, is continuing efforts to stabilize the rental market through the development of affordable residential zones and policies to increase homeownership among expatriates and locals.

With the gas expansion project driving economic growth, new housing developments are increasing, aimed at mid-income workers, helping to balance supply and demand in the rental market. Additionally, sources told The Peninsula that incentives for developers to build more affordable housing could further stabilize rents across the region.

A recently released study by the research consultancy platform - hapondo states that apartment rents in select neighborhoods in Qatar indeed have increased in Q3 2023. However, the data also suggests that rents are still recovering back to 2023 levels.

When compared to the third quarter of last year, Q3 2024, the prime neighborhoods showed varying levels of performance. One-bedroom apartment rents in West Bay have increased by 4.1 percent year-on-year by nearly 8 percent quarter on quarter in Q3 2024, while The Pearl rents remained relatively stable, moving down by just 1.6 percent, a decline by 0.6 percent quarter on quarter in Q3 2024. 

Compared to Q3 last year, one-bedroom apartment rents in Lusail continue to be on the low side, while the average one-bedroom apartment rent in Marina District and Fox Hills shrunk by 9.7 percent and 7 percent, respectively.

“The spike in rents seen in Q3 suggests that rates could be coming back to the level during the same period last year, but even the increase in many of these neighborhoods has not yet been enough,” said Abdullah Al Saleh, CEO of Sakan, hapondo’s parent company.

He further explained that “This is true even in the downtown areas such as Al Sadd, where rents increased by 6.6 percent but are still down by double digits.” Rents in Fereej Bin Mahmoud barely moved in Q3 2024 but are down by 6.4 percent year-on-year. Najma also witnessed a 4.9 percent decrease in rents quarterly compared to a larger decline of 12.9% year-on-year, the report showed. 

“Since the successful  FIFA World Cup Qatar in 2022, we have seen price adjustments in rents across 2023. The increasing residential supply, changes in the expat population, and the level of demand in select neighborhoods will contribute to these cyclical fluctuations,” Al Saleh added.

However, residents reacted to the latest quarterly data and took to social media platforms urging swift actions to bring down the rents noting less or unchanged wages and employment crisis in the market.