Apartment rental rates in Doha have plunged by 15 to 20 per cent in the last three months due to continual stream of housing stock coming into the market, the latest study by real estate firm Asteco shows.
This has been particularly evident in the West Bay area and the Pearl-Qatar where the handover of seven towers has been completed, with a further three scheduled for Q3 2010.
Other parts of Doha such as Al Sa’ad, Bin Mahmoud and Old Airport have shown more signs of stabilisation in the rental market compared with the first quarter of this year, Asteco says in its 2010 second quarter report.
While releasing the research, Elaine Jones the Chief Executive Officer of Asteco Property Management attributed the rise in market activities to mortgage products that are being promoted by banks in Qatar.
“Major banks have started to promote mortgage products aimed at purchasers looking to buy at the Pearl-Qatar. Although the restrictions on mortgages remain stringent, there are signs that banks are becoming more flexible with their lending requirements,” she said.
Units on the Pearl-Qatar and Lagoon Plaza developments recorded the largest rental decline for all apartment types. Villa rental rates recorded a minimal change with three, four and five bedrooms decreasing by 0, 1 and 3 per cent respectively, while the studio units have the steepest decline. One and three bedroom units throughout Qatar have seen minimal rental movements, the study says.
“Overall, the downturn in the rental market has provided prospective tenants with more choice of accommodation while landlords are having to lower their rents and in some cases offer incentives such as rent free periods,” Asteco report says.
Sales market stagnant, no price fluctuations
According to the research, the sales market in the last three months has become stagnant with no fluctuation in pricing levels for the primary or secondary market on The Pearl-Qatar.
“This could be an indication of the market reaching the bottom,” it says.
Rents at the West Bay Lagoon are still strong “as well paid expatriates working for reputable companies are willing to pay for this type of accommodation given the limited supply for executive and luxury villas currently available.”
Asteco foresees reduced rental yields for landlords, if excess supply continues into 2011.
“However, with the continued growth in GDP and the government’s focus on creating more business and investment opportunities beyond oil and gas industries, Qatar offers an attractive location to foreign business and workers.”
Meanwhile, the oversupply of office space has forced rental prices down, Asteco study reports, adding that “This scenario has generated an increase in demand for office space, particularly for Grade A office stock mostly located at the Business District.”
“This demand has been derived from companies attracted by 20 to 30 per cent rent reductions, which now find accommodation in prime locations affordable.”
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