Rental rate ‘declined in second quarter’

Weak demand growth and a continuous rise in supply have led to a “slight” ease in rents in Qatar in the second quarter (Q2) of this year, according to a Century 21 report.
The report also found that mid and long-term returns of real estate projects over the next few years are “feasible” despite the current imbalance of supply and demand.
“Overall, change in apartment rental rates over the months of Q2 was slightly negative,” it said.
The highest declines were seen in Bin Omran (more than 4%) while areas such as Al Matar and Bin Mahmoud saw a positive growth of 2% and 1% respectively, it said.
The average growth of apartment rental rates in the entire areas understudy has registered a positive 5% increase during April 2011 and two consecutive declines in the next months (May and June) at 1% and 5%, respectively, Century 21 said, adding, hence, apartment rents declined 1% in Doha over Q2 of this year.
“Rent declines are expected to continue over the next two months (summer vacation), while activity will rise after the end of the Holy month of Ramadan and before the start of school season,” it said.
However, villa rents have seen a better performance than apartments where some villa areas saw growth of rents; it said observing that the highest decline in rents was seen in Ain Khaled and Muraikh at 8% and 6% respectively, while Al Waab area saw the highest growth at 7%.
Overall, change in villa rents over Q2 recorded an increase of 1% in April and two consecutive declines of 1% during May and June. Hence, villa rents in Doha declined 1% between April and June 2011, it said.
On real estate transactions, it found that the total value recorded during Q2 of this year reached approximately QR7bn over 12 weeks starting from the beginning of April 2011. The last four weeks (May 29th to June 25th) have seen QR2.3bn in real estate purchases registered which is a relatively high figure.
Exceptional transactions at high prices were seen more often in investment areas such as Al Sadd, Bin Mahmoud and Al Dafnah. In addition, the market witnessed a number of deals to sell commercial and residential multi-storey buildings, of which one tower at least in the West Bay area, it said.
“Though growing continuously, the volume of real estate transactions remains modest as transactions are limited to local traders while foreign investments are yet to come,” it said.
On the commercial office rental market, Century 21 said high volume of supply and the continuous delivery of office space in the market are “still casting a long shadow over office rental rates”.
Leasing rates have seen declines of 2% on a monthly basis over the months of Q2 2011. In total, office leasing rates saw almost 9% decline since the beginning of the year, it said, adding slow growth of demand is also delaying recovery of the commercial real estate sector.
However, the government is still trying to lend a hand to property owners by leasing their properties on a long term basis, it found.
Despite the current imbalance of supply and demand, studies indicate that mid and long-term returns of project over the next few years are feasible, thanks to government plans and a broad economic recovery anticipated.
“It is anticipated that the next months, after the seasonal holidays, demand will improve and a better performance will be witnessed in the office space sector,” the report said.


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