BMI View: The real estate market in Qatar continues to prosper with the massive growth occurring in the tail end of 2014. As we look into 2015 our positive outlook for the economy over 2015 supports our view that investment will remain strong in the real estate sect, which should only increase in the longer term as the country a boost in real estate expenditure as it prepares for the world cup in 2022.
While Qatar's real estate sectors falls in the shadow of some its more prosperous neighbours such as UAE, developments such as the 2020 world cup and 2030 vision programme auger well for the real estate market in Qatar. For the most part commercial real estate in Qatar relate to its main cities Al Khor Al Wakra and Doha, however there has been significant plans from the Qatar government to improve real estate in other areas of the country. Forexample, they plan to spend 45BnUSD on real estate development in Lusail city.
In term of its actual population Qatar is quite small recording just over 2mn people last year. However the population is incredibly wealthy and in terms of per capita income it is one of the richest countries in the world. The affluent nature of the population along with a growing tourist sector has seen a growth in demand for modern retail facilities, particularly for luxury good outlets. This has led to the development to many shopping malls including mall Qatar which will open in 2015 at a cost of 84mn USD. This demand for retail properties will more than likely continue in the mid to long term and it should remain the fastest growing of all real estate sub sectors.
Along with the ongoing infrastructure developments in preparation for the World Cup, the vision 2030 project should result in a large growth for commercial real estate going forward especially in the key commercial regions such as Doha. Doha has now become a key financial hub in the Gulf and this has seen a surge in demand for commercial office space in the city. The office sub-sector has also benefited from a number of major engineering, financial services players establishing themselves in the country. The growth of Doha as one of the premier financial centres in the Gulf coast could lead to significant real estate hikes in the longer term.
Two towers in Al Dafna area in West Bay, Doha were sold in late July 2014 for QAR1.5bn (USD411.94mn), recording a total value of real estate transactions in a week to QAR2.76bn (USD 757.97mn) which is an all-time high. The first tower covers 3,126 square metres (sq m) and was sold for QAR1bn (USD274.68mn), while the second tower covers 4,056sq m and was sold for QAR500mn (USD137.31mn).
Ezdan Holding Group reported a 58.9% growth in rental income to QAR641.3mn, a significant turnaround in performance after recording an increase in liabilities to nearly QAR37bn (USD10.16bn) by the end of 2012 as a result of overexpansion.
Key BMI Forecasts
Rental rates in the office sectors of Doha and Al Ware are expected to grow in 2015, while in Al Khor rents will remain stable.
Retail rental rates in Doha will increase by 10-12% in 2015, while those in the other two cities will remain flat.
Doha's industrial real estate rental rates will rise by 5% in 2015.