Real estate prices at new record

January 16, 2014 - 12:07:15 pm
By Satish Kanady

DOHA: Qatar Central Bank’s  (QCB) annual update of  2013 real estate price index indicates the country’s real estate market prices are heading to record high points. The update shows that the index has touched a high 189.8 percent in December 2013, up by 21 percent year-on-year.

After reporting a drop for two successive months, the index rose to a new high of 178.6 points in September 2013. The September levels rose to 184.7 points in October and 184.4 percent in November, indicating Qatar’s real estate market is either on the recovery mode or heading to a record price. 

The index, that tracks the price movement of the country’s real estate market, reached a peak in 2013 April and May months with 183.9 points and 190.4 points respectively before dropping to 178.8 points in June. The index further slipped to 174.2 points in July and rose marginally in August reaching 176.9 percent. 

According to experts who track the country’s real estate market, the deals in the country last year were worth QR45.5bn.

In the run up to the FIFA World Cup in 2022, Qatar plans to invest over $140bn over the next five years in transport infrastructure to transform Qatar. Currently supply of housing is scarce and with an increase in population forecasted in Doha over the coming years, construction of affordable residences will increase. 

QNB’s  ‘Macro economic outlook for 2013-14’ noted large public sector infrastructure projects will  require a significant expansion in the labour force. As a result, population is expected to grow by an annual average rate of 10 percent in 013-14. This will inevitably result in upward pressure on rents, which account for nearly a third of the consumer price index (CPI). Rents have recovered from their trough in June 2012, and the rate of rental increases has been increasing in recent months while non-rent inflation has fallen. QNB forecasts inflation to increase in 2013 to 3.6 percent and to 3.8 percent in 2014, mostly driven by higher housing costs. 

Deloitte noted in its latest report on ‘Qatar’s construction market’ that affordable accommodation is currently performing well in the market. Golden Tulip, Hiltorn Worldwide and the Starwood Group are actively considering investments in this sub-sector in Qatar.

Demand for hotel accommodation is also anticipated to increase as more visitors are expected to visit Qatar in the run-up to the FIFA World Cup, when the peak in the number of visitors will be experienced. 

With millions of visitors and football fans anticipated in 2022, Qatar has planned for the development of several hotels in the next few years. The expected influx of visitors also creates the opportunity for the development of commercial units, such as various shopping malls around Qatar.

The ratings agency Standard & Poor’s recently noted that Qatar’s real estate market is expected to recover from its sharp decline since 2009. According to S&P, the commercial sector remained more vulnerable than the housing segment.   Concentration in the real estate and constructions sector is high at 20 percent of total loans at year-end 2012. 

The Peninsula