Real estate prices seen shooting up

February 09, 2014 - 5:00:56 am

DOHA: Real estate prices are expected to shoot up in Qatar by 20 to 25 percent this year, but this will not necessarily lead to a proportionate increase in rents, they argue.

Speculation about a massive rise in rents in the years to come is not justified by prevailing trends in the market, say real estate experts.

The QNB Group, in its weekly report yesterday, said that an increase in land prices over the past two months is expected to cause a rise in rents by the middle of this year.

Based on data released by the Ministry of Development Planning and Statistics, the report suggested that inflation resulting from rents dropped by about two percent by the end of last year and this trend is expected to be reversed in the months to come. A four to five percent increase in rent inflation is expected by the second half of this year.

The report noted that land prices were a fundamental driver of rents. Land is the main component of the cost of building, developing and buying real estate. To recoup costs, landowners and real estate developers need to raise rents in line with rising land prices, or vice versa.

While admitting an increase in rents in some segments, a prominent Qatari real estate expert has cautioned against generalising this trend for all sectors.

According to Khalifa Al Maslamani, rents in general are not likely to see a major increase this year because there is still surplus supply in the market.

The presence of “for hire” boards on a number of buildings across the country is a clear indicator of this fact, argued Al Maslamani, in remarks to a local Arabic daily.

He, however, believes that real estate prices are expected to rise by 20 to 25 percent this year due to growing demand from investors. Stock exchange and real estate are the two sectors that attract investors most. “Now the trend is to invest in land and big buildings because of the huge influx of foreign workers to the country to cash in on an expected boom in the real estate sector in the years to come,” said Al Maslamani.

Properties outside Doha will see more demand because the city is packed and the prices are extremely high.

He believes rents will be stable this year to a great extent because the 2012/2013 surplus in supply still remains. 

He pointed out that several government organisations had hired properties in Doha and outside this year at prices that existed last year and the year before. 

What people talk about is mostly related to the private sector, which is based on a different logic. “This is not a standard to assess the market,” he argued.

THE PENINSULA

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