DOHA: Given Qatar’s fast- growing land value and rising construction costs, rentals in the country is expected to grow at an average 10 percent per year until 2022.
Rents of commercial space and residential units are expected to witness a phenomenal growth in the coming few months.
Rentals, which saw a slight pull back ahead of the summer vacation, are expected to recover in the coming months.
The market dynamics in Qatar’s real estate sector is fast changing. Rents are not anymore fixed solely on the demand-supply gap, but increasingly on the basis of land value and construction costs, say market experts.
Land value has gone up manifolds in the recent past. Construction costs have also increased by 20 to 30 percent over the past one year.
Rents of brand new residential and commercial units have already gone up by 25 percent to 50 percent in some most sought-after locations, due to the hike in land value and construction costs.
A latest market intelligence report has ranked Qatar first in terms of cost of living in the region. It noted that housing expense was the main driver of Qatar’s high cost of living.
Khalifa Al Muslimani, a real estate expert, said rentals had gone up by 15 percent during the first half of 2014 from a year ago and have further increased by 5 percent during the past two months.
High construction costs and growing land value are the two major reasons for the uptrend in the rentals market. In certain areas, land prices have gone up to 70 percent, he said.
According to Abashir Mohammed, a real estate sales consultant, a notable trend in the rental market is that prices have been steadily going up the whole year without dropping a single month.
In some cases, the rentals have gone up by 50 percent, for both residential and commercial units. The steady increase in rents has forced a large number of middle-income families, who have been living in Doha for several years, to move to the city’s outskirts.
“The market is really buoyant. The demand for housing units is very high at present. The rentals will steadily go up from mid-2015, when the market is expected to witness a fall in the supply side, especially with the launch of the execution phase of mega projects when the country will receive a large number of middle-level professionals accompanied by their families”, said Ali Obaidily, Group CEO, Ezdan Holding.