Qatar among top real estate markets in GCC
10 Jan 2017 - 21:21
By Mohammad Shoeb / The Peninsula
With the rapid economic development and influx of expatriates, Doha, Dubai and Abu Dhabi have emerged as top three real estate markets in the GCC, which has been witnessing one of the fastest rate of growth in the world.
The GCC region, especially Qatar, over the past decade, has been witnessing rapid economic development and demographic changes, including the influx of foreign workers, which in turn has increased the region's overall population.
This coupled with rise in per capita income has fuelled the demand for residential units in the GCC region, including Qatar, noted Al Masah Capital, in a real estate review report released yesterday. In a sector-wise review on Qatar’s real estate market, the report suggested that the office space sector has undergone dramatic changes since 2000 due to policy decisions.
The supply of Grade A office space in Doha grew at a CAGR of 17.2 percent between 2010- 2015, thereby reaching 3.3 million square metres (sqm) in 2015. Office stock is expected to reach 3.6 million sqm by the end of 2016, with fresh stock of 144,000 sqm to be added in Q4. Around 168,000 sqm of additional space is expected to enter the market in 2017, taking the tally to approximately 3.8 million sqm by the end of 2018. For Grade B and Grade C commercial space, Qatar’s office sector is mired in oversupply challenges.
With regard to Qatar’s residential market, the report, referring Colliers International, said that Doha has suffered from a continuous undersupply of residential units resulting in increasing house prices making living it unaffordable for many.
An undersupply situation caused residential rents to increase by 10 percent in 2013 and 4 percent in 2014, with the upward trend anticipated to continue through 2016.
The overall demand for units stood at around 177,000 in 2014, whereas the market supply was estimated at 129,200 units in the same year. Colliers International estimates that by the end of 2018 the stock is expected to exceed 160,000 units, while demand is expected to reach 266,000 units.
Approximately an additional 9,000 units are due to enter the market between 2016 and 2018. Despite an approximate 3 percent annual increase in supply, high population growth rates of around 11 percent per annum are expected to continuously keep existing market fundamentals in an undersupplied market.
About Qatar’ retail market, the report said the sector continues to be dominated by modern shopping malls such as the Villaggio, Lagoona, Landmark, Porto Arabia and City Centre, which together account for over 50 percent of Doha’s mall retail supply. As of 2015, the cumulative retail space in Qatar amounted to approximately 854,000 sqm of GLA, of which Doha City Centre alone accounts for around 15 percent of the supply.
The supply of retail space in Doha was up 68.4 percent in 2015 from 507,000 sqm in 2013. As of Q3 2016, total supply stood at 1.1 million sqm and going forward, it is expected to receive a fresh supply of 837,000 sqm of retail space between Q4 2016 and 2018.
Qatar is expected to continue its aggressive expansion in the coming years as the supply of retail space is expected to more double to reach 1.9 million sqm of GLA by end of 2018, in light of the Fifa World Cup 2022.