Doha: Qatar’s rental market exhibited resilience from restrictions and lockdown to contain the spread of the coronavirus disease (COVID-19) in the first half of this year (H1 2020), however, the full impact of the pandemic on the country’s the property market is to be evident by the year-end, noted a latest real estate report yesterday by a leading consulting firm.
KPMG recently released their Qatar Real Estate Rental Index Q1 2016 – Q2 2020, which tracks quarterly changes in the real estate rental market covering three core asset categories: KPMG Office Rental Index (K-ORI), KPMG Residential Rental Index (K-RRI) and KPMG Mall Rental Index (K-MRI).
Anurag Gupta (pictured), Director and Head of Strategy & Real Estate at KPMG in Qatar said: “Qatar real estate market has not been impacted much in the first half of 2020, as the developers are still waiting to assess the overall impact of COVID-19, which we believe will be more visible in Q3 2020. The same is also reflected in our rental indices across three asset classes, which have shown marginal falls. Interestingly, the decline has been much softer than the decline we witnessed over Q1 and Q2 2019. This also indicates that going forward, developers may be willing to accept lower occupancy and keep resisting the rental fall.”
The latest KPMG Qatar Real estate Rental Index showed that in the pre-COVID -19 phase during Q1 2020, residential real estate’ affordable segment witnessed increased vacancy levels.
This was primarily due to the movement of tenants seeking affordable deals in the middle-income housing areas of Doha. However, since the outbreak of COVID-19, due to the restricted movement the leasing activity reduced drastically.
The impact of COVID-19 in the commercial market is going to be severe as it has allowed enough time to blossom ‘the work from home concept’, forcing corporates to re-think their office establishment and expansion plans. For developers, it’s a time to re-strategize their proposed marketing plan of existing and future commercial office properties.
Q1 and Q2 2020 witnessed a cumulative 1.56 percent drop in the rental index compared to 3.36 percent during the last two quarters of 2019. While the same period (Q1 and Q2) during 2019 witnessed a decline in the rental index by 2.33 percent.
In Qatar’s retail market interestingly, after maintaining a stable outlook for almost a year, the best performing malls in Qatar with stable occupancy have started to experience the heat in the quarterly rentals and witnessed a drop of 4.21 percent over Q1 and Q2 2020.
While the malls having occupancy of less than 80 percent including the upcoming malls experienced a marginal drop in the rentals by 1.52 percent during the initial two quarters of 2020.
On the future opportunities for real estate sector, Gupta concluded; “Managing assets and projects in an efficient manner and using real estate technology to improve productivity and containing cost would take the driving seat.”
