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Wednesday, October 20, 2021

Rising home rents continuing to drive up cost of living in Qatar

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The rising cost of rental accommodations in Qatar is continuing to push up the cost of living here, new government statistics show.

The rate of inflation accelerated in August to 3.8 percent year-on-year – up from 3.1 percent in July and 2.8 percent a year earlier.

The government charts the change in the Consumer Price Index (CPI), by looking at the change in real-time prices of a “basket” of common consumer goods and services.

CPI - Aug 2014

According to the Ministry of Development, Planning and Statistics (MDPS), which collates the figures, the main driver behind Qatar’s rising cost of living continues to be “rents, fuel and energy,” which was up 7.9 percent year-on-year in August.

This is mostly due to ongoing rent increases, particularly for residential buildings.

Rent makes up about one third of the average expat family’s monthly spend, and likewise a third of the CPI. If it is excluded, the rise of the CPI year-on-year shows a more moderate growth of 2.2 percent for August.

Rising costs

Other categories of goods that showed notable increases over the last 12 months include:

  • The cost of furniture, textiles and home appliances – up by 5.1 percent from the previous year;
  • Clothes and shoes (up 3.3 percent);
  • Transport and communications (up 2.5 percent);
  • Entertainment, recreation and culture (up 1.2 percent); and
  • Food, beverages and tobacco (also up 1.2 percent).

The news won’t come as a surprise to many residents, many of whom have their money isn’t going as far anymore.

The summer period is also a common time for renewal of residential contracts and landlords often take the opportunity to increase rents.

In response, a member of the Central Municipal Council called last month for the introduction of caps on rental increases, in a bid to control the market.

Mishal Al Dahnim, the council member representing Al Hilal, said rent should go up by no more than 10 percent every two years. He added:

“Rents should not be left to supply and demand. Supply is much less compared to demand and will lead to an unprecedented crisis … There must be a law to control rents.”

GCC study

Earlier this year, Qatar was found to be the most expensive country in the GCC due to its high cost of living.

The Cost of Living Reports Middle East found that, in a like-for-like comparison of seven measures including accommodation, food, healthcare, education, transport and lifestyle, Qatar came out the most expensive of all Gulf states. It was followed by the UAE, Saudi, Bahrain, Oman and Kuwait.

Again, high residential rents was the main reason behind this, as the figures showed the average cost to rent a two-bedroom apartment in Qatar in Q4 2013 was $42,930 (QR156,3340) a year, or just over QR13,000 a month.

This was $15,540 more than the next highest average of $27,390 per year in the UAE, and 15 times more expensive than Bahrain ($2,849 per year).

The inflated rents were in due in large to limited supply and high demand, which many fear will only get worse as Qatar’s population continues to grow.

Already more than 2 million, the population is expected to increase by 7.4 percent annually in the coming years, as the country gears up its economic expansion.

In a recent report, QNB predicted there will be 2.5 million people living in the state by 2016 as the labor force expands to meet the demands of preparing for Qatar to host the World Cup in 2022.

Thoughts?

31 COMMENTS

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Jaded
Jaded
7 years ago

“The inflated rents were in due in large to limited supply and high demand”

Er, no, inflated rents are due in large to greedy landlords inflating rental fees and taking advantage of the government’s lack of protection when it comes to residential rental

MN
MN
7 years ago

In a fair world, BOTH rents and salaries would increase by 10% every year, and not only rents…

MIMH
MIMH
7 years ago

The big landlords are trying to control rents in Qatar to supply an ever increasing income. The basic law of supply and demand has very little affect as landlords and middle men are willing to leave places empty rather than lower rent to attract customers. They fear a knock on effect from their existing tenants asking for a reduction in rent.
The middle men, the agents are a large part of the problem. Trying to drive up rents and therefore increase their commission, while keeping landlords in the dart about the real situation. They also try to extort money out of prospective tenants by demanding fees for renting them a property, usually going for a months rent so also driving up the rent increases their fees. These middle men are expats out to make a quick buck often at the expenses of their own countrymen and are not adverse to giving out illegal contracts.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  MIMH

Demand is far outstripping supply. That’s a fact. whether ‘actual’ supply is significantly greater than ‘available’ supply, only a detailed report by Doha News will help out on that one! Do we honestly think the “Big” landlords in Doha are trying to control rents? What would their long term vested interest be to do so in pure commerical terms? Existing tenants have little or no chance of rent reduction due to inflation factor alone. I believe you are correct that the scavenging middle men are creating multiple layers of additional unnecessary cost and yes, likely many transactions are unregulated. However, we can assume that the general landlord instruction would be ; “I want x for the rental, whatever you make on top is your business”. In my own personal experience, do I want to deal with 6 agents pitching me the same commercial space, all with differing prices? Who contacts and instructs the multiple agents in the first place? No easy solution I agree, but to say it’s not driven by supply and demand, coupled with poor regulation control and commercial greed is open to a long discussion!

MIMH
MIMH
7 years ago
Reply to  SokhnaFan2010

Not so, especially at the middle to high end of the market, plenty of supply available. I know one GM of a real estate company proudly tell me he was leaving a whole compound of villas empty for the next 18 months as he expects the rents to rise significantly and wants to charge more. Does it make economic sense to do that and miss out on 18 months rent on a lot of villas? No, of course but TIQ.

Also many landlords don’t want to rent to Indians or Arabs as they believe they will trash the place. They hold out for westerners as they believe they will take good care of their properties and they can charge them more

Curiosity Killed the Cat
Curiosity Killed the Cat
7 years ago
Reply to  MIMH

I worked for a real estate here many years ago, big name, big residential buildings, depressing job, but I always thought the fee structure was pretty minimal. For every lease the company got 2 weeks rent as the fee from the owner. Some real estates extort a further 1 month from the customer but we never did, many come off the plane thinking that fee is normal but it isn’t, it’s greed. I always thought the 2 weeks we got in fees pretty cheap for all the work the salesman puts in, driving people around 10 properties at least, moaning about lack of this and that. That fee we got has to cover the company costs, salesman commission and of course a wee profit. We have a rental property in OZ and the agent extorts 8.5% every month! a far more clever pricing structure than the 1 off fee here. You are right in thus weird mentality here, many owners would rather it empty than take a lower rent, complete opposite to home, where many in the bank is gold. Many building owners will wait several years for a blue chip to take the whole building.

Deepak Babu
Deepak Babu
7 years ago
Reply to  MIMH

I wouldn’t blame the landlords really. Most landlords here are only taking 50-60% of the rent on their properties. These middle-men really do eat in to profits and inflate the prices.

On the case of them preferring to rent out to Westerners, it’s more due to the reason that they don’t sublet their properties out and usually tend to leave Qatar sooner than the Indians or Arabs.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

Where do you get your figures? If “Most” landlords in Qatar are renting out for 50-60% of teh rent on their properties, no wonder they are fleecing the tenants and keeping the rest of them empty. Maybe some existing landlords reading this thread can comment on their renting strategy.

Deepak Babu
Deepak Babu
7 years ago
Reply to  SokhnaFan2010

They prefer to rent it out as a compound to either agencies who manage it and further sub-let it adding “services” or contract it out to large companies directly. This way, they get their fixed income and don’t have a headache to deal with the tenants on a personal basis. They don’t look into the extra markup that the agencies include for their services. This is just based on hearsay from a few landlords that I know personally. Not a “fact” for sure.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

Yes, hearsay is definitely a basis for refuting facts. I shall certainly rely on that logic. I also know of such landlords, but not through hearsay, but direct experience. They are smart people here. 50% – 60% would be an insult, I would hold on to my property and not sell it if I would only be getting that also.

Deepak Babu
Deepak Babu
7 years ago
Reply to  SokhnaFan2010

Anecdotal experience is not equal to fact. Sell? We are talking about renting. I can’t seem to follow your train of thoughts.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

No point in a circular argument really. Better you keep on blaming the middle men. That will certainly allieviate the pressure on those typically good natured and generous landlords. Have a good weekend.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  MIMH

Yes, I get there is a degree of supply at the high end, there always is. Not many workers coming from nepal are going to move into the Lagoona Villas at 30k a month. On a national scale, there is a shortage of suitable, affordable accommodation and that’s a well known challenge for most international commerical enterprises either currently here, or setting up. As for landlords not renting to Indians or Arabs with a fear of trashing, I understand the sentiment, but it simply goes back to proper regulation and control, of which there is currently very little. That includes protection for the tenant.

Deepak Babu
Deepak Babu
7 years ago
Reply to  SokhnaFan2010

I don’t agree with you for one minute that “Demand is far outstripping supply” is a fact. If that were the case, you wouldn’t see so many properties lying empty. The real estate “cartel” overcharges completely, and will let the property lie vacant for months or even years if their eye gouging rentals( on properties that are not even the same quality compared to the rest of the GCC even) are not met. In a true supply and demand market, the price of the property would go down when it lies vacant for months. Not so, the case here.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

Well, that’s fine with you and your minute of disagreement, however unless you are in real estate “So many properties lying empty” does not solely factor on a visual drive by of the Pearl, which is not indicative of the city and indeed country demand. Take population growth alone (15% annually from 2005 to 2012) and do the math. Cartel or not, more people are coming in, needing more housing of a specific “type”. Fact. Of course there are landlords that are sitting on housing compounds. I even know some myself. However, there are many more that are simply increasing rents by 10% annual and still letting their properties. Rental property quality not being the same as GCC? I think not, from personal experience.

Deepak Babu
Deepak Babu
7 years ago
Reply to  SokhnaFan2010

Name one location where you drive around and don’t see “for rent” signs around. You say people are coming in looking for a specific “type”? People are more often than not, just looking for a specific budget, not a “type”. Again this is my opinion as an everyday man, not an expert like the ones quoted in the newspapers and nor are they “facts”.You keep stating your reasoning as facts. What is there to exactly backup these facts?

Rental property is definitely not on the same quality for price standards as the rest of the GCC.Let alone compare it to Dubai standards, it will not stand up against Abu Dhabi/ Bahrain standards. You just get a lot more money for your money’s worth in real estate from the rest of the GCC.

I do not blame the landlords for this market. Like i have stated elsewhere, they are not the greedy ones here. It’s the middlemen that manipulate this market. My landlord itself has been quite reasonable with my contract. Not even a 10% increase in rents for the last 2 years and I am paying way below the market rate. Unfortunately, not everyone is lucky to deal with the landlords or their offices directly.

Michael Fryer
Michael Fryer
7 years ago
Reply to  Deepak Babu

Is it my imagination, or wherever I go I see plenty of villas – new, old, big, small – all over town with For Rent signs on them?

I agree that there is a supply/demand imbalance at the lower end of the price range, but when it comes to villas and high end apartments there is no shortage of available properties – some of which have landlords actively trying to rent them out, and a lot of others where it seems there is no desire to rent them out.

I find the notion that the cause of high rents is somehow related to evil ‘middlemen’ to be ridiculous – the sort of fiction that would be used by people too reluctant to point the finger at the landlord but instead would rather blame an Arab/Asian for the fact that their rent is so expensive.

Have you met these middlemen? Have you seen their cars, clothes and demeanor? Do they honestly look like people who are raking in the cash?

Deepak Babu
Deepak Babu
7 years ago
Reply to  Michael Fryer

Yes, the middlemen that I refer to are not individuals as such. I’m talking about the Real-Estate Agencies that exist here that take up bulk compounds and flats from owners and then manage it by adding “extra services” and charge a premium on them. How much of that actual rent do you think actually makes it back to the actual landlords?

There is a reason why the agencies like Barwa and Ezdan, that actually own their properties, charge a lot cheaper for their compounds as opposed to these other agencies.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

Construction Companies bringing in 1000 workers are of course working to a budget per individual, they are not looking for villas. Check out the availability of worker compounds. I am (once again) talking about the larger picture, not about random for sale signs around town. Where do you think 80% of the construction worker accommodation is? West Bay? No, it’s outside of town, for space and capacity reasons alone. Is there an oversupply? No. Great that you have a landlord who gives you way below the market rate. You are the exception. He must be the one that only takes 50-60% of the rental fee. Manipulation is at all levels and that is well known. Sorry, your comments on GCC real estate quality need some basis of comparison, to “Stand up.” Are the builders here any more or less deficient than anywhere else in the gulf? Value for money is a different argument. Compare all the indexes and then let us know the true picture.

Deepak Babu
Deepak Babu
7 years ago
Reply to  SokhnaFan2010

Construction companies don’t fall under the consumer price index. We are discussing rent prices for consumers.

Have a nice Weekend.

SokhnaFan2010
SokhnaFan2010
7 years ago
Reply to  Deepak Babu

You are correct. I was in fact commenting on the larger issue and obviously related building and development challenges that are currently affecting the overall housing inventory in this country, both current and future. However, better we stick to comparing rental prices for villas here vs Dubai and Bahrain, much more useful thread. I never mentioned CPI by the way, just indexes. It’s a lot more complicated that a basic CPI comparison. Maybe one day we can see a report in DN that compares GCC in detail across all criteria, to arrive at the true picture. Until then, let’s pray for more rental capping.

expat viewer
expat viewer
7 years ago

to sum it up..it’s just a plain and simple GREEDINESS! … if only the so called “big landlords” and other so-called vested interests (middle men, etc..) in the real estate industry will contain somewhat their greediness, it will not really be a big issue..the problem is artificial, its a man made problem so it can only be resolved by men themselves, pls. don’t blame the sun, the moon, the stars for it…just thinking aloud… 🙂

AA
AA
7 years ago

and yet some large companies continue to play havoc with expat salaries and housing allowances. In one such confirmed case, there is talk of reducing salaries and allowances and forcing employees to sign new contracts!

Big Biker
Big Biker
7 years ago

I must be one of the lucky ones, I am into my fourth year rental agreement in the same high quality condo and still paying the same rent as my first year. I also understand there are condos available. But and the big but I am not in the pearl or any new development. I believe if you take the time to look around especially here in the bin Mahmoud area you can get a good deal.

Yacine
Yacine
7 years ago
Reply to  Big Biker

Do you mind sharing with us this great place? I am struggling to get something decent at a fair price 🙂

Big Biker
Big Biker
7 years ago
Reply to  Yacine

It all depends what your budget is, while I’m not prepared to divulge my rent price try looking at bin Mahmoud, between center roundabout and La Cigale

Deepak Babu
Deepak Babu
7 years ago
Reply to  Big Biker

Do you believe it’s a good deal compared to the properties and rental prices associated with the rest of the GCC? Or are you comparing it to NYC/London City prices?

Big Biker
Big Biker
7 years ago
Reply to  Deepak Babu

My comment was related to the article which refers to the large increases in rental prices each year in Qatar. As I said my rental has not increased in the last four years. My rental is comparable to Qatar as I have no knowledge of prices in the rest of the GCC.

johnny wang
johnny wang
7 years ago

Yeah rents going up but the landlords or the guys inbetween don’t do anything to improve the properties or the service to the tenants. Out here rents keep on going just one way for no apparent reason at all and its either take it or leave it till another gullible tenant comes along

Dazk55
Dazk55
7 years ago

My rent increased by 2,000.oo riyals a month, a rise of 12.5%, not a lot of options to move elsewhere at the time. Greed is the main motivator with this.

Ms. Hala
7 years ago

I’m currently paying close to half my salary for my current rent. There are PLENTY of apartments and villas (horribly split or otherwise) lying around collecting dust because there isn’t an idiot in Qatar willing to pay thousands upon thousands more than what it’s worth. If expats could buy property in other areas outside the Pearl, it would make more since then flushing all this money down the drain.

Even in “low end” markets as they are now deemed, a one bedroom with an entrance way living room, a corner for a bathroom and a sink in the hallway for a kitchen starts at 7,000QR easy! The gentleman that rented me my current apartment only took 2 wks commission vs the many others that wanted a month or even a month and a half commission. These guys are totally driving up the rent by the way. On one apartment I looked at, I got three different prices from three different “agents”. One “agent” flat out told me, “You American, you make good money, you pay.” Lovely!

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