As Qatar’s population grows at a rapid clip, it is becoming harder to rent and live in the West Bay/Dafna area, thanks to rising prices and falling supply, according to US-based international real estate services firm DTZ.
The company – which leases, sells and manages a number of properties in West Bay and at the Pearl-Qatar – has just released its quarterly market overview. The report found that demand continues to outpace supply, despite a 32 percent jump in the number of luxury apartments in the 2 years up to the end of 2012.
The report added that 4,000 new luxury apartments are due to come onto the market in the next few months, but forecasted that only 10,000 people would be needed to fill them – a fraction of Qatar’s expected population growth of 200,000 people over the next year.
Since 2011, demand has caused rental rates for luxury properties to increase 15 to 20 percent, the report continues. A three-bedroom apartment at the Pearl or in West Bay, for example, now rents for an average of QR18,000 a month, compared to QR15,000 two years ago.
Compounding the problem is the fact that many new towers have been slow to come onto the market this year, said Mark Proudley, Associate Director at DTZ:
“Only one new tower at The Pearl has come onto the market this year… DTZ understands that a number of the virtually completed towers are just waiting for final Civil Defence certification, though obviously ensuring Health & Safety standards are met is a priority.”
City-wide rent rises
Although only a small percentage of Qatar’s residents can afford to live in these high-end buildings, the rental increases in this area are indicative of a wider issue across Doha.
The Qatar Statistics Authority’s latest inflation figures show that rent, fuel and energy costs have gone up 6.1 percent in the last year, largely as a result of increased housing rents. Proudley said:
“It is a case of a similar scenario across the board, given the huge increase in demand. There’s also a trend whereby we’re seeing some of the largest organisations looking at acquiring entire compounds and towers.
If they take over a whole tower, that soaks up a whole amount of new apply. There are also very few new compounds under construction, and the best quality compounds are full and have waiting lists.”
Earlier this year, a Doha News housing survey showed that many Qatar residents are feeling the squeeze as rents rise while income and housing allowances largely stay the same.
Many residents expressed concern that Qatar is about to revisit the rental price bubble it experienced in 2008. At that time, the government introduce a rental law setting a 10-percent limit on price increases for tenants renewing their contracts. The restriction, which was designed to restrict rapid inflation of rental prices, ended in 2010.
If rents continue to rise, recruitment may become even harder for many construction firms, who have said they’re already struggling to recruit professionals to help build high profile World Cup and transport-related projects due to a lack of school places and the high cost of living in Qatar.