Completion of mega infrastructure projects adds to momentum across asset classes
Backed by a substantial rise in population, the Qatar government announced its budget for 2020, the biggest in five years, which triggered a boost in real estate market activity. This, coupled with the gradual completion of mega infrastructure projects, has reignited interest in the market. More and more projects are being completed for the 2022 FIFA World Cup at an accelerated pace. Demand from tenants, particularly the midmarket ones, continues to surge and is expected to gain more momentum in the first quarter of 2020.
The residential market is set to receive an additional 13,500 units, most of which (65 percent) are expected to be added to The Pearl and Lusail. This will create more options for tenants who are looking for a sophisticated lifestyle. Demand will continue to intensify among mid-market and lower income tenants in areas with more affordable rents such as Al Wakara, Al Mashaf and other districts. These regions are seeing rapid urban development, as well as the addition of new malls to commercial venues in Al Wakra. This includes Ezdan Mall Al Wakra and Ezdan Mall Al Wukair.
Rents across the market are gaining more stability. Despite a looming growth in supply, rents are forecast to remain steady, with regular and seasonal offers by landlords and developers to keep supporting occupancy levels, especially for affordable properties.
On the other hand, malls in Qatar are providing a wide range of shopping experiences, with 1.9 million square metres of shopping spaces already open across the country. Eight more malls are expected to open in 2020, which will increase the retail space to over 2.4 million square metres. Meanwhile, the average saturation ratio in the GCC is 615 sqm/1000 capita, while Qatar has a saturation rate of 677sqm/1000 capita. This means the residents in Qatar have more shopping experiences to enjoy, especially during the hot summer months.
Rents in shopping malls are more affordable in the current market and can be executed in different ways (rent/sqm, revenue sharing and mixed rent) and that depends mainly on the experience retailers are introducing to shopping centres and the size they want to occupy.
It’s worth saying that Qatar is gearing up to be a shopping destination. Shopping centres with more interesting experiences will attract more footfall than malls with a more traditional merchandise mix.
With regard to the office market in Qatar, there is a wide range of offers across Qatar, with higher potential of growth upon the completion of infrastructure projects. Office space has always been a reliable indication of the business atmosphere. The wellbeing of business practices worldwide and office spaces in Qatar reflect a positive indication about the business flow and boom in Qatar.
While the office sector has been under pressure globally and in Qatar due to the global economic slowdown, this sector is expected to benefit from the introduction of 100 percent foreign ownership in businesses and the expansion of areas where expatriates can own properties. This will encourage more investors to establish companies in Qatar.
This article was published as part of the fourth edition of Property Finder Qatar’s Trends Report