Qatar: Low demand may see 30% decrease in rentals
Residential housing rentals could see as much as a 30% drop on the back of oversupply and low demand, according to real estate experts.
Real estate experts expect residential rental units to decrease off the back of low demand.
Landlords are coming up with innovative ideas and offers to attract tenants in Qatar, as the low demand and oversupply of residential units in the market could force real estate companies to reduce the rents by up to 30% in the near future, The Peninsula reported.
Several leading real estate companies have come out with attractive packages instead of reducing the rents, in an effort to survive in the market, with offers such as free occupancy for up to six months, experts have said.
Khalifa Al Maslamani, a Qatari real estate expert said in a talk-show on Qatar TV: “Supply of housing units has surpassed the demand. Owners of the buildings would have to reduce the rents by 20 to 30% due to low demand,” he added.
He commented that it is better to reduce the rents to attract tenants than be left with empty units.
An apartment being rented out at QAR8,000 ($2200) per month should be rented out at QAR6,000 ($1,600), while high-end rentals ranging from QAR20,000 ($5,500) to QAR25,000 ($6,800) per month should be reduced to QAR15,000 ($4,100) to QAR16,000. ($4,400).
“I would like to say that there will be less loss as long as the properties are rented out. There is more risk for investors and developers if the buildings are kept unoccupied, waiting for tenants,” he added.
Abdul Rahman Al Najjar, SAK Holding Group deputy CEO added: “We as a real estate company are not competing with our rivals in reducing the rents of housing apartments due to falling demand.”
He said that the company would rather offer free occupancy for two months, three months and in some cases up to six months.
He believes that this move aims to protect all real estate investors and developers “because if one company is affected others will also be affected”, he added.
“Now we are competing in providing better services. The rents have declined significantly in various areas. These days there is no increase in rents as it used to be in the past (like five percent or ten percent),” Al Najjar explained.
The falling oil prices continue to impact on real estate properties, with land prices generally falling by about 25 to 30% and up to 50% some areas.
Least affected by the oil price drop is the residential segment with a fall in rents by about 15 to 20%, whereas office space rentals have fallen by about 50% owing to oversupply, he added.
On the other hand, shops remain high demand owing to a shortage of commercial streets.
Al Najjar said: “Investors are hesitant in developing this segment because of high cost and risk. The prices of land at commercial streets have reached up to QAR4,000m² ($1,100m²).”
Owing to the high demand for middle and low income segments, he said his company was developing housing units in this category.
“We did not jump into the luxury segment,” he commented and added: “About 95% of our projects are focused on housing units targeting the middle income segment.”