While the overall direction of the real estate sector appears set for steady growth through the next 12 months, demand may be uneven across the various segments as the market moves towards striking a balance between supply and demand, particularly in office accommodation, Global Arab Network reports according to OBG.
According to the most recent data from the Real Estate Registration Department (RERD) at the Ministry of Justice, between June 24 and July 5, some $440m worth of property transactions were registered with the RERD, indicating strong activity across the board through the sales of open plots of land, villas, houses, residential buildings and complexes.
Though marginally down on the almost $275m per week average for property transactions across the first quarter of the year, the figures released by the RERD do suggest that the momentum has been maintained, even going into the summer months, when activity can be more subdued as locals travel to escape the heat.
Importantly, this year’s results look likely to eclipse those of 2011, when a total of $7.2bn worth of transactions were conducted. RERD figures show that for the first quarter of 2012 alone, sales of $3.5bn were logged, putting the market in line with the $13.7bn worth of trade some analysts predicted at the beginning of the year.
These predictions are backed up by the findings of a recent study by local real estate firm Tanween, which forecast solid growth for the residential segment, with the mid-tier segment tipped to perform the best. According to the Tanween report, while there will be a steady flow of new residential stock coming onto the market, with some 18,000 units expected to be made available, increasing demand should see this supply taken up, particularly by a growing number of expatriates coming to Qatar who will be seeking mid-market or higher levels of accommodation.
By contrast, Tanween suggests that the heavy flow of new office space coming on to the market in 2012, estimated at around 650,000 sq metres – more than four times the level of 2011 – may not be fully taken up by expanding state agencies or the private sector.
Another property firm believes a balance will be struck sooner rather than later, with real estate firm Asteco Property Management saying companies involved with infrastructure projects – both associated with Qatar’s hosting of the 2022 FIFA World Cup and with the government’s investment programme – will drive up occupancy rates.
However, it is in the residential component that there is the biggest movement in the rental markets, with rents for smaller apartments rising 8% in the first quarter of 2012, Asteco said in its report, issued in early July. Jed Wolfe, the managing director at Asteco, said that while the flow of new residential properties onto the market may limit further rental growth, this would be only a short-term situation.
The 8% rate of increase for smaller and medium-sized apartments outstripped the year–on-year (y-o-y) increase in Qatar’s GDP, which climbed by around 6.9% in the first quarter of 2012, according to data released by the Qatar Statistics Authority (QSA) on July 7. Significant among the figures released by the QSA was the strong performance of the construction sector, which posed y-o-y growth of 11.4%. While some of this can be accounted for by non-property building projects, a fair proportion of the construction activity will result in new real estate developments down the track.
The property market may be affected to some degree by a more moderate rate of growth in the domestic economy, with GDP forecast to expand between 6% and 10% in 2012, before easing back to 4.5% in 2013, mainly due to a stabilising of gas production and exports. However, rising demand will still need to be met, making property investments an appealing option.