Significant increase in tenant movements in Qatar in the medium and high-end residential categories in the first half of the year: KPMG
Driven primarily by increased affordability in the mid and high end categories, there has been a marked increase in tenant movement in Qatar’s residential segment during the first (T1) and second (T2) quarters of this year, KPMG said in a report.
Interestingly, the second quarter saw signs of a recovery in the rental index. This is good news for a sector that has seen a steady decline since the start of 2016.
“This positive trend is due to increased accessibility in the mid- and high-end categories, coupled with a growing demand for larger living spaces, convenient access to leisure facilities and private outdoor spaces. According to our research, central neighborhoods continue to be popular with renters keen on high-end properties, ”said KPMG.
While the mid-range and affordable segment continues to experience stable rental demand, the high-end segment saw a marginal decline of 1.4% in the rental index.
The decline in the upscale category is mainly driven by the apartment category (nearly 2%) located to the north of Doha.
While the rental demand for villas in the upscale category remained stable, villas in the mid-range and affordable segment saw a further correction of almost 2%, noted KPMG.
In the residential segment, Q1 and Q2 2021 saw stable rental activity leading to a marginal drop of 0.4% in the rental index against 3.7% as observed in Q3 and Q4 2020.
The same period (Q1 and Q2) in 2020 saw a decline of around 2.7%.
Research has shown that office rentals in the central business district show promising signs of stability. With the recovery of economic activity, we can expect a possible recovery in the short to medium term.
After declining 8.4% in the last two quarters (Q3 and Q4) of 2020, rentals in the commercial office segment have improved significantly with a drop of just 1% in the rental index in during Q1 and Q2 2021.
Anurag Gupta, Director and Head (Strategy and Real Estate Consulting) at KPMG Qatar, said: “The sharp drop in monthly rents after the pandemic has forced landlords / developers to rethink their strategies. Landlords maintain high rental yields when demand is stable; however, it is also necessary to adapt to the low demand scenario if necessary. Homeowners willing to adjust are seeing an increase in rental activity with subsequent demand for their properties.
“The first and second quarters of 2021 saw a change in dynamics, with monthly rents falling relatively more moderately. This could be attributed to owners offering good-value products as well as other external factors such as the government’s efforts for widespread vaccination, the expected relaxation of employment restrictions and the gradual improvement in overall economic activity.
Sayantan Pande, Managing Partner and Head (Infrastructure, Financing and Real Estate Valuations) at KPMG Qatar said: “We are confident that Qatar’s real estate sector will maintain positive momentum in the second half of 2021. This is due to the success of Covid. -19 vaccination efforts coupled with continued government measures to support the economy.
“We have started to feel an increased interest from large regional developers in the Qatar market, again confirming our view that the market remains attractive and will soon return to normal. ”