The residential sector in Qatar continued to show signs of buoyancy during the third quarter of 2015 despite the falling oil prices, on the back of rapid population growth, increased activity across the non-hydrocarbons sector and a construction boom preceding the 2022 Fifa World Cup, said a report.

Qatar Central Bank’s real estate price index rose by 17 per cent year-on-year (y-o-y) during the third quarter, indicating an increase in the value of the country’s real estate market, according to leading consultancy PKF.

According to a third-party industry report, average apartment sales rates within the primary market in The Pearl-Qatar reached QR17,000 ($4,663) per sq m, up seven per cent compared to the same period in 2013.

The secondary market in the same locality witnessed an increase of 15 per cent from two years ago, bringing average sales prices up to QR15,000 ($4,114) per sq m.

According to PKF, the demand for residential units within the affordable segment remained high as the majority of the existing supply caters to upper-mid and high-income residents.

Falling oil prices have resulted in job redundancies across the oil and gas sector, which increased vacancy levels in the prime residential market. This temporary increase in vacancies, however, is expected to stabilise due to a projected growth in Qatar’s population, it stated.

According to Qatar Statistics Authority, the population of the country totalled 2.35 million by the end of September, representing a y-o-y increase of 7.3 per cent.

Despite the temporary increase in vacancies, lease rates in the residential sector remained strong during the period.

Rentals across the apartment segment in The Pearl-Qatar and West Bay varied between QR14,000 and QR18,000 ($3,840 and $4,937) per month for a 2BHK apartment, while monthly rates across areas inhabited by less affluent individuals, such as Al Sadd and Bin Mahnoud, ranged from QR7,000 to QR12,000 ($1,920 to $3,291).

The third quarter also witnessed the approval of a draft law by the cabinet, which prohibits labourers from residing in residential areas, predominantly inhabited by families, said the PKF in its review.

In line with the clauses stipulated in the draft law, the Ministry of Municipality and Urban Planning has published on its website a series of interactive maps indicating the districts where labourer accommodation is banned, it stated.

On the office sector, the consultant said Qatar continues to be concentrated within Doha, where the total supply of office space, as of the third quarter of 2015, is estimated at 4.25 million sq m, 40 per cent of which is located in the capital’s West Bay area.

Declining oil and gas prices, however, have resulted in many state companies revising their budget activities.

This resulted in a significant drop in demand for prime office space and leasing activity across the public sector, which occupies or leases approximately two-thirds of the office space in West Bay. As a result, lease transactions were concentrated around smaller office units of less than 250 sq m.

Vacancy rates in West Bay area remained stable at eight per cent despite the lack of newly inaugurated office developments, due to a drop in demand, said the report.

An additional 300,000 sq m of office space, which is expected to enter the market in West Bay and Lusail over the next year is forecast to lead to a potential oversupply and put downward pressure on occupancy rates and rentals, it added.-TradeArabia News Service