DTZ Research

PROPERTY TIMES

Pressure Grows on the

Residential Market
Qatar Q4 2014

Qatars strong economic performance and major infrastructural development

projects in preparation for the World Cup in 2022, is driving population growth.
There continues to be substantial government investment in all areas of the
economy to reduce reliance on the hydrocarbon sector.

The increased pressure on the housing market from the rapidly increasing
population has lead to concerns about escalation of inflation rates.

There are a number of major development projects under construction which will
aim to address the undersupply of good quality affordable accommodation. If the
rate of population increase is maintained however, supply of affordable
accommodation may struggle to meet demand in the coming years.

There has been a seasonal reduction in demand for high quality apartment and
villa accommodation however the market remains buoyant with strong underlying
demand.

A number of new apartment developments on Pearl Qatar are expected to be

released to the market over 2015 which could ease rental inflation in this sector.

Demand has reached unprecedented levels from retailers for prime

accommodation however no new retails malls opened throughout 2014. A number
of new shopping malls are expected to open in 2015, easing the current shortage
in retail accommodation.

The hotel sector witnessed strong growth throughout the year, with occupancy
levels exceeding 70% in Q4. A number of new 5 star hotels are due to open in
early 2015 which is likely to see average occupancy levels reduce.

10 February 2015

Contents
Economic Overview

Office Market Overview

Residential Market Overview 4

Hospitality Market Overview 5
Retail Market Overview

Author
Johnny Archer
Associate Director
Consulting & Research, Qatar
+974 7404 3927
johnny.archer@dtz.com

Contacts
Mark Proudley
Head of Consulting & Research,
Qatar
+974 5584 8281
mark.proudley@dtz.com
Magali Marton
Head of EMEA Research
+33 (0)1 4964 4954
magali.marton@dtz.com
Hans Vrensen
Global Head of Research
+44 (0)20 3296 2159
hans.vrensen@dtz.com

www.dtz.com

Figure 1

Organised Retail Supply by Year, Sq M (GLA)

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

Source: DTZ Research

Property Times

Qatar Q4 2014

Economic Overview
Figure 2

Qatars strong economic performance continued throughout

2014, with growth levels expected to be confirmed at 6.3%, a
slight drop from 6.5%, which was witnessed in 2013.
The fiscal budget for 2014/15 sets out proposed expenditure of
QAR 218 billion. Revenues are expected to total QAR 225
billion but these are based on an oil price of US$ 65 per barrel,
which is above current levels.
Qatars economic growth, together with the enormous
infrastructural development spending in preparation for the
FIFA 2022 World Cup is helping to drive the increase in
population. Based on QSA figures, the population hit a high of
2,269,672 in November 2014, representing a 12 month
increase of 9.7%. A recent publication by Qatar National Bank
predicts that population figures will continue to increase by
7.4% per annum, surpassing 2,500,000 by the middle of 2016.
The rapid increase of the population has a knock-on effect on
growth figures for various sectors of the economy, particularly
in services such as finance, hotels and restaurants, and trade
and transport.
Qatars economy has been underpinned by exports in the
hydrocarbon sector, however substantial government
expenditure is helping reduce the reliance on the hydrocarbon
sector. The hydrocarbon sector still accounts for approximately
40% of total GDP, though domestic investment has replaced
the oil and gas sector as the key driver of economic growth.
Earlier this year the Government set out plans for investment of
US$ 182 billion for projects over the next five years.
According to Ministry of Development Planning and Statistics
inflation is expected to be recorded at 3% and 3.4% in 2014
and 2015 respectively however banking experts believe this
figures are conservative, with inflation estimated in some
quarters at between 3.8% and 5% in 2014. The major concern
in relation to Qatars inflation rate is the housing market, where
rents have been increasing due to an undersupply of good
quality accommodation. Similarly, there are major concerns
about construction cost inflation, which according to an
independent report by EC Harris could peek at 18% during a
World Cup building boom between 2016 and 2019.

GDP (QAR Million) and Real GDP Growth (%)

1,000,000

20

800,000

15

600,000

10

400,000
200,000

Nominal GDP (QR Million)

Qatar Real GDP Growth (%)

Source: GSDP

Figure 3

Inflation (%)
25
20
15
10
5
0
-5
-10
-15
-20
2008

2009

2010

2011

2012

Consumer Price Inflation (%)

2013

2014

Rental Inflation (%)

Source: EIU

Figure 4

Population Growth Forecast

4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2006

2008

2010

2012

Growth at 10% per annum

2014

2016

2018

2020

Growth at 7.4% per annum

Source: MDPS/DTZ Research

www.dtz.com

Property Times

Qatar Q4 2014

Office Market Overview

Figure 5

Levels of Office Stock & Availability (,000 sq m)

There are a number of high rise office towers currently under
construction in Dohas prime office district of West Bay,
however no new buildings were released to the market in Q4
2014, Office stock in West Bay stands at approximately 1.637
million sq m.
There has been limited leasing activity in recent months
however leases have been agreed on more than 120,000 sq m
throughout 2014, the majority of which has been to
government related bodies. The amount of new office space
leased in 2014 is less than the annual average of 162,000 sq
m recorded over 2009 to 2013.
In spite of reduced take-up of new lettings, DTZ estimate that
there is currently just 146,000 sq m of vacant offices available
to rent in West Bay, which represents less than 9% of total
supply,
DTZ expects more than 300,000 sq m of office accommodation
to come to the market in West Bay and Lusail by the end of
2015, which will increase vacancy levels and ease the upward
pressure on rents that was witnessed in 2014.
Rental levels have remained relatively stable since 2011. In the
Diplomatic District (West Bay) rents can vary significantly
depending on the quantum and the quality of the
accommodation being leased. It is possible to lease offices in
excess of 5,000 sq m from rental rates of QR160 per sq m per
month, whereas smaller office units of less than 250 sq m can
command rents of as much as QAR 300 per sq m per month.
Many towers in West Bay are leased in their entirety to
government ministries, or government affiliated organisations.
Rental levels to government companies in such transactions
are currently fixed at QAR150 per sq m per annum, and are
typically 5 year leases with rights to renew.
Elsewhere, office accommodation is concentrated around C
and D Ring Roads, Old Salata, Airport Road, and Al Sadd.
Rental levels in these areas typically range from QAR 120 per
sq m to QAR160 per sq m per month.
As new office buildings in West Bay, Al Sadd, Lusail, and
Shamal Road come to the market in 2015, DTZ forecasts that
higher vacancy levels will see rents remain at the levels seen
in 2014, with more attractive deals potentially available for
occupiers who seek professional representation.

2,000

400

1,500

300

1,000

200

500

100

2007 2008 2009 2010 2011 2012 2013 2014

Supply - Diplomatic District
Supply - Lusail
Availability
Source: DTZ Research

Figure 6

Take Up of Office Accommodation Prime Stock, 000 sq

m
350
300
250
200
150
100
50
0
2007

2008

2009

2010

2011

2012

2013

2014

Source: DTZ Research

Figure 7

Prime Office Rents by District, QAR/Sq M/Month

300
200
100
0
2008

2009

2010
2011
2012
2013
Diplomatic District
Airport Road
C/D Ring Road and Al Sadd
Salwa Road

2014

Source: DTZ Research

www.dtz.com

Property Times

Qatar Q4 2014

Residential Market Overview

Figure 8
Prime Apartment Supply (No. of Apartments)

The residential property market in Qatar is being driven by the

consistent and strong growth in population. The population
recorded by the Qatar Statistics Authority in November
reflected a 9.7% increase in 12 months.
The increasing number of residents in Qatar has been putting
pressure on residential supply, especially for affordable
housing, where new development supply struggles to meet
demand.
Demand has been strong for family accommodation,
particularly four and five bedroom villas, where occupancy
rates throughout Doha are currently high. A number of
developers confirm that waiting lists are in place for some of
the better located residential compounds.
The high-end of the market, including West Bay and The Pearl
Qatar, has seen a number of new developments in 2014. This
has resulted in rental levels stabilizing for some apartment
types following the strong increases witnessed in 2013. The
current levels of prime apartment stock reached approximately
14,600 units by the end of 2014.
DTZ estimate that up to three more residential towers in Porto
Arabia could potentially be released to the market by the end of
Q1 2015 (subject to approval being received from the civil
defense requirements) increasing supply by more than 700
apartment units.
On the Pearl, DTZ has seen strong demand for one bedroom
and three bedroom apartments in particular, which are now in
shorter supply than two bedroom units. The impact of high
occupancy rates has been a gradual uplift in the average
monthly rental rates as shown in Figure 9.
Residential sales at The Pearl-Qatar still dominate the freehold
market, with sales activity in 2014 registering an improvement
on previous years. The majority of demand however is
restricted to Qatari and GCC based investors.
Prices have grown at a stable rate since 2011. While there is
evidence of sales transaction on the Pearl-Qatar reflecting
prices of more than QR 18,000 per sq m for premium units,
average sales prices range from QAR 12,000 14,000 per sq
m.

16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Diplomatic District

Pearl

Source: DTZ Research

Figure 9

Prime Apartment Rents, QAR/Month

25,000
20,000
15,000
10,000
5,000
0
2009

2010

One Bed

2011

2012

Two Bed

2013

2014

Three Bed

Source: DTZ Research

Figure 10

Average Freehold Sales Prices, Pearl Qatar, QAR/Sq M

20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2007

2008

2009

2010

2011

2012

2013

2014

Source: DTZ Research

www.dtz.com

Property Times

Qatar Q4 2014

Hospitality Market Overview

Figure 11

No. of Hotels/Serviced Apartments by Rating

There was a significant increase in tourist numbers recorded
by the Qatar Tourism Authority with hotel occupancy rates
increasing from 65% over 2013 to 73% over 2014.
The Qatar National Tourism Sector Strategy Plan: 2030
(QNTSSP 2030) was published in February 2014. The plan
outlined public and private investment of $45bn on tourism
projects with a view to increasing tourist numbers from 1.1m in
2013 to 7m by 2030.
QNTSSP 2030 also aims to diversify the tourism sector, which
relies heavily on business related travelers and visitors from
GCC countries, particularly Saudi Arabia. The plan aims to
increase visitors from outside the GCC to 64% by 2030.
In Q4 2014, DTZ identified 108 hotels and serviced apartment
hotels, which are rated between 2-star and 5-star. These
establishments provide the tourism sector in Qatar with
approximately 16,700 rooms, of which 85% are either 4-star or
5-star.

120
100
80
60
40
20
0
2009

2010
2-star

3-star

2012
4-star

2013

Q3 2014

5-star

Source: DTZ Research

Figure 12

Rooms by Rating Q4 2014

2-star
2% 3-star
13%

There are currently approximately 125 hotel establishments

currently under construction in Qatar, which, on completion, will
increase the level of stock to approximately 35,000 room keys.
Despite the number of hotels being built, 2014 saw a slowdown
in new hotels coming to the market. There were no major hotel
openings throughout the year, although The Kempinski Marsa
Malaz on the Pearl Qatar opened in January 2015.
The slowdown in new hotel openings combined with the
increase in tourist numbers resulted in a jump in occupancy
levels in the past 12 months. Despite the recent performance,
DTZ expect occupancy levels to come under pressure again in
the near future with up to 4,000 new hotel rooms scheduled to
come to the market over 2015 and 2016. Occupancy levels are
likely to be tested further in the medium term as the supply of
hotel rooms continues to increase to meet Qatars FIFA 2022
obligations.

2011

5-star
41%

16,700
rooms
4-star
44%

Source: DTZ Research

Figure 13

Hotel Performance Indicators. Luxury and Upperscale

Hotels: Average Daily Rate in QAR, Occupancy in %.
1,200

80

1,000

70

800

60

600

50

400

40

200

30

20
2009

2010
2011
ADR (QR)

2012
2013
2014
Occupancy (%)

Source: STR Global

www.dtz.com

Property Times

Qatar Q4 2014

Retail Market Overview

Figure 14

Distribution of Organised Retail Malls

The retail market in Qatar is currently undergoing significant
change, with a number of shopping malls due to open, bringing
much needed new supply.
The retail sector in Qatar is driven by the high levels of
disposable income. In 2013 the World Bank estimated that the
Per Capital GDP reached $136,727, representing the highest
level of disposable income per capita in the world.

City Centre
Villaggio
Landmark
Hyatt Plaza
The Mall
The Centre
Lagoona Mall
The Gate
Royal Plaza
Centrepoint
Dar A Salam Mall
Ezdan
West End Mall

590,000 Sq M

The strong spending power within Qatar has seen significant

increase in demand for retail accommodation from both local
and international retailers with current occupancy levels in the
main shopping malls at unprecedented levels.
The retail market in Qatar is generally divided between
organised retail malls, high street showrooms, and souq retail.

Source: DTZ Research

The organised retail market is currently dominated by the

Villagio and City Centre malls, which between them account for
42% of the current supply. Overall supply currently stands at
approximately 590,000 sq m across 13 shopping centres.

Figure 15

While no new malls have opened in 2014, DTZ estimates that

there is more than one million square meters of retail space
being constructed in nine new shopping malls. With proposed
opening dates of between 2015 and 2016, these new additions
are likely to change the dynamics of the retail market in Qatar
considerably.
Retail rates have remained relatively stable in recent years. In
the prime retail malls rents vary between unit sizes, and their
location within the malls. At the primary malls rents range from
QAR 220 to QAR 250 per sq m per month for the medium size
units. Anchor stores have typically secured accommodation for
between QAR 40 and QAR 80 per sq m per month.
Elsewhere, the showroom retail market has seen the addition
of Barwa Commercial Avenue, providing much needed good
quality accommodation. This development has added
approximately 250,000 sq m of new showroom
accommodation, which represents approximately 25% of the
total stock. DTZ understand that more than 70% of the retail
units have been reserved by various retailers.
Medina Central on The Pearl Qatar has also increased the
amount of retail space available in Doha. The development
comprises approximately 65,000 sq m of commercial space.
DTZ understands that lettings have been agreed on the
majority of the retail units, which are due to open their doors in
2015.

Organised Retail Supply by Year, Sq M (GLA)

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

Source: DTZ Research

Figure 16

Headline Retail Rents, QAR/Sq M/Month

300
250
200
150
100
50
0
2007

2008

Landmark
The Gate

2009

2010

2011

City Center
Lagoona

2012

2013
Villaggio

Source: DTZ Research

www.dtz.com

Property Times

DTZ Global Contact

DTZ Middle East Contacts

John Forrester
Chief Executive EMEA
+44 (0)20 3296 2002
john.forrester@dtz.com

Edd Brookes
Senior Director
General Manager
+974 4483 7395
edd.brookes@dtz.com

Adam Stewart
Associate Director
Head of Valuation
+974 4483 7395
adam.stewart@dtz.com

Mark Proudley
Associate Director
Head of Consulting and Research
+974 4483 7395
mark.proudley@dtz.com

Jonathan Wright
Associate Director
Head of Commercial Leasing
+974 4483 7395
jonathan.wright@dtz.com

Johnny Archer
Associate Director
Consulting and Research
+974 4483 7395
johnny.archer@dtz.com

Colin Jones
Head of Residential Leasing
+974 4411 7260
colin.jones@dtz.com

Disclaimer
This report should not be relied upon as a basis for entering into transactions without seeking specific,
qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility
for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information
contained herein should not, in whole or part, be published, reproduced or referred to without prior
approval. Any such reproduction should be credited to DTZ.

To see a full list of all our

publications please go to
www.dtz.com/research

DTZ 2015

Global Headquarters
77 West Wacker Drive
18th Floor
Chicago, IL 60601 USA
phone
+1 312 424 8000
fax
+1 312 424 8080
email
info@dtz.com

Qatar Office
Mezzanine Level
Tornado Tower
West Bay
Doha
phone +974 44837395

www.dtz.com/research