Qatar Real Estate Market Overview Cityscape, March 217
Qatar Real Estate Market Overview Introduction Overview The fall in oil prices, which started in 214, started to have an impact the real estate market in Qatar in 216 Real estate prices and rents had seen strong increases between 211 and 215. This was driven by a growing economy, rapidly expanding population, and insufficient new supply coming to the market. Despite signs of a softening in rents in 216, rental levels remain strong The biggest challenge currently facing Qatar s real estate market is pipeline of new supply and uncertainty in relation to future demand Not an typical supply and demand based model, with organic growth. Inevitable that there will be periods of undersupply and oversupply Improvement in quality of new buildings will be important to attract tenants, as the market matures Flight to Quality 2
Qatar Real Estate Market Overview QCB Real Estate Price Index QCB Real Estate Price Index - (26-216) 3
No. of Apartments Qatar Real Estate Market Overview Residential Market Example of Residential Rental Trends, Doha, 211 Q4 216 Type 211 212 213 214 215 Q4 216 One Bed Apartment (West Bay) 9,5 11, 12, 12,5 12, 11, Two Bed Apartment (Al Sadd) 9, 1, 11, 11,5 12, 1, Three Bed Villa (Abu Hammour) 13, 14, 15, 17, 17,5 15, Four Bed Villa (Abu Hammour) 15, 16, 17, 19, 2, 17, Prime Apartment Supply 4, 35, 3, 25, 2, 15, 1, 5, 212 213 214 215 216 217 218 219 22 Diplomatic District Pearl Lusail Msheireb Trends in Residential Market Fewer companies looking to take corporate leases. Living allowances are now more common Recovery in Oil Price may stimulate growth and see a recovery in demand compared to 216 The drop in rents will be welcomed by tenants, and may make Qatar more competitive Greatest demand in coming years is likely to be generated by lower to middle income expatriates. DTZ see an opportunity for good quality mid-range housing 4
Qatar Real Estate Market Overview Hospitality Market 14 12 1 8 6 4 2 6 5 4 3 2 1 Hotel Supply 29 21 211 212 213 214 215 Q4 216 2-star 3-star 4-star 5-star Hotel Performance Metrics (MDPS) 1% 474 8% 329 6% 4% 2% % Talking Points In the region of 22,5 hotel keys are now available, of which 88% are 4 star or 5 star. DTZ estimated that at least 15 hotel and serviced apartment buildings are scheduled to open in the next 12 months, which will potentially add up to 4, keys to existing supply It is estimated that 25, hotel keys in 64 developments are at various stages of planning and construction Performance metrics have been impacted by a 3% fall in tourist numbers (Oct 16), and an increase in the supply of hotel keys. The trends are unlikely to be reversed considering the scale of pipeline supply Challenging market for hotel operators. Limited justification for further 5 Star proposals without a unique selling point (beachside/destination resort etc) Occupancy % ADR RevPAr 5
Qatar Real Estate Market Overview Retail Market Retail Mall Supply (Current 838, Sq M) Trends in Retail Market 2,, 1,8, 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, 838, 211 212 213 214 215 216 217 218 Pipeline Supply Retail market has performed strongly in the past 5 years, due to increased population growth, high disposable income many residents, and limited new supply Retail spending estimated to have reduced by between 1% and 15% in past year Rental levels either increased or remained stable in existing malls in the past 12 months Premium rents achieved for units in new malls such as Mall of Qatar Project Location Estimated Completion Date Al Hazm Mall Markhiya 217 Doha Mall Abu Hamour 217 Katara Mall Al Qassar 217 Al Mirqab Mall Al Mirqab St 217 Tawar Mall Duhail 217 Doha Festival City Umm Salal 217 Northgate North Doha 217 Place Vendome Lusail 218 Boulevard Mall Al Khissa 219 6 Mall of Qatar opened in December 216, increasing organized retail supply by 3% / 195, sq m Doha Festival City expected to open in April, increasing supply by 24, sq m The amount of high quality new supply to come on line in the next 24 months is likely to create a 2-tier market
Total Stock - SqM Availability Qatar Real Estate Market Overview Office Market Supply and Availability Trends, West Bay 1,7, 1,636,549 25% 1,65, 1,6, 2% 1,55, 1,5, 15% 1,45, 1% 1,4, 5% Market Trends 5% of all enquires are for sub 5 sq m of space Increase in demand from QFC affiliated companies 1,35, 1,3, 1,25, 211 212 213 214 215 Q4 216 5% % 3 Only three requirements in 216 for 5, plus sq m Diplomatic District Availability Increase in Relocation Future Considerations Government ministries to Lusail? QFC licensed companies to Msheireb? Enquiries from occupiers in secondary locations taking advantage of lower rental levels Increased reliance on the private sector 7
Qatar Real Estate Market Overview Land Transaction Analysis Qatar Land Transactions 216 2 Total Number of Land Transactions - 216 18 16 14 12 1 8 6 4 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1, Land Transactions QAR 385 per sq ft QAR 5.6 billion 14.6 million sq ft 8
Number of Land Transactions Per Month Qatar Real Estate Market Overview Land Transaction Analysis Total Number of Land Transactions - 215/216 Comparison 4 Total Number of Land Transactions - 215/216 Comparison 35 3 25 Total Number of Land Transactions 215 Total Number of Land Transactions 216 2 15 1 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9
Total Value of Land Transactions (QAR million) Qatar Real Estate Market Overview Land Transaction Analysis Total Value of Land Transactions - 215/216 Comparison 4, Total Value of Land Transactions - 215/216 Comparison 3,5 3, 2,5 2, Total Value of Land Transactions 215 Total Value of Land Transactions 216 1,5 1, 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1
Average Land Rate (QAR per sq ft) Qatar Real Estate Market Overview Land Transaction Analysis Average Land Rate - 215/216 Comparison 7 Average Land Rate - 215/216 Comparison 6 5 4 3 2 1 Average Land Rate 216 (QAR per sq ft) Average Land Rate 215 (QAR per sq ft) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 11
216 Real Estate Market Review - Qatar Cause of Land Market Trends Historically cheap and readily available credit Land treated as a traded commodity Residual values lower than transactional values Land owners not willing to sell at a loss Banks tightening lending criteria Focus on income generating potential 12
216 Real Estate Market Review - Qatar Looking Forward Transactional volumes increasing slightly Availability of credit to remain tight Average land rates to remain fairly stable Speculative purchases to drop Purchases for development or store of value Stronger oil price and committed Government spending Reduced land values to be seen as a positive to the market 13
Qatar Real Estate Market Overview Outlook Focus on growing the private sector and attracting international companies. Positive signs in this regard recently with increase in QFC Company activity and the development of the Manateq Projects New Builds: Importance of high quality construction, internal finishing, and good estate management Opportunity for Qatar to develop attractions and increase leisure tourism Completion of infrastructure projects, retail malls, Lusail and Manateq Economic Zones, as well as various leisure and recreation provisions will increase Qatar s appeal as a destination for companies, and potential residents Transparency in urban planning and a coordinated approach to real estate development, would help meet future requirements 14