QATAR
REAL
ESTATE
MARKET
1ST HALF | 2020 REVIEW
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Introduction
During the first half of 2020, COVID-19 had infected 10.2 million people globally, as per the
World Health Organisation (WHO). The global health crisis not only impacted the health of
millions around the world but led to restrictions on travel, social mobility and closure of
non-essential businesses.
Qatar experienced its first COVID-19 case on 29th February. The government of Qatar was
quick to respond by enforcing a range of measures in an effort to restrict the spread of the
virus. By the end of H1 2020, Qatar had approximately 95,000 confirmed cases of COVID-19. In
terms of testing, Qatar was ranked in the top twenty countries to have the highest testing per
million people and also had one of the lowest numbers of deaths in proportion to the number
of confirmed COVID-19 cases. In addition to implementing efficient health strategies, the
government also announced an economic stimulus package of QAR 75 billion in an attempt to
counter the economic fallout and provide relief to those impacted the most by the constraints.
The real estate market, like all sectors in Qatar, was impacted by the pandemic and its
resulting constraints on mobility, travel and businesses. The first quarter of 2020 had a good
start, particularly January and February. However, lockdown measures were implemented in
March, from where we saw regressing fundamentals. In June 2020, the government of Qatar
introduced a plan to release the restrictions in four phases. By the end of H1 2020, phase 1 of
easing of restrictions was completed.
This report provides an overview of the performance of all sectors in real estate during the
first half of 2020. Sectors such as hospitality and retail were directly impacted by the
restrictive measures in place. While the remaining sectors were indirectly affected due to
ensuing impact of the crisis on the economy. It will be some time before we know the full
extent of the influence of COVID-19 on the economy and real estate of Qatar. However, it is
evident that a new equilibrium has been established in all sectors as we have to adjust to this
“new normal”.
1 | Qatar Real Estate Market 1st Half 2020 Review
Timeline:
Measures
• With the advent of COVID-19 in Qatar by the end of February 2020, the Government of Qatar imposed restrictions
on gathering, travel, outdoor & professional sports, education & health and business & leisure. The Supreme
Committee for Crisis Management of Qatar announced on June 8th a controlled phased lifting of COVID-19
restrictions. The main premise of the plan was on the phasing of the lifting of restrictions, close monitoring of
the impact of lifting restrictions and clear precautions. The four-phase plan was based on achieving target Key
Performance Indicators (KPIs) and passing the minimum time required to move between phases.
Restrictions and Lifting of Measures
January - September 2020
H1 2020
January
COVID-19
Active Cases
Phases
February
March
April
May
June
July*
August*
September*
1
717
12,027
26,582
14,411
3,154
N/A
N/A
Advent of COVID-19
Lifting of restrictions
Restrictions
Restricted
mosque
opening
Gatherings
Travel
Suspension of inbound flights except for transit
and cargo; public transport banned
Outdoor &
Professional
sports
Closure of all parks and beaches; suspension of
all sport activities
Education &
Health
Suspension of all educational institutes, health
clubs and non-emergency health services
Business &
Leisure
Medium scale
only (<40
people);
restricted
mosque
opening friday
prayers
All mosque
opening and
friday prayers,
business &
entertainment
related mass
gatherings,
theatres and
cinemas with
precautions
Personal boats; Essential flights
out of Doha. Upon return
travellers will go to mandatory
hotel quarantine allocated by the
government for 2 weeks, paid for
by the traveller
Low risk
inbound flights
for priority
passenger (e.g.
returning
residents)
Expanding
inbound flights
as advised by
MOPH; metro
and bus
restricted
service
Restricted
parks for
outdoor sports;
(1:1 and 1:5)
professional
training
outdoor
only/large open
space
Parks, corniche
and beaches
(<10 people)
professional
training of
small
groups-outdoor
only/large open
spaces
Playground and
skate parks;
(<40 people)
team trainings,
amateurs
sports/team
competition
Sports-related
mass
gatherings:
local and
international
sports
competitions
(with
spectators)
40% Capacity
selected
private
healthcare
facilities
60% Capacity
80% Capacity
100% Capacity;
new academic
year
commences
Partial opening
of shops in
malls, shops
with minimum
area of 300 sq
m will open,
not exceeding
30% mall
capacity
All malls,
souqs,
wholesale
market,
museums and
libraries open
(restricted
hours and
capacity);
restricted
restaurants
opening with
low capacity
All malls open
(full hours);
souks &
wholesale
markets
(restricted
hours and
capacity) ;
restricted
restaurants
opening with
gradual
increased
capacity; 50%
capacity of
health clubs,
gyms, pools,
beauty and
massage
parlours and
barbershops /
hairdressers
All malls,
souqs and
wholesale
markets fully
open; gradual
opening of
restaurants;
museums and
libraries fully
open to full
hours; 100%
capacity of
health clubs,
gyms, pools,
beauty and
massage
parlours and
barbershops /
hairdressers
Public events and gatherings are prohibited
Closure of all retail stores in commercial
complexes and shopping centres except
pharmacies and food outlets; imposition of
work from home for 80% of employees in
Private Sector; closure of all restaurants
(delivery and takeaway allowed); closure of
museums and home services
Small scale
(<10 People);
restricted
mosque
opening
* Forecast-Subject to Change
Source: Ministry of Public Health
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Timeline:
Restrictions, Recovery & Growth
• Based on forecasts made by the International Monetary Fund (IMF) and our analysis, we have formulated a
timeline to predict the recovery of the economy and various sectors of the real estate market of Qatar.
• All sectors of real estate in Qatar were experiencing declining rents and sale prices before COVID-19. To fully
evaluate the impact of the pandemic on rents and prices we have to understand the previous trend and see if
sale prices or rents fell more than the historical trend.
Restrictions, Recovery and Growth
Sector
Short
term level
of impact
Lockdown (Q2 2020):
Introduction of measures
Recovery (Q3 2020-Q2 2021) *:
Removal of social mobility
measures
Growth (Q2 2021) Onwards) *:
COVID-19 manageable in
population
Medium
Reduction in real GDP
Reduction in real GDP**
Growth in GDP**
Low
No significant decline in
performance
Higher quarterly decline expected
compared to 2019
Slowdown in quarterly decline in
line with pre-COVID-19 level
Medium
No significant decline in
performance
Higher quarterly decline expected
compared to 2019
Slowdown in quarterly decline in
line with pre-COVID-19 level
Higher quarterly decline expected
compared to 2019
Slowdown in quarterly decline
but not predicted to reach
pre-COVID-19 levels
Decline in occupancy and ADRs
expected to continue compared
to 2019
Recovery in occupancy and ADRs
but not expected to reach
pre-COVID-19 levels
Economy
Residential
Office
High
Retail
High
Significant loss of revenue due
to shut down of retail shops,
however, no significant decline
in asking rents and occupancy
Significant loss in RevPAR
(Occupancy and ADRs)
Hospitality
*Forecast based on existing data as of June 2020.
**Forecast based on International Monetary Fund (IMF) projections for the economy of Qatar.
Source: International Monetary Fund (IMF), ValuStrat
3 | Qatar Real Estate Market 1st Half 2020 Review
Macroeconomic Overview
Economic Growth
Total GDP at Constant Prices (QAR Billions)
& YOY GDP Growth at Constant Prices (%)
171.8
0.9
0.0
0.9
169.6
167.3
165.9
-0.6
164.2
-1.4
Q1
Q2
Q3
2019
Real GDP (QAR Billions)
Q4
Q1
2020
Real GDP Growth (%)
Source: Planning & Statistics Authority (PSA), ValuStrat
• The Gross Domestic Product (GDP) at constant prices with a revised base year of 2018, expanded by 0.9%
YoY during Q1 2020, as per the latest statistics released by the Planning & Statistics Authority (PSA). The
slowdown in economic growth can be attributed to the fall in real oil output, which remains unchanged
compared to Q1 2019. On the other hand, the non-hydrocarbon sector, expanded by 1.4% YoY as of Q1
2020.
• Based on revised estimates of GDP with 2018 as the base year, the mining & quarrying sector (includes
oil and gas sector) contributed an average 38.3% to real GDP as of Q1 2020. Over time, mining and
quarrying sector sees reduction in its contribution to the GDP.
• Amongst the non-mining sector, manufacturing, construction, wholesale and retail trade, financial and
insurance activities, real estate activities and public administration comprise 49.0% of the Financial and
Insurance Services and Public Administration experienced more than 7.8% YoY growth as of Q1 2020.
• The International Monetary Fund (IMF) adjusted the forecast for Qatar’s real GDP to an average of -4.3%
for 2020 and then at 5.0% in 2021,this is above the Middle East and North Africa (MENA) average of 3.5%.
• A major global trend from the pandemic was a plunge in oil prices. In March 2020, the crude oil (Brent)
average fell to $33 per barrel. The World Bank projected oil prices to average $35/barrel in 2020.
• International financial institutions projected oil prices to average in the range of $45-$65/barrel in the
medium term. The 2020 national budget of Qatar of QAR 210.5 billion was approved in Q4 2019,
representing a 2.0% increase over 2019. The government aimed to continue to consolidate fiscal policy
emphasising on new tax measures, limited current expenditure and higher capital spend. QAR 90 billion
was allocated for major projects, focusing on World-Cup related developments, infrastructure projects
and sectors such as food security, tourism, SME’s and economic free-zones. There was a projected
surplus of QAR 500 million, based on forecasted oil prices for 2020 of above $60 per barrel. However,
after the pandemic, the forecasted surplus based on the higher oil prices might not materialise as the
forecasted oil rate is below Qatar breakeven price of oil ($45 per barrel). The IMF projected Qatar current
account balance to average at -1.9% in 2020.
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Foreign Trade
• During 2017-2019 Qatar had one of the highest current account balances as a percentage of GDP in the
region ranging from 3.8% to 8.7%.
• During H1 2020, export revenues contracted by 28.5% YoY with hydrocarbon related exports declining by
31.4%. Japan, India, United States of America and South Korea were the top export destinations.
• Imports fell 9.3% during the first six months of 2020. USA, China, United Kingdom, India, Turkey and
Germany were the top destinations for imports.
Population
Qatar Population 2013-2020
2,045,000
2,235,000
2,421,000
2,597,000
2,641,000
2,674,000
2,773,000
2,794,000
2013
2014
2015
2016
2017
2018
2019
2020-Q2
Source: Planning & Statistics Authority (PSA)
5 | Qatar Real Estate Market 1st Half 2020 Review
• As of June 2020, the population of Qatar was estimated at 2,794,000.
73.5% of the population consists of ages
between 25-64. And 72.8% of the total population comprises of males.
• Based on repatriation figures announced by various embassies in Qatar, we estimated more than 35,000
expatriates were repatriated to their home countries during April-June 2020.
• As per the latest Labour Force Survey Q1 2020 published by the Planning & Statistics Authority (PSA), the
economically active population reached 2.2 million, where males within the age group of 25-34 years
represented the highest percentage of participation. Non-Qataris comprised 95% of the economically active
population.
Inflation
Consumer price index Vs Housing Index
January 2019-2020
102
100
98
96
94
92
90
2019
Consumer Price Index (2018 = 100)
Jun
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
88
2020
Housing, Water, Electricity, Gas and other Fuels
Source: Planning & Statistics Authority (PSA)
• The Planning & Statistics Authority (PSA) modified the Consumer Price Index, in 2019 making 2018 as the
base year. As per PSA, the pattern of households did not change significantly during the previous five
years and minor changes were observed in the basket of goods between 2013 and 2018. As per the new
base year, Consumer Price Index declined by 3.2% annually and 2.2% quarterly during Q2 2020.
• As of Q2 2020, housing and utility expenses index declined 3.9% YoY and 1.0% QoQ.
• Qatar Petroleum decreased average fuel pump prices in Qatar in
Q2 2020 by more than 47.9% YoY and
37.7% QoQ.
• The IMF forecasted inflation for Qatar to average at -1.2% for 2020 and 2.4% for 2021.
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Residential Market
Residential Supply
& Demand
• As of H1 2020, total residential
supply totalled 300,550 units. The
first six months of 2020 saw the
completion of 2,250 apartments
and 700 villas scheduled to be
handed over this year.
• An estimated 2,000 units were
concentrated in Lusail, The Pearl
and West Bay. Al Bandary Real
Estate launched Al Shahed Tower
with individual units for sale.
Tower 13 and 15 of Viva Bahriya,
The Pearl started leasing. Phase
1B in Musheireb Downtown also
completed construction
comprising 157 apartments.
• Approximately, 7,250 units are
projected to be added during the
remaining quarters of 2020. Some
notable developments in the
pipeline are: Abraj Bay Towers in
Abraj Quartier in The Pearl, Al
Mutahida Towers and Tower 24 in
Viva Bahriya The Pearl, Al
Darwish and Arwa tower in West
Bay and Amwaj Tower in
Waterfront district, Lusail.
Residential Supply
2017-2021
(’000 UNITS)
4.6
• A significant amount of existing
supply is being delivered in the
form of medium to large size
projects targeting upper-middle
to high-income families. Demand
is being generated by
lower-middle income segments.
Moreover, as per our estimates,
the overall growth of demand
isn’t matching the growth of
supply. As of H1 2020, we
estimate an oversupply of
approximately 80,000 units.
298
290
286
2017
Existing
2018
2019
Expected Supply
Source: MEED Projects, ValuStrat
7 | Qatar Real Estate Market 1st Half 2020 Review
308
10.0
298
2020E
2021E
Low
Supply
Medium
High
Residential:
Demand versus Supply
Low
Medium
High
Demand
Residential Rents
• As of Q2 2020 , ValuStrat Price Index for
• As per VPI for residential rental values, rents have
residential rental values softened 2.2% compared
to Q1 2020, 2.6% compared to Q4 2019 and 5.2%
compared to Q2 2019. Over a period of two years,
residential rents fell 14%.
not declined significantly during H1 2020 and the
fall in rents is in line with historical trend.
• The highest fall in rents up to 2.5% for
apartments during H1 2020, was experienced in
prime locations: Al Sadd, The Pearl and West Bay
compared to Q4 2019.
• As of Q2 2020, the median monthly asking rent for
apartments was QAR 6,560, down 2.6% QoQ, 2.8%
compared to last six months and 5.4% compared
to Q2 2019. Three-bedroom apartments
experienced the highest asking rental declines
during H1 2020 compared to Q4 2019 and Q2
2019.
• The highest fall in rents for villas, up to 3% during
H1 2020, was experienced in prime locations: Abu
Hamour, Al Duhail, Al Gharrafa and Al Waab.
• Typical incentives offered in the market were in
• The median monthly asking rent for villas was
the form of furnishing and utilities included in the
rents or one/two month rent free periods
(differing contract period).
QAR 10,890 as of Q2 2020, softening 0.5% QoQ,
1.0% compared to last six months and 3.7%
compared to Q2 2019. Five-bedroom villas
experienced the highest fall in asking rents
compared to Q4 2019 and Q2 2019.
ValuStrat Price Index - Residential Rental Values
2016
2017
68.5
66.9
65.6
64.6
63.6
62.9
62.7
61.3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
71.3
Q2
73.1
Q1
74.5
Q4
78.1
Q3
81.4
Q2
82.9
Q1
88.2
Q4
90.2
Q3
98.0
Q2
Q1
100.0
Q3
Q1 2016 = 100
2018
2019
2020
Source: ValuStrat
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VPI
Market Intelligence.
Simplified.
For more details, please visit www.valustrat.com/vpi-qatar
ValuStrat Price Index
Residential Capital Values
• As of Q2 2020, as per ValuStrat Price Index (VPI),
average residential capital values was QAR 718 per
sq ft (QAR 7,731 per sq m), fell by 1.4% QoQ, 1.9%
compared to Q4 2019 and 4.1% compared to Q2
2019.
• The average capital value for apartments was QAR
1,036 per sq ft (QAR 11,152 per sq m), reduced by
2.3% QoQ, 2.5% compared to the first six months of
2019 and 6% YoY.
• The average capital value for villas was QAR 560 per
sq ft (QAR 6,052 per sq m), declined by 1.2% QoQ,
1.8% compared to Q4 2019 and 3.6% YoY.
• Amongst freehold apartments, Lusail witnessed the
highest fall in capital values followed by West Bay
Lagoon and The Pearl during H1 2020, compared to
Q4 2019.
• For villas, eight locations out of thirteen clusters
(The Pearl, West Bay Lagoon, Ain Khaled, Old
Airport, Al Dafna, Umm Salal Muhammad, Umm
Salal Ali and Al Khor) saw a quarterly marginal
change of less than 1% in capital values. Five
locations such as Al Waab, Muaither, Al Thumama,
Duhail and Al Wakrah saw a quarterly fall of 1.5% to
3.7%.
• As per VPI, capital values of residential units have
not declined significantly during H1 2020, the QoQ
and YoY fall in values during Q2 2020 were less
compared to Q2 2019.
• Gross yields for residential units averaged at an
overall 5.1%, adjusted by 6.2% for apartments and
4.6% for villas.
ValuStrat Price Index - Residential Capital Values
2016
2017
Source: ValuStrat
9 | Qatar Real Estate Market 1st Half 2020 Review
75.8
75.0
73.4
72.8
71.8
71.2
70.8
69.9
Q4
Q1
Q2
Q3
Q4
Q1
Q2
77.7
Q2
81.3
Q1
82.7
Q4
84.9
Q3
87.2
Q2
89.8
Q1
90.9
Q4
94.2
Q3
96.3
Q2
Q1
100.0
Q3
13 Villa and 3 Apartment Locations
Q1 2016 = 100
2018
2019
2020
Residential Performance Tree
Sale Price (QAR/SQ M)
Monthly Rental Rate (QAR)
11,000
10,000
10,000
Performance
11,000
9,000
8,000
9,000
8,000
7,000
7,000
6,000
6,000
Residential
Villas
Apartments
Source: ValuStrat
Residential Median Asking Rents
-14.0%
-5.2%
-2.6%
-2.2%
Last 2 Years
Last Year
Last 6 months
Last Quarter
Residential ValuStrat Price Index (VPI)
-10.1%
-4.1%
-1.9%
-1.4%
Last 2 Years
Last Year
Last 6 months
Last Quarter
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Residential Transactions
• During Q2 2020, the transaction volume
of residential houses fell 36.7% over last
six months and 26.2% YoY. Although
declined significantly during April and
May 2020, it picked up again in June
2020. The total value of transactions of
residential houses during H1 2020 was
QAR 2.6 billion.
• The median transacted ticket size for
residential houses during Q2 2020 was
QAR 2.5 million, no change compared
to Q1 2020, 10.7% decline compared to
Q2 2019 and 10.7% decline during the
last six months.
• During H1 2020, The Pearl and West Bay
Lagoon saw purchases down 20%
compared to the same period in 2019.
The total value of transactions amounted
to QAR 467.6 million, reduced by 32.1%
compared to 2019. The transactional volume started to decline in March 2020 but picked
up again in June 2020. However, volume and value of transactions in June 2020 were
higher compared to June 2019.
Residential Transaction Volume
-36.6%
-26.2%
-36.7%
-36.7%
Last 2 Years
Last Year
Last 6 months
Last Quarter
Residential Median Transacted Ticket Size
-8.1%
-10.7%
-10.7%
0.0%
Last 2 Years
Last Year
Last 6 months
Last Quarter
11 | Qatar Real Estate Market 1st Half 2020 Review
Transactional Volume of Houses
203
127
100
109
128
129
52
57
78
87
90
160
153
151
133
124
159
164
186
160
125
140
124
112
108
146
168
163
A
90
100
J
145
154
170
185
188
184
173
129
146
161
168
204
Jan 2017 - June 2020
J
F M A M
J
J
A
2017
S
O N D
J
F M A M
J
2018
S
O N D
J
F M A M
J
J
2019
A
S
O N D
J
F M A M
J
2020
Source: Ministry of Justice (MOJ)
COVID-19:
Trends
• No significant decline in rents and prices compared to 2019. The decline in fundamentals is in line with
the historical trend experienced since 2019. However, we have observed landlords increased the
incentives offered compared to 2019, in a bid to attract new tenants.
• We observed a trend of accelerated falls in rents and prices of apartments in prime locations during H1
2020. This trend was not witnessed in 2019 as during that year we experienced more significant declines
in rents/prices of apartments in secondary locations relative to residential units in prime developments.
• Sales and leasing activity picked up since May 2020, however, did not reach the same level as 2019.
• There was no official reporting of significant job losses, however, repatriation reports from various
embassies indicated repatriation of more 35,000 people during H1 2020. There was an increase in
vacancies across Qatar. This may limit the absorption rate of new properties in the medium term.
• Companies reported an increase in caution in expanding their size, therefore, it may limit future growth
of expatriate families in the medium term.
• Developers reported no significant delays in construction schedules of under development residential
projects.
www.valustrat.com | 12
Office Market
Office Supply
& Demand
Office Supply
• As of H1 2020, the supply of office
2017-2021
(Million sq m GLA)
space was 5,060,000 sq m Gross
Leasable Area (GLA). As per
ValuStrat research, 60% of existing
office space is of Grade-A.
• There was an addition of seven
office buildings and four mixed-use
buildings during H1 2020 in Lusail
(Marina and Energy City), Najma,
Fereej Bin Omran, Abu Hamour, Al
Wakrah, Al Wukair and Umm Salal
comprising 220,000 sq m GLA.
0.7
5.6
0.8
4.8
4.8
4.1
3.9
• Upcoming projects in 2020,
currently under development
totalled 580,000 GLA, 48% of which
are located in Lusail (Fox Hills,
Energy District and Marina District)
and Al Dafna and whereas the
remaining projects are located in
Duhail, Nuaija, Al Hitmi, Al Sadd,
Umm Ghuwailina and Al Muntazah.
Approximately 60% of the upcoming
office space is of Grade-A.
• During H1 2020, we observed an
increase in launches of companies
working in e-commerce, finance
and technology.
13 | Qatar Real Estate Market 1st Half 2020 Review
2017
Existing Stock
2018
2019
2020E
2021E
Expected Supply
Source: MEED Projects, ValuStrat
• Over time, oversupply in the office sector has been
increasing, as observed by increasing vacancy rates in
office buildings witnessed since 2016. Due to falling
rental rates across office buildings in prime districts
such as West Bay and Lusail Marina, there has a been
shift in demand from secondary locations to prime
districts. However, the influx of supply is more than an
increase in demand. As per ValuStrat research, the gap
between demand and supply of office space may amount
to more than 1 million sq m GLA.
Medium
Low
Supply
High
Office:
Demand versus Supply
Low
Medium
High
Demand
Office Rents
• As of Q2 2020, the median asking rent for office
• Al Sadd also experienced an estimated 5% fall in
space fell by 1.2% QoQ, 4.7% over six months and
12.8% YoY.
• The highest fall in office rents during H1 2020
was experienced in office buildings across
C/D-Ring roads. Offices along C-Ring road quoted
rents ranging from QAR 60-110 per sq m while
offices along D-Ring road have asking rents
ranging from QAR 70-130 per sq m depending on
size, quality and furnishing of the commercial
spaces offered. Rent-free periods of up to 2
months (differing contract periods) were
commonplace in the area.
• We observed a trend of more significant declines
in rents within secondary locations (despite no
significant supply additions in the area) compared
to prime locations.
average rents over six months during H1 2020.
The majority of the office space in Al Sadd had
asking rents ranging from QAR 55-90 per sq m,
although some buildings also quoted rents of up
to QAR 140 per sq m. Rent-free periods of up to 3
months (differing contract periods) were
commonplace in the area.
• We observed some offices in Al Mansoura and
along Al Nasr street offering up to six months
rent-free periods with a minimum 3-6-year
contract. Smaller office spaces were readily
available everywhere except in West Bay, where
the option was available, however, in lower quality
relatively older office buildings.
• Offices offered for sale in Lusail at an average
rate of QAR 20,000 per sq m (QAR 1,858 per sq ft)
and in West Bay at QAR 16,250 per sq m (QAR
1,510 per sq ft).
Office Asking Monthly Median rents
109
106
104
100
98
94
87
86
83
Q1
110
Q4
120
Q3
QAR/SQ M
82
80
60
40
20
2018
2019
Q2
Q2
Q1
Q4
Q3
Q2
Q1
0
2020
Source: ValuStrat
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Office Performance Tree
Sale Price (QAR/SQ M)
Rental Rate (QAR/SQ M)
120
19,000
110
Performance
20,000
18,000
17,000
Lusail
West Bay
Al Sadd
100
90
16,000
80
15,000
70
C/D Ring Road
Salwa Road
Source: ValuStrat
Office Median Asking Rents
-24.8%
-12.8%
-4.7%
-1.2%
Last 2 Years
Last Year
Last 6 months
Last Quarter
COVID-19:
Trends
• A drop in new inquiries was reported beginning from March 2020. Main transactions focused upon lease
renewals compared to new leasing activity. Although, since June 2020, a pickup in leasing activity has
been accounted for.
•
There was a reported increase in preference from tenants for flexible short-term contracts.
• The fall in rents during the first six months of 2020 was in line with historical trend, however, landlords
were more flexible in offering incentives to close deals compared to pre-COVID-19.
• There has been anecdotal evidence of job losses across Qatar. In addition, there were reports of
companies adopting a “cautious” approach to expansion, therefore demand for larger office space may
become limited in the medium term.
• There was an observed increase in preference of "working from home" for private companies compared
to government companies. However, there is no one-size-fits-all solution to how work should proceed in
the long term and how this new trend will impact office demand in Qatar. Each company have their own
work requirements and outlook towards office culture. Restrictions on working in an office started to
ease since the advent of Phase 1 of the lifting of measures in June 2020 and with time there can be a
clear indication what this trend will mean for office space in Qatar.
15 | Qatar Real Estate Market 1st Half 2020 Review
Retail Market
Retail Supply
& Demand
• Between March-May 2020 there was the
closure of all retail shops in shopping centres
and commercial complexes except for
pharmacies and shops that sold food. In June
2020, with the advent of phase 1, ban on
non-essential retail shops was partially lifted.
Retail Malls and Shopping Centres
(‘000 sq m GLA)
337
132
• The total Gross Leasable Area (GLA) of
organised retail space grew 5% annually
from 2018 to H1 2020 up to 1.89 million sq m,
with no addition during the first six months of
2020.
981
• Approximately 170,000 sq m GLA of organised
retail space comprising of three shopping
centres: Doha Mall in Al Maamoura, 04 Mall
in The Pearl and J Mall in Al Markhiya and
Place Vendome in Lusail are projected to be
completed by end of 2020. Assuming no
construction delays, the retail GLA will
exceed 2 million sq m by the end of 2020.
• Un-organised retail comprises an estimated
70% of the total retail supply in Qatar with the
addition of approximately 50,000 sq m during
first six months of 2020. 60,000 sq m is in
pipeline during the remaining quarters of
2020.
673
202
40
Neighbourhood
(3k-10k sq m)
Community
(10k-30k sq m)
Regional
(30k-90k sq m)
Super Regional
(> 90k sq m)
Existing Stock
Expected Supply (till 2021)
Source: ValuStrat
• It’s a challenging time for the retail market in Qatar. Despite a reported increase in consumer spending,
retail vendors have been experiencing falling turnover since 2017. This can be attributed to a slowdown in
the growth of household population and consumer spending and increasing competition from an influx of
new retail supply. With the advent of the pandemic, this trend is predicted to exacerbate at least for
2020-21. As per our research, the gap between demand and supply in the retail market in Qatar is
estimated to exceed 1 million sq m GLA.
www.valustrat.com | 16
Medium
Low
Supply
High
Retail:
Demand versus Supply
Low
Medium
High
Demand
Retail Performance
• As of Q2 2020, the median monthly asking rent in
• Median monthly asking rents among streets
shopping centres was estimated at QAR 230 per
sq m, down 4% compared to Q2 2019, 2% dip in
rents compared Q4 2019 and no change
compared to Q1 2020.
• Rent for street retail varied across municipalities.
Median monthly asking rents among street retail
units in Doha stood at QAR 178 per sq m, down
9% compared to Q2 2019, 2% compared to Q4
2019 and 1% compared to Q1 2020.
outside Doha stood at QAR 168 per sq m, down
7% compared to Q2 2019, 2% compared Q4 2019
and 1% compared to Q2 2020.The average rent for
anchor stores within malls or as standalone
outlets countrywide ranged QAR 50 to QAR 120
per sq m depending on size and location.
• The retail leasing market amongst shopping
centres was tenant-friendly, landlords offered
lucrative incentives (such as waiving services
charges or offer turnover rents as base rent,
rent-free periods of up to six months with
different contract periods) to retain existing
retailers or attract new ones. Typical incentives
offered in the market for street retail were in the
form of rent-free periods of up to 3 months with
differing contract periods, utility inclusive
contracts and fully fitted offerings.
Median Monthly Asking Rents: Malls & Street Retail
QAR/SQ M
260
250
252
240
230
248
246
246
240
230
230
210
205
240
238
234
220
200
220
210
190
200
180
195
192
180
210
172
182
172
230
230
180
178
170
168
2018
Mall Rents
Street Retail (Doha)
Street Retail (Outside Doha)
Source: ValuStrat
17 | Qatar Real Estate Market 1st Half 2020 Review
2019
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
200
2020
Retail Performance Tree
Occupancy (%)
Monthly Rental Rate (QAR)
230
90%
220
Performance
100%
80%
70%
200
180
60%
170
50%
160
Street Retail (Outside Doha)
Street Retail (Doha)
Malls
Source: ValuStrat
Median Asking Street Retail Doha
-22.6%
-8.7%
-2.2%
-1.1%
Last 2 Years
Last Year
Last 6 months
Last Quarter
www.valustrat.com | 18
Median Asking Street Retail Outside Doha
-18.1%
-6.7%
-2.3%
-1.2%
Last 2 Years
Last Year
Last 6 months
Last Quarter
Median Mall Rents
-7.3%
-4.2%
-1.7%
0.0%
Last 2 Years
Last Year
Last 6 months
Last Quarter
COVID-19:
Trends
• On average, 8% of the total leasable area in malls was allowed to open including anchor tenants that sell
food and pharmaceuticals. We estimated a monthly loss of an approximately QAR 1.5 billion in total sales
from shopping centres due to the social mobility measures which were in place.
• Developers of major commercial complexes offered rent exemption for their commercial tenants in
March 2020 for at least three months or until further notice. Restrictions began to lift in June 2020 with
the implementation of Phase 1 by the government of Qatar.
• Restaurants in particular were hit hard by the pandemic, as out-of-home consumption came to a
standstill, only delivery and takeaway was allowed during the first six months of 2020. These restrictions
were also lifted in June 2020.
• Retail vendors reported challenges
with cash flow management, rental collection was quoted as being
the main problem.
• There was a significant increase in demand for food and grocery especially in March and April 2020 due
to panic buying in light of uncertainty regarding social mobility measures. However, there was no report
of major shortages of any food product. Significant increases in demand were met conveniently by
effectively readjusting supply chain routes and using sufficient buffer stock already at hand. Another
off-shoot was a reported increase in reliance on local Qatari food products.
• COVID-19 boosted e-commerce in Qatar. There was a noted increase in retailers across Qatar resorting
to online trading platforms or home delivery services to improve transactions. Owners of malls also
facilitated their tenants by modifying their websites to enable customers to connect directly with the
retailers. Additionally, hypermarkets reported a surge in demand for online grocery shopping which
resulted in an expansion of delivery services being offered.
19 | Qatar Real Estate Market 1st Half 2020 Review
Hospitality Market
Hospitality Supply and Demand
• As per Qatar National Tourism Council (QNTC),
the total stock by end of 2019 was 27,261 keys
(130 hotels and hotel apartments). 24,562 keys
are hotel rooms and 2,699 are hotel apartments.
The five-star segment is the largest in size and
encompassed 12,900 rooms across 49
properties at the close of 2019.
Hotel Room Supply
2017-2021
(’000 KEYS)
8.0
3.0
• As per ValuStrat research, 988 keys were added
during H1 2020 with the opening of Pullman
Hotel in West Bay, Imperium Residences in
Najma, Dusit D2 Salwa Doha in Muraikh and Al
Liwan Suites in Rawdat Al Khail and Diyafa Hotel
Suites in Al Sadd.
• As per Valustrat research, 10,000 keys are in
pipeline till 2021. There were reported delays in
the launch of hotels in 2020 due to uncertainty
caused by the advent of COVID-19. As per the
latest statistics released by QNTC, a total of
21,500 rooms across 107 projects are under
construction at various stages of development.
30.3
24.9
2017
25.8
2018
27.3
2019
Hotel & Serviced Apt Rooms
27.3
2020E
2021E
Expected Supply
Source: ValuStrat, MEED Projects
• 2020 began with increasing visitor arrivals, up till
February 2020 there were 498,528 arrivals, up by
32% compared to the same period in 2020. In
March 2020 with the advent of the pandemic,
government of Qatar imposed a ban on inbound
tourists causing the volume of tourists to
plunge. Moreover, all recreation facilities and
F&B outlets in hotel properties were also
mandated to close.
• Since March 2020, hotels had to rely on local residents for turnover. Hotel apartments were reported to
fare well compared to hotel segment as they relied on long term leasing tenants. YTD June 2020 tourist
arrivals totalled 548,812, down by 48% compared to the same period 2019.
• As per ValuStrat research, the gap between demand and supply at the end of 2019 was estimated at 9,000
keys. This is projected to increase by the end of 2020 depending on the recovery of tourist arrivals and
influx of new properties. As per the plan of the lifting of restrictions in July 2020, hotels will be allowed to
re-open their F&B outlets. In addition, once inbound travel will re-open in Phase 3, the government of
Qatar mandated two weeks stay at designated quarantine hotels for particular inbound traffic.
www.valustrat.com | 20
Medium
Low
Supply (Units)
High
Hospitality:
Demand versus Supply
Low
Medium
High
Demand
Hospitality Performance
• YTD June 2020, occupancy of hotels and hotel
• Average Daily Rates (ADR) of hotels declined
• The highest occupancy of 66% was recorded for
•
apartments fell 13% and 12% respectively,
compared to the same period in 2019. Occupancy
declined the most for 1-2-star hotels followed by
the five-star and four-star segment.
3-star hotels amongst all hotel properties as of
H1 2020. Hotel apartments had an average
occupancy of 61% YTD June 2020.
21 | Qatar Real Estate Market 1st Half 2020 Review
2.4%, whereas for hotel apartments the decline
was 9.3% as of H1 2020, compared to H1 2019.
ADRs fell the most for 1-2-star hotels followed by
5-star segment and 3-star segment.
Revenue per Available Room (RevPAR) was
recorded at QAR 192 per night for hotels and
QAR 180 per night for hotel apartments, down on
average by 22% annually during the first six
months of 2020.
Cumulative ADRs & Occupancy of Hotels
and Hotel Apartments
2018 - YTD 2020
76
72
72
71
75
75
74
73
71
70
71
71
72
72
68
66
65
64
63
65
66
Occupancy Hotel Avg.
52
367
52
336
352
328
Feb
Jan
Dec
296
Occupancy Hotel Apartment Avg.
Nov
Oct
Sep
Aug
Jul
Jun
Apr
May
2019
ADRs Hotel Apartment Avg.
61
57
380
325
323
323
323
324
323
323
327
323
322
327
Mar
Feb
2018
ADRs hotel Avg.
62
63
365
377
377
377
371
362
327
Jan
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Feb
Mar
Jan
67
67
389
60
324
328
331
329
334
332
336
336
341
339
330
341
63
375
59
64
376
59
65
376
58
380
394
58
368
58
66
373
402
59
68
67
64
389
60
398
398
402
396
62
392
60
62
387
58
398
392
393
63
70
293
72
Jun
72
333
72
293
72
290
73
May
73
294
74
Apr
74
Mar
73
72
2020
Source: ValuStrat, Qatar National Tourism Council (QNTC)
Hospitality Performance Tree
Occupancy (%)
Average Daily Rate (QAR)
380
90%
360
80%
70%
Performance
100%
330
320
60%
310
50%
290
Hotel Apartments
Hotels
Source: ValuStrat
www.valustrat.com | 22
Occupancy Hotel & Hotel Apartments
-7.6%
-12.9%
-13.6%
-10.4%
Last 2 Years
Last Year
Last 6 months
Last Quarter
ADR Hotel & Hotel Apartments
-8.3%
-3.1%
-4.1%
3.8%
Last 2 Years
Last Year
Last 6 months
Last Quarter
COVID-19:
Trends
• With the advent of COVID-19 and mandated ban on inbound tourists, there was a significant decline in
arrivals of up to 48% YoY which was not in line with the historical trend.
• There was a YoY decline in performance fundamentals of hospitality properties as a result: occupancy,
ADRs and RevPARs.
• Hospitality properties had to rely on residents to increase occupancy. The majority of the properties
announced “Staycation Packages” in May 2020 to attract residents for upcoming Eid festivals.
• During March and April 2020 there was a rise in residents occupying hotel apartments due to flexibility of
short-term leasing contracts they offered.
• The full impact of the pandemic might only be known once the crisis ends. However, it is agreed upon
that the negative impact on the hotel industry will be short to medium term.
• The recovery of the hospitality industry is centred upon how responsive the operators are to needs of the
travellers in the long term. Healthy and safety techniques, policies and procedures will have to be
reconsidered in order encourage guests back in their premises while changes in consumer trends will
also have been studied in order to effectively elevate occupancy to pre-COVID-19 levels.
23 | Qatar Real Estate Market 1st Half 2020 Review
How
Can Help
Our firm is extremely well-equipped to help our clients navigate
uncertain times. We respond quickly to challenging situations
and are constantly helping clients to analyse, structure,
negotiate and execute the best possible solutions from both a
strategic and financial perspective.
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(VPI)-Residential
www.valustrat.com | 24
in Media
9th June, 2020
27th April, 2020
Qatar’s efforts to raise strategic stock of
Residential sector remains attractive to real
food commodities: ValuStrat
estate investors: ValuStrat
“Logistical challenges might also arise in the coming
months. There is a projected fall in the workforce
within the short to medium-terms, and due to the
existence of social mobility measures, logistical
footprint will have to be planned out in order to reduce
delays in ‘last mile’ deliveries to consumers. In
addition, more businesses will be looking into E2E (End
to End) or O2O (Online to Offline) supply chain visibility
and resilience. All of this will have to be taken in
account, to make necessary changes in supply chain
and support the growing e-commerce sector,”
ValuStrat said.”
“Doha: Developers who are willing to sell properties
during the COVID-19 crisis might provide favourable
deals for the buyer in the form of discount on asking
sale prices. This coupled with reduced interest rates
offered by banks has increased attractiveness of real
estate, particularly in the residential sector, as an
investment option, consulting firm ValuStrat Qatar has
said in its latest quarterly report titled ‘COVID-19 & The
Qatar Housing Market’.”
30th January, 2020
3rd May, 2020
8,600 residential units may be added in
Qatar by end-2020: ValuStrat
“Total housing stock by end of Q1, 2020 was
approximately 299,100 units with the addition of 900
apartments and 500 villas during the quarter, ValuStrat
said in its first quarter report on ‘Qatar housing
market’. All new additions were during the first two
months of this year, it said.”
25 | Qatar Real Estate Market 1st Half 2020 Review
Hotels witness high occupancy in Q4 of 2019
“Countrywide sales transaction volumes accumulated
to QR22.7bn in value in 2019. In The Pearl & Al Qassar,
transaction volumes increased by a staggering 72
percent during 2019, while total transaction value
increased by 55 percent to QR2bn,” Pawel Banach
(pictured), ValuStrat’s General Manager, Qatar told The
Peninsula.”
VPI
Market Intelligence.
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About VPI
The ValuStrat Price Index for Qatar’s residential sector is
constructed to represent the quarterly price change
experienced by typical residential units within Qatar. The VPI
is a valuation-based weighted price index that uses a data
sample representing influential locations across the city and
is built by our expert RICS Registered Valuers.
Research Methodology
Every effort has been made to ensure the accuracy of this
document. New supply data covers all the eight municipalities
of Qatar. Only completed and under construction projects are
included. The new supply data does not include announced
projects, and projects in design phase. The new supply
database does not take into account most private building
projects. Prices are calculated from actual transactions
extracted from the Ministry of Justice data that have been
carefully cleansed to exclude duplicates and outliers. Rental
data is derived from carefully chosen listings from
predetermined areas and districts for commercial and
residential properties.
Subscribe
for regular market intelligence
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www.valustrat.com | 26
About
Strategic
Partners of
Financial
Institutions
ValuStrat Qatar is part of a
leading consulting firm
providing Advisory,
Valuation, Research, Due
Diligence, and Divestment
services across a diverse
range of industry sectors
since 1977.
ValuStrat’s office network provides services to over
1,000 corporate clients including financial institutions,
local corporates, multinationals, governments, SMEs,
family businesses and start-ups.
Some of the key sectors serviced by ValuStrat’s
consulting team include real estate, hospitality,
healthcare, education, manufacturing, retail,
entertainment, transport, and FMCG. ValuStrat is a
Royal Institution of Chartered Surveyors (RICS)
Regulated Firm and the first company head quartered
in all of MENA and Asia to be accepted into the
prestigious RICS Tech Affiliate program.
Pawel Banach, FRICS
General Manager
pawel.banach@valustrat.com
Haider Tuaima
Head of Real Estate Research
haider.tuaima@valustrat.com
Anum Hasan
Market Research Manager
anum.hasan@valustrat.com
Anthony Fernando, MRICS
Property Valuation Manager
anthony.fernando@valustrat.com
Maaz Anser
Advisory Manager
maaz.anser@valustrat.com
Doha
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