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Rentals in Upcoming Malls Higher: Report

Middle East : 21 June 2013

Source: The Peninsula 2013

DOHA: Asking rental rates in some upcoming malls in Qatar are 20 to 30 percent higher compared to the prevailing rates, indicating a bullish market outlook, according to the latest Tanween Quarterly Real Estate Market Report (Q1 2013).

The rising trend in rents for retail space is owing to steady population growth. Due to high population gross leasable area (GLA) per capita is set to remain low by regional benchmarks despite an additional 1.1million sqm of organised retail space spread across 14 additional malls coming online by 2015.

Rents for line tenants in malls have remained stable for the past few quarters, in the range of QR200 per sqm-QR250 per sqm. Strip retail rentals are 30-40 percent lower than rentals in malls.

According to the report, real estate transactions trends in Q1 2013 witnessed a sluggish start with lower transaction value compared to Q1 2012 and 2012 averages. Land transactions accounted for 54 percent of all real-estate transactions by value in the quarter, down from 67 percent in 2012.

Pushed by high demand for plots, land prices are up relative to Q1 2012, with average transacted land prices of QR704/sqft in Doha (up 14 percent from Q1 2012 to Q1 2013). Umm Slal, Al Wakrah, Al Dayeen and Al Shamal have witnessed double-digit growth in land prices during this period.

Al Dayeen, Al Khor and Al Wakrah are expected to witness increases in transactions due to forthcoming developmental projects. With regards to the residential units, average monthly rents for apartments in The Pearl are approximately QR15,000 per month, a three-five percent premium over West Bay area. Rental yields in these areas average 8-10 percent.

Rents in secondary districts have been stable with a moderate upward trend during the past year. Rents for one-three bedroom (1-3BR) in these areas averaged QR5,300-QR8,600 with Al Sadd commanding a rental premium of up to 20 percent over other secondary districts, mainly due to its proximity to a retail hub, more fully furnished apartments and better facilities.

The report forecast a stable outlook for residential units with over 90 percent occupancy rates due to strong demand for housing as a result of robust population growth outlook in 2013 but a smaller expected increase in supply of housing stock in 2013 relative to 2012.

Office rents have inched up in West Bay from Q1 2012 to Q1 2013 and average QR230 per sqm mainly due to new supply coming online, while the office rents in other areas (SBD) have been stable from Q1 2012 to Q1 2013 at QR 145 per sqm.

The report estimates an additional 700,000 sqm space will come online in 2013 and a further 100,000 sqm in 2014. Incremental increases in demand will likely not be sufficient to absorb additional supply in the coming year implying lower occupancy. With most additional supply concentrated in the Central Business District (CBD), occupancy in this area is likely to witness a significant drop.

In the hospitality industry, four and five star category hotels will continue to dominate the Qatari market (65 pct of current supply) with demand driven by business arrivals (90 percent). High-end hotels recorded higher occupancy on average for Q1 2013 relative to Q1 2012. About 12 new high-end hotels opened in 2012, delivering an estimated 2, 200 additional rooms to the market. The Report expects about 1,500 additional rooms to be delivered in 2013.

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