Q2 REAL ESTATE MARKET REVIEW - PROPERTY TIMES QATAR Q2 2021 - Cushman & Wakefield ...
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PROPERTY TIMES Q2 REAL ESTATE MARKET REVIEW QATAR Q2 2021
PROPERTY TIMES
Q2 Real Estate Market Review
Qatar Q2 2021
• COVID-19 related restrictions continued to ease gradually throughout Q2. There
30/06/2021 has been an increase in footfall in indoor retail malls, and an increase in the number
of people returning to offices and other workplaces in Qatar.
Contents • Various sources have reported that Qatar’s economic recovery has gained pace in
Economic Overview 2 recent months. This is due to the easing of COVID restrictions and the resurgence
in energy prices.
Office Market Overview 3
Residential Market Overview 4 • Qatar’s economic recovery is expected to gain pace in H2, as the country’s rapid
vaccination programme will enable the further lifting of restrictions.
Hospitality Market Overview 5
Retail Market Overview 6 • The restoration of economic ties between Qatar and Saudi Arabia has boosted
economic growth in recent months. The easing of travel restrictions is expected to
increase travel between the countries and boost bilateral commercial activity.
• Qatar’s real estate market continues to feel the impact of the COVID-19 pandemic;
however, Cushman & Wakefield expects to see a significant increase in activity as
travel restrictions ease and the 2022 FIFA World Cup approaches.
• According to the Planning and Statistics Authority (PSA), year-to-date real estate
transactions have increased by 82% by the end of May.
• Residential house/apartment sales increased by 180% in April and May compared
to the corresponding months in 2020. The increase in sales activity suggests that
the expansion of ‘freehold’ designation to areas such as Lusail under Law No. 6 of
2018, and the availability of new apartment developments in these areas, have
boosted the investment sales market.
Figure 1
No. of real estate transactions in Qatar, Oct 2016 – May 2021
800
700
600
500
400
Author
300
Johnny Archer
Director 200
Consulting & Research, Qatar 100
+974 44837395
0
johnny.archer@cushwake.qa
Contacts
Edd Brookes No. of Sales Transactions
Head of Middle East
+974 44837395 Source: PSA
edd.brookes@cushwake.qa
cushmanwakefield.com / 1
cushmanwakefield.com PROPERTY TIMES 1QATAR
Qatar Q2 2021
Q2 2021
Economic Overview Figure 2
GDP (QAR billion) and real GDP growth (%), 2013 - 2020
Economic indicators and projections continue to
800,000 6%
be affected by COVID-19 related restrictions
700,000
4%
Recent data shows that Gross Domestic Product in Qatar 600,000
shrank by 2.5% year on year in Q1, after a 3.7% decline in Q4 500,000 2%
2020. This stemmed primarily from a slower pick-up in the non-
oil sector, which declined by 2.8% year on year, while the oil 400,000
sector shrank by 2%. However, despite the annual fall, quarterly 300,000 0%
growth accelerated reached 1.5% in Q2 2021 showing signs of
a recent recovery after the contractions of 2020. 200,000
-2%
100,000
Qatar began to ease its virus-containment measures on 28 May,
0 -4%
with the third of four reopening phases due in early July. This 2013 2014 2015 2016 2017 2018 2019 2020
has seen capacity restrictions loosened further in many settings,
Nominal GDP (Oxford Economics), QAR Million
including public transport and restaurants, with children allowed
Real GDP (Oxford Economics), QAR Million
in a greater number of venues. Google data shows mobility is
Qatar Real GDP Growth
now consistently in line with the pre-pandemic baseline. New
Source: PSA/Oxford Economics
infections had reduced to around 140 a day in July, from almost
1,000 a day in mid-April. The domestic recovery is expected to
gain traction in H2 as the number of vaccinated residents Figure 3
increases. Consumer Price Index & Consumer Price Inflation (%),
High energy prices bode well for export receipts and fiscal 2013 - 2020
revenues. Oxford Economics forecast that both the current 102 4%
account and fiscal balance will turn positive in 2021. Spending
100 3%
restraint had limited the deterioration in public finances in 2020
when the budget deficit stood at 2.1% of GDP. 98
2%
96
Despite the gradual reopening of economic activity, consumer 1%
prices fell by 0.7% month on month in June after three months 94
of increases, with most categories including transport costs 0%
92
falling. Consequently, year on year inflation slowed to 2.0% from -1%
2.5% in May. Oxford Economic forecast CPI inflation at 1.5% in 90
2021 before rising to about 2% in 2022. 88 -2%
86 -3%
Qatar has based its 2021 budget on a conservative assumption
2013 2014 2015 2016 2017 2018 2019 2020
of a $ 40bp oil price, well below the $ 69pb average now Consumer Price Index Consumer price inflation, %
forecasted for this year. While reduced oil prices have taken
their toll, spending restraint limited the deterioration in public Source: PSA/Oxford Economics
finances in 2020. The budget shows another year of deficit, with
low oil and gas prices continuing to take a toll, and spending Figure 4
rising. Oxford Economics expects the balance to swing into
surplus at about 1.6% of GDP this year, with official statements Real estate pricing index, Q1 2012 – Q1 2021 (base 100 -
suggesting a modest surplus in Q1 Q1 2009)
350
(Economics Overview insight provided by Oxford Economics
300
Country Economic Forecast as of June 2021).
250
200
150
100
50
0
Q2 2009
Q1 2010
Q4 2010
Q3 2011
Q2 2012
Q1 2013
Q4 2013
Q3 2014
Q2 2015
Q1 2016
Q4 2016
Q3 2017
Q2 2018
Q1 2019
Q4 2019
Q3 2020
Q2 2021
Qatar Real Estate Index
Source: QCB
2 / Cushman & Wakefield
www.cushmanwakefield.qa PROPERTY TIMES 2QATAR
Qatar Q2 2021
Q2 2021
Office Market Overview Figure 5
Activity remains sluggish as corporate occupiers Grade A office supply (West Bay, Lusail, Msheireb), Doha
take time before committing to new office leases (million sqm) 2014 - 2020
3.0 30%
New leasing activity in the commercial office sector has
remained slow in Q2, with many corporate occupiers taking their 2.5 25%
time in committing to new leases. One of the most notable
tenancies in recent months saw Lusail University acquire an 2.0 20%
entire building in Lusail’s Energy City.
Cushman & Wakefield has seen an increase in companies 1.5 15%
looking to secure new office accommodation in recent months;
however, this has been largely driven by lease expiries from 1.0 10%
companies within Qatar.
0.5 5%
The majority of new demand is focussed on Lusail’s Marina
District. Companies are being attracted to Lusail by the 0.0 0%
improved access, infrastructure provisions, car parking 2013 2014 2015 2016 2017 2018 2019 2020
availability, rental prices, and the number of government entities West Bay Lusail
locating in the area. Msheireb Vacancy Prime Stock
COVID-19 and the reduction in international travel continue to Source: Cushman & Wakefield
influence the pace at which international companies’ secure new
office space. Cushman & Wakefield’s global clients are Figure 6
increasingly of the view that most employees will return to the
office over the coming months, but new acquisition strategies Overall supply by district (2021) (total approx. 4.9m sqm)
continue to be put on hold in many cases.
2%
Within Qatar, the successful take-up of vaccines has seen an 10%
West Bay
increasing number of employees return to the office. Phase 2 of
the lifting of lockdown restrictions, which was introduced in June, Lusail
saw an increase in workplace capacities to 80%. 39% Msheireb
13%
New office supply continues to reach the market in Qatar, most Old Salata
notably in Lusail, where supply has now surpassed 600,000 sq Airport Rd
m. Overall office supply in Qatar will shortly surpass 5 million sq
8% B/C/D Ring
m. The increasing supply of office accommodation, and
relatively slow take-up from new tenants, has seen a reduction Al Sadd
in overall occupancy levels. Cushman and Wakefield estimate 9% Other
that approximately 20-25% of supply in West Bay and Lusail is
4% 15%
now available to lease.
Office rents have fallen significantly since 2015, after a fall in oil Source: Cushman & Wakefield
prices saw a dramatic reduction in new demand from
government entities and the oil and gas sector. Prime office Figure 7
rents in West Bay now range between QAR 100 and QAR 130
per sqm per month exclusive of service charges. Office spaces Office rents by district (QAR/sqm/month), 2014 – Q2 2021
fitted to ‘shell and core’ command significantly lower rates as
tenant’s look to avoid the significant capital expenditure involved 300
with office fit-outs.
Office suites in Lusail usually command rents of between QAR
200
80 and QAR 120; however, we expect rents to match those in
West Bay soon as occupancy rates increase in the area.
Office rents in Old Salata, Al Sadd and C-Ring Road are typically 100
between QAR 60 and QAR 80 per sq m per month, with rent-
free incentives also available to attract new tenants.
0
2013 2014 2015 2016 2017 2018 2019 2020 Q2
West Bay - Prime West Bay - Average 2021
Lusail - Average Lusail - Prime
C/D Ring Road and Al Sadd
Source: Cushman & Wakefield
cushmanwakefield.com / 3
www.cushmanwakefield.qa PROPERTY TIMES 3QATAR
Qatar Q2 2021
Q2 2021
Residential Market Overview Figure 8
Occupancy rates climb in prime locations as Prime apartment supply, West Bay, Pearl Qatar & Marina
residents capitalize on reduced rents District, 2018 – Q2 2021
Demand for apartments in locations like The Pearl-Qatar, West 30,000
Bay, and Lusail’s Marina District surged in recent months as
residents take advantage of the more affordable rental levels in 25,000
these areas. In addition, our research shows that residential
20,000
tenants increasingly prioritise their rental budget, with reduced
spending on international travel and holidays, primarily due to
15,000
COVID-19.
Occupancy levels in The Pearl-Qatar and West Bay Lagoon are 10,000
currently at their highest point in more than four years. This has
led to some evidence of rents increasing for certain apartment 5,000
types, although most rents remain stable, as they have been
0
over the past year.
2018 2019 2020 Q2 2021
The vast majority of rental activity has been generated by those West Bay Pearl Qatar Marina District
re-locating within the country; however, there have been
Source: Cushman & Wakefield
increasing signs of new residents moving to Qatar, largely on
projects that are either directly or indirectly related to the FIFA
World Cup in 2022. Figure 9
Average apartment rents, Porto Arabia, (QAR/month), 2013
The importance of high-quality building finishes and amenities
has become more apparent in recent months in areas such as – Q2 2021
Bin Mahmoud, Al Sadd, and Msheireb. High specification 21,000
buildings that offer tenants swimming pools and gyms have
18,000
retained high occupancy rates, while older buildings generally
see vacancy rates increase, and rental levels falling. 15,000
Semi-furnished, two-bedroom apartments in Porto Arabia 12,000
typically command monthly rents of between QAR 10,000 and
QAR 12,000. In districts such as Bin Mahmoud rental values can 9,000
vary significantly depending on the quality of the buildings. New
6,000
buildings can command rents between QAR 9,000 and QAR
11,000 per month for two-bedroom apartments, while similarly 3,000
sized apartments in older buildings may struggle to generate
monthly rents of QAR 6,000. 0
2013 2014 2015 2016 2017 2018 2019 2020 Q2
Demand from tenants has shifted towards fully furnished units 2021
or serviced apartments over the past year. This is especially the One Bed Two Bed Three Bed
case for new residents on short term contracts – including those Source: Cushman & Wakefield
moving to Qatar on World Cup-related projects
Residential investment sales in Qatar have been boosted by the Figure 10
expansion of Freehold Zones, which allow ownership of property Average compound villa rents, Al Waab (QAR/month)
by foreign nationals. Residential sales in Qatar increased by 2013 – Q2 2021)
180% in April and May compared to the same months in 2020.
Properties in Al Daayen represent approximately one-quarter of 25,000
all residential sales, indicating the popularity of new freehold
sales projects in Fox Hills, Al Erkyah City and Yasmeen City in 20,000
Lusail.
15,000
10,000
5,000
0
2013 2014 2015 2016 2017 2018 2019 2020 Q2
2021
Three Bed Four Bed Five Bed
Source: Cushman & Wakefield
4 / Cushman & Wakefield
www.cushmanwakefield.qa PROPERTY TIMES 4QATAR
Qatar Q2 2021
Q2 2021
Hospitality Market Overview Figure 11
Delays in projected hotel openings due to COVID- Hotel keys by classification 2021 (Total 28,300)
19 pandemic
5%
The total supply of hotel keys in Qatar reached 28,300 by the 13%
start of 2021, which represented an annual increase of 1,200
keys. There are approximately 20,000 hotel keys under 1&2-star
construction and expected to be completed by mid-2022. The
48% 3-star
delivery of hotel keys has been lower than expected over the
past 12 months, indicating that COVID-19 has delayed 4-star
construction schedules and projected opening dates. 5-star
The completion of new hotel projects remained slow in Q2 2021. 34%
The most notable new arrival to the market has been Banyan
Tree by La Cigale, a luxury hotel located in the landmark Doha
Oasis development in the Msheireb District.
The hotel market remains significantly affected by the COVID- Source: NTC
19 epidemic and the related restrictions. According to the
National Tourism Councils latest statistics report, visitor arrivals Figure 12
to March were 92% down compared to Q1 2020. Hotel performance in 2020, ADR & RevPAR (QAR),
Demand for hotel rooms has been more difficult to quantify over Occupancy (%)
the past year due to the Ministry of Public Health’s designation
of a large number of hotels as quarantine facilities. Of the hotels 500 80%
that are available to guests, occupancy rates fluctuated between 450 70%
54% and 65% for the first three months of the year. These levels, 400
which are comparable to pre-COVID levels, are primarily driven 60%
350
by domestic tourism. 50%
300
Average daily rates in January and February matched the 250 40%
equivalent levels for 2020 at QAR 361 and QAR 369, 200 30%
respectively. March saw a significant improvement in revenues,
150
with average ADRs increasing to QAR 408. This reflected an 20%
100
increase of 8% on the previous month and a 48% increase on
50 10%
March 2020.
0 0%
The easing of COVID-related restrictions, the take-up of Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
vaccines, and the resumption of diplomatic ties in the GCC are
all expected to boost regional travel, which will be a welcome
ADR 2020 RevPAR 2020 Occupancy 2020
development to the hotel sector in H2. While we hope to see an
Source: NTC (Quarantine hotels removed through 2020)
increase in arrivals to Qatar over the next six months, the re-
introduction of quarantine hotels to the open market and the
completion of new supply will maintain pressure on occupancy Figure 13
rates and room revenues. Visitors to Qatar Q1 2021 (92% fall since Q1 2020 / pre-
Covid)
The recovery in tourist numbers, post-pandemic, will rely on the
delivery of new resorts, attractions, and leisure facilities. The
importance of leisure tourism to Qatar has increased over the India
past year as the growth of virtual meetings and a general
avoidance of unnecessary trips is likely to have a prolonged GCC
impact on global and regional business travel.
Turkey
Pakistan
USA
UK
Other
0 3,000 6,000 9,000 12,000 15,000 18,000
Source: NTC
cushmanwakefield.com / 5
www.cushmanwakefield.qa PROPERTY TIMES 5QATAR
Qatar Q2 2021
Q2 2021
Retail Market Overview Figure 14
Retailer demand focused on developments with Organised retail supply, Qatar (sqm/millions) year end
high footfall 2014 – 2021
2.5
The phased easing of COVID-19 restrictions has resulted in an
encouraging return to pre-lockdown footfall levels in most retail 2.0
malls. While social distancing measures and reduced capacity
remain a consideration, retailers in Qatar generally feel that the 1.5
most challenging period is behind them, and a brighter outlook
is emerging.
1.0
New demand for retail accommodation remains subdued, as
retailers retain a cautious approach with COVID-19 in mind; 0.5
however, recent evidence suggests that several retailers are
looking to secure space in some of Doha’s prime retail
0.0
developments where strong footfall can be guaranteed. 2014 2015 2016 2017 2018 2019 2020 2021
The recent reconfiguration of City Centre Mall saw the delivery Destination Malls, Doha Neighbourhood Malls, Doha
of a number of ‘big-box’ units, which have enjoyed strong Al Wakra & Al Khor Malls
demand from tenants. Research from Cushman & Wakefield
Source: Cushman & Wakefield
shows that there is still reasonable demand for retail units of
between 1,000 sq m and 2,000 sq m in prime retail locations.
Figure 15
The supply of retail mall accommodation in Qatar is now in
excess of 1.5 million sq m. The delivery of new supply has been Average retail mall occupancy (%) & average headline
delayed over the past 18 months as COVID-19 has impacted on rents (QAR), Doha 2013 – Q2 2021
proposed opening dates. La Galleria at Msheireb remains the 350 120%
only new development to open its doors in 2021; however, Place
Vendome and Doha Mall are anticipated to open before year- 300 100%
end. 250
80%
Rents for ‘in-line’ retail stores in Doha’s main organised malls 200
typically range from QAR 200 to QAR 320 per sq m month. 60%
150
Lower rents are available to anchor stores and larger outlets,
40%
with retailers in a strong position to negotiate favourable terms 100
for large units. 50 20%
Many retailers were offered temporary discounts or rent holidays 0 0%
over the past year to cushion the impact of the COVID-19 2013 2014 2015 2016 2017 2018 2019 2020 Q2
pandemic. Most of these incentives have dissipated in recent 2021
months as footfall levels recover and trading returns to ‘pre- Shopping Mall Headline Retail Rents (Prime Line Units)
COVID’ levels. Average Occupancy
Outside of the main malls, high street and local convenience Source: Cushman & Wakefield
retail units are typically available for between QAR 90 and QAR
180 per sq m per month, depending on the size of unit and the
Figure 16
level of footfall. Premiums typically apply for units with licences
to sell food and beverages. Showroom accommodation on some Organised supply by retail mall Q2 2021
of Doha’s busiest traffic corridors can usually be secured for
between QAR 90 and QAR 130 per sq m per month.
10%
7% City Centre
Villaggio
42%
Mall of Qatar
15%
Doha Festival City
Tawar Mall
Other
19%
7%
Source: Cushman & Wakefield
6 / Cushman & Wakefield
www.cushmanwakefield.qa PROPERTY TIMES 6EMEA Qatar - Doha UAE - Dubai
John Forrester Edd Brookes Edd Brookes
Chief Executive | EMEA General Manager Head of Middle East
+44 (0)20 3296 2002 +974 5586 7044 +971 (0) 4 518 2629
john.forrester@cushwake.com edd.brookes@cushwake.qa middleeast@cushwake.com
EMEA Qatar - Doha UAE - Dubai
Andrew Phipps Johnny Archer Waleed Mahmoud
Head of EMEA Research & Insight Head of Consulting & Research Senior Researcher
+44 (0)20 3296 4236 +974 4483 7395 +971 (0) 4 518 2628
andrew.phipps@cushwake.com johnny.archer@cushwake.qa waleed.mahmoud@cushwake.com
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