Qatar will comprise approximately 40,000 hotel keys, 330,000 residential units and an office supply of 6.5mn sq m GLA by end-2023, assuming all projects are delivered on time, says consultancy firm ValuStrat.
ValuStrat noted the opening of some 46 hotels last year comprising at least 9,000 keys. An estimated 62% belonged to the 5-star category. Lusail and West Bay comprised 40% of the total hotel rooms.
The number of visitors amounted to 1.9mn by the end of November 2022, as per Planning and Statistics Authority data. FIFA estimated a cumulative attendance of 3.4mn spectators, including 1.2mn international visitors equalling 96% total occupancy for the tournament. Additionally, there was a rise in ADRs as well; as of November, YTD 2022, the average ADR (average daily rate) was QR577, 38% higher y-o-y.
There was a significant surge in supply in the residential market with the addition of at least 13,000 units, which majorly concentrated in Al Wukair, Lusail and The Pearl. The largest project launched was a master plan named Madinatna, in Al Wukair, to be developed by Barwa Real Estate, comprising 6,780 apartments and 20,000sq m of retail space.
Excess supply was outstripped by growth in demand arising from "Eskan leases" and a temporary increase in population. As a result, residential rents increased an estimated 15% annually.
While home rents saw a substantial increase, residential sales stabilised; the ValuStrat Price Index recorded marginal declines during the first half of 2022.
The retail market saw significant growth in terms of supply. This includes opening a super-regional mall in Lusail, Place Vendome and regional and community malls in The Pearl, Msheireb and Lusail.
Additionally, handing over of new street shops was seen, notably on Lusail Boulevard, West Bay Beach, Qetaifan Island North, and Al Maha Island.
As a result, an increase in demand for retail was corroborated by the opening of new brands and expansion of existing brands in malls and street retail in Qatar. However, by Q3, 2022, there was downward pressure on rents, with supply surpassing the demand.
According to ValuStrat, 90% of the upcoming 8,000 residential units will be concentrated in The Pearl and Lusail. Once the projects are handed over, the pipeline supply might negatively impact the market rent in the areas relatively more than others.
The durability of 'Eskan Leases' might provide a buffer against a steep decline in demand and rental performance. However, by the end of the year, most of the leases are predicted to complete. As a result, prices and rents are expected to decline by 10% during the year.
The “oversupply” in the office sector is estimated to exceed 2mn sq m GLA, including the 700,000 sq m GLA in the pipeline for 2023. The significant gap in demand and supply is expected to put downward pressure on rents of office spaces, especially in Lusail, where most of the pipeline supply is concentrated.
The hospitality sector is expected to see an addition of the following notable establishments: Corniche Park Towers, Doha Live, Four-Season Luxury Residence and Burj Damac Seaviews.
However, the “significant” jump in supply in Q4, 2022 and pipeline supply for 2023 is projected to dampen performance in the year as the volume of tourists is not predicted to catch up in proportion but grow gradually. Hosting major events, cruise season and transit passengers were deemed to be the main drivers of tourism growth during the year.
FIFA estimated 5bn people around the world watched the World Cup matches; it is possible 40mn people will seek to visit Qatar in the medium to long term, ValuStrat said.
For a detailed perspective on the property market, visit: Qatar - Real Estate Review Q1 2023