Doha: No place to live?
Increasing rents and shortage of residential units are two key problems facing Qatar’s residential real estate sector. Complicating the issues further are the loopholes in planning and management of these units.
If you go through the classified section of major newspapers circulated in Qatar, you will most probably find at least one full page dedicated to the real estate sector. Such is the state of Qatar’s residential real estate market. Qatar has a residential yield of 10 percent – the highest in Middle East – owing to the increasing number of expatriates. While the occupancy rate of residential buildings is very high, those that are vacant are because of the owners’ preference to rent it to a single company, according to some real estate agents.
Part of the reason behind high customer demand is also the shortage of quality apartments. While the recently constructed buildings feature better finishing, split A/Cs, swimming pools and gyms, such buildings are very small in number and are considerably more expensive. In an attempt to control the costs, however, most of the new apartments show owners’ compromise on spatial dimensions.
The increasing demand has led to escalating rents which have outpaced Qatar’s inflation rate, believes the managing partner at Mannzili, Qatar, Aziz Sharif, who said that “tenants will experience this during their next rental rate increase.” Many of the contracts for mid-range apartments finishing this year are upgraded by an increase of at least QAR500 per month with no change in facilities whatsoever. Hence, many fully furnished two-bedroom apartments in Najma previously rented out for QAR7500 are now upgraded to a rate of QAR8000.
“Informal brokers have a significant market share, but there are risks in dealing with them.”- Adrian Camps, Asteco.
The increasing rents have led to apartment sharing by people who cannot afford it independently – an emerging trend in real estate, according to Sharif. Al Asmakh’s leasing team leader, Roy Francis Samuel, revealed that such illegal practices often lead to lawsuits when the tenants are unable to pay their rents upon one of their member-tenants leaving the apartment. As a proactive measure, Samuel explained, some agencies also require a tenant’s salary certificate to ensure their income is reasonably higher than the rent.
The situation, however, is not the same across Qatar. There are cheaper and well-maintained options outside Doha. “Barwa and Ezdan have been involved in a number of large-scale development projects that are aimed at the middle income demographic, though these tend to be found on the outskirts of Doha in locations with lower land values,” said Mark Proudley, associate director DTZ Qatar Properties. However, because of increasing inhabitation in suburban cities and concentration of offices and schools in Doha, the limited routes available are leading to increased traffic congestion during the peak hours.
An emerging trend in the Qatari residential market is the preference of building owners to provide fully furnished apartments. Currently, the occupancy rate of these apartments in Doha is 99 percent. While these apartments provide ready solutions for customers, the lack of customisation makes them less preferable for many. The dearth of storage spaces inhibits the removal of any item not liked by the tenants. For bachelors, however, fully furnished apartments remain a more attractive option.
Similarly, client preferences vary greatly depending on where they come from. Ostensibly, some nationalities are more inclined to save money, and do no want to spend too much on accommodation. Westerners, on the other hand, are more concerned about the quality of life and are willing to pay much more. Similarly, the location preferences for the two groups are also different. While the former prefer inhabiting in a location close to their offices and schools, the latter demand peaceful areas away from the city centre.
The shortage of residential units and their escalating rents, however, are not the only problems in Qatar’s residential market. With a fixed commission of half a month’s rent from the tenant, informal agents sometimes also get owner’s commission in case they close a deal for big real estate companies like Al Emadi and Ezdan.
Speaking about the role of these agents, Adrian Camps, chartered surveyor and head of research, valuation and consultancy at Asteco Qatar, said, “Informal brokers have a significant market share, but there are risks in dealing with [them], especially where cheques or cash are handed over for rental or the purchase properties.”
QAR500 - The amount in Qatari Riyals of residential rent increased per month in Najma, Qatar.
There are no compliance rules maintained by real estate companies on the eligibility of an informal agent. Hence, a single apartment is dealt by many agents, resulting in increased competition for tenant’s commission. Ironically, the trend can make things more difficult for the tenants when some agents have arrangements with the buildings’ watchmen who avoid showing the vacant apartments to any other’s clients, revealed a market insider.
Considering the cheap cost of putting a brief ad in the newspapers, these brokers often post misleading ads to attract more customers. Ads for attractive but unavailable properties are used to later negotiate the deals for otherwise less preferred areas. When Amer, an informal agent, was contacted about an ad he posted for 38 apartments, he claimed they were all rented out. The ad, however, continued to reappear for many days.
Many times, agents post online ads on platforms like Qatarliving.com. Like any other marketing website, Qatarliving is not free of scams. As a guiding principle, any accommodation ad which offers a very attractive rate, does not reveal any contact number and uses email address as a medium of communication is most probably a scam.