Experts privy with the trends of the real-estate sector have said that due to a low demand and a simultaneous oversupply of residential units in the Qatari real-estate market, companies will be forced to reduce the rentals by up to 30% in the near future.
Many companies are not directly reducing the rent; however, they are offering attractive incentives instead such as rent-free occupancy up to 6 months, the stiff competition coupled with oversupply has forced companies to resort to these tactics for survival.
“The demand for houses is less than the supply, in such a scenario businesses are forced to drop prices and the same holds true for the real-estate market as well”, Khalifa Al Maslamani, a Qatari real estate expert said in a talk-show on Qatar TV.
Given the market situation, many businesses feel that it is better to rent out housing units at reduced prices rather than leave them vacant. The result of this thinking is that an apartment whose rent used to QR8000 is now available at QR6000, the rental prices of high-end properties have similarly dropped.
“I would like to say that there will be less loss as long as the properties are rented out. There is more risk for investors and developers if the buildings are kept unoccupied, waiting for tenants,” Al Maslamani added.
However, some companies do not want to be a part of any price-war with a rival housing company, to keep themselves in the business they are implementing other strategies, on such company is the SAK Holding Group.
“We are not competing with our rivals in reducing the rents of housing apartments due to falling demand,” said Abdul Rahman Al Najjar, SAK Holding Group Deputy CEO
“We are instead offering free occupancy for two months, three months and in some cases up to six months. The move aims at protecting all real estate investors, developers because if one company is affected others will also be affected too”, he said.
In order to justify their rental packages, companies are now focusing on improving their services and offering some incentives to the tenants to stay afloat in the competitive market.
Experts believe that the fall in the oil prices has had a huge impact on the real estate sector, and due to the oil prices plummeting land prices have dropped by 25-50% in some areas.
In comparison, the residential segment of the sector has witnessed a fall in rental price by about 15-20% and one of the biggest reasons for that is the oversupply of residential units.
Shops, however, continue to remain in high demand as there is a shortage of commercial streets in the country. Similarly, companies such as SAK Holding Group are focusing on the middle-low segment housing projects as the demand in the segment is still robust.