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White Paper

Residential Market and Affordability Levels | Doha
November 2014

Doha’s Residential Market
Market Performance, Trends and Affordability

With 70% of households in Doha (excluding blue collar workers) earning between QAR5. expatriate households spend 34% of their income on housing. healthcare. appraisals.Introduction Ian Albert Regional Director | Middle East Colliers International ian. asset management and research. education. brokerage. Affordability is a relative measure. Colliers International delivers a full range of services worldwide that includes: valuations.999 per month. hospitality. UAE. but it also increases the overall spending power of households. with one of the highest per capita incomes in the world. Average rental rates in 2014 have increased by 14% compared to average rentals in 2013.700 and QAR6. infrastructure sector. In MENA Colliers International has provided leading advisory services through its regional offices located in Dubai. the compounding undersupply has resulted in unaffordable accommodation costs. In the latest income and expenditure survey by the Qatar Statistics Authority (2012/2013). Despite attempts by developers to meet the acute supply gap. The availability of affordable housing not only improves worker and employer attraction and retention. within the residential.800 professionals operating out of more than 485 offices in 63 countries.bibby@colliers. both within the highend as well as the mid-market developments. Sales prices have also witnessed an upward trend. commercial.com Colliers International While the provision of affordable housing involves important social and economical values. Riyadh and Jeddah since 1996.albert@colliers. This percentage is only likely to increase in the future given the acute undersupply in the market.ahmed@colliers. These households can then afford to improve their existing quality of life by increasing their spending on vital social infrastructure facilities such as better levels of education and healthcare for their families. trends and some strategies for addressing the growing demand for affordable housing towards a sustainable and competitive asset class. Qatar and Saudi Arabia. A commonly accepted guideline for housing affordability is when accommodation costs are within 30% of a household's gross income. Mansoor Ahmed Director | Development Solutions Colliers International mansoor. 2 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International . albeit increasing by a lower rate of 6% during the same period. Colliers International is a global leader in commercial real estate services with over 15.800 per month. The latest annual real estate survey by Euromoney named Colliers International ‘Best Advisor’ in the MENA region. such as Qatar. especially in a growing real estate market. our focus in this whitepaper is aimed at highlighting Doha’s overall residential market performance.com Supply scarcity in Doha’s housing market offers a strong foundation for opportunity. consulting. the majority of residents can afford rental levels between QAR1.000 and QAR19.com Peter Bibby Director | Qatar Country Manager Colliers International peter. Abu Dhabi. retail. Public Private Partnership (PPP) and economic and industrial free zones.

the majority of residents in Doha are within a kilometer to asphalted roads and retail outlets. The majority of these villas are owned by Qatari nationals. Quality developments. approximately 47. Doha’s housing market has been affected by an acute shortage for years. retail and road networks ” 3 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International . translating to an increase of 9% (CAGR) in relation to the current level. the ratio of owneroccupied villas are significantly larger at 45%.The housing shortage in 2014 is at 37%. As illustrated in Exhibit 3. While a limited 5% of apartments are owner-occupied. in close proximity to vital social infrastructure facilities such as schools. Exhibit 2: Households in Doha by Types of Ownership 100% 24% 21% 80% 60% 79% 95% 40% 20% 76% Villa 5% Owned Apartment 0% Apartments Source: Qatar Statistics Authority Rented Villa Source: Qatar Statistics Authority Exhibit 3: Distribution of Households in Doha by Proximity to Vital Community / Infrastructure Facilities 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 22% 30% 29% 39% 96% 48% 60% 33% 20% Hospital / Health Center Shops (Food Items) Less than 1 km 1 .000 households. This is expected to increase to 1. remain more competitive than developments that lack such facilities.000 units comprises of apartments being 66%. hospitals and retail facilities together with good accessibility / road networks. with the remaining 24% being villas. There is little or no vacancies in the residential market.500 homes. The number of households has risen considerably in recent years. Existing Residential Landscape Doha currently has approximately 1.7 million inhabitants and 1 million households by 2018. Growth in housing stock fails to meet the growing number of households.5 km Primary School Asphalted Road More than 5 km Source: Qatar Statistics Authority “Tenant and investor preference are towards developments with accessibility to healthcare facilities. schools. Doha’s existing housing stock of approximately 129. Exhibit 1: Distribution of Residential Units in Doha With the supply shortage increasing annually. The expectation is that the shortage will increase further up to 85% in 2018. the accommodation costs have also been escalating. due to a sharp rise in the growth of the population.2 million inhabitants and 727.

followed by 36% of three bedroom apartment units. the majority of non-nationals live in apartments (51%)” 4 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International . Colliers International estimates that by the end of 2014 this number will exceed 129. Research conducted by Colliers indicates that approximately 44% of the existing residential stock consists of two bedroom units. While the majority of Qatari nationals live in villas (63%).200 units are due to enter the market during 2015 – 2018.555 units in 2010. While all Qatari and GCC nationals can own property on a freehold basis. According to the latest census.Demand Vs.200 units. Supply Doha has suffered from a continuous undersupply of residential units resulting in increasing house prices making living in Doha unaffordable for many. An additional 8. West Bay Lagoon. Doha had a total of 97. non-GCC nationals are limited to The Pearl Qatar. the majority of demand recorded is for one and two bedroom units with requirements for three bedroom apartments remaining limited. high population growth rates of approximately 11% per annum are expected to continuously keep existing market fundamentals in an undersupplied market. Lusail and the Al Khor development. In contrast. Despite a 3% annual increase in supply. Exhibit 4: Distribution of Apartment Supply in Doha 100% 6% 90% 80% 36% 70% 60% 50% 40% 44% 30% 20% 10% 15% 0% Apartment Supply 1BR 2BR 3BR 4BR Source: Colliers International Exhibit 5: Doha Residential Demand and Supply Source: Colliers International “Residential demand is clearly defined by nationality.

The average spend on housing in Doha is considerably higher compared to a number of established international benchmarks.800 per month.m 25% 29% Rental Affordability: QAR 1. The National Housing Federation defines affordable rent levels at 25% of household income.m 30% 18% QAR 5.800 p.000 + p. An analysis of monthly household income levels also suggests that 70% of Doha’s total households earn between QAR5. The highest income bracket represented by households earning QAR40. are living in alternative accommodation facilities.999 per month.000 QAR 50.999 QAR 20. As households in this income category which is generally provided with accommodation by their employers (mainly comprising of contractors.m 40% 40% Represents 25% of Doha Households Rental Affordability: QAR 10. such as the Department of Housing and Urban Development (USA) and NSW Government (AUS). This market represents 25% of total households in Doha. Rental affordability at this top tier of the market starts at QAR13.200 – QAR 13.999 5 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International Rental Affordability: QAR 17. Households earning between QAR20.700 – QAR 3.400 p.600 per month.600 per month.m Represents 70% of Doha Households Rental Affordability: QAR 6.000 . hotels and retailers).Affordability in the Rental Market Affordable housing takes many different forms.000 and QAR19. suggests that average expatriate households in Doha spend approximately 34% of their income on housing (household spend of Qatari nationals has been excluded from this analysis since 82% are home-owners). This income bracket.000 and QAR39.999 7% 0% QAR 30.800” Exhibit 6: Monthly Household Income Distribution in Doha & Rental Affordability Levels 20% 15% 10% 5% Rental Affordability: QAR 3. can afford rental levels between QAR1.800 – QAR 10. In the UK.400 – QAR 6. Colliers’ rental affordability analysis excludes those earning less than QAR4.QAR 9.700 and QAR6.600 p.000 and above per month are a limited 5% of total households. “70% of households in Doha can afford monthly rentals between QAR1.000 p.000 QAR 39. they are omitted from the study.999 per month.999 Source: Colliers International *Excludes those earning < QAR 4.800 and QAR13. Analysing the latest available income and expenditure surveys published by Qatar Statistics Authority (2012/2013). since this income category are generally blue collar workers and are provided with labour accommodation.m 45% 3% 2% QAR 40.999 a month can afford rentals ranging between QAR6. where the accepted definition of affordability is for a household to pay no more than 30% of its annual income on housing.999 per month.000 QAR 29.600 – QAR 17. hospitals.000 QAR 19.000 + .200 p.000 QAR 49.m 35% Represents 5% of Doha Households Rental Affordability: QAR 13. The distribution of income levels in Doha suggests that 11% of total households are earning less than QAR4.700 and QAR6.999 QAR 10. and this whitepaper uses the term to define all housing units at levels affordable to average households in Doha.

a. and therefore. Al Sadd and Old Airport” Exhibit 8: Average Apartment Rental Rates across Doha 1. increased 14% year-on-year (Q2 2013 – Q2 2014). 12% 10% 150. due to the majority of companies offering accommodation and transportation for their staff.000 20% 14% 900 15% 10% 4% 5% 600 -3% 500 0% 400 -5% 300 -15% 745 634 614 639 700 799 100 -10% -15% 2008 2009 2010 2011 2012 2013 2014 200 - -20% QAR per m² p. 1BR 2BR Al Sadd West Bay 3BR Qatar Pearl Average YOY Growth Source: Colliers International “Average rents in the Pearl Qatar have witnessed 11% YOY rental increases.000 6% YOY % Growth Since 2008. driven by a combination of strong economic fundamentals and population growth in an already undersupplied market. Old Airport and the Pearl Qatar. This is among other factors. YOY Growth Source: Colliers International 6 -15% Residential Market and Affordability Levels | November 2014 | Doha | Colliers International YOY % Growth 10% 700 875 QAR per m² p. compared to 14% achieved in West Bay. Exhibit 7: Average Apartment Rental Rates by Unit Type – Q3 2014 250. a.a. This is shown in an analysis of average rental prices across apartments in key residential districts of West Bay. rent prices have shown a cumulative rise of approximately 7%. Average rents in apartments. rent prices have risen over the past few years. a trend which is likely to continue. Among the primary reasons for the higher YOY increases in Al Sadd and Old Airport is due to a number of new developments predominantly offering furnished units. across Doha.000 2% 0 0% Old Airport High rentals already achieved in the Pearl Qatar. 4% 50. the need to be located in proximity to the Central Business District (CBD). have witnessed 11% rental increases.000 AED p.000 16% 14% 14% 14% 14% 200. Traffic is further exaggerated by the Metro works in the area. Al Sadd. 800 . Despite Pearl Qatar being a popular destination for luxury living.Rental Rates Due to the strong demand and limited supply in the housing market. accessibility and traffic conditions when commuting to and from the Pearl and the CBD/West Bay is becoming challenging.000 8% 100. The level of the average rent price (per m² usable area) has also witnessed a strong performance since 2012. and is unlikely to be resolved immediately. 11% Areas in and around Doha Municipality have the highest demand in the rental market. while more ‘affordable’ districts of Al Sadd and Old Airport have increased by 14% during the same period.

000 can afford to rent apartments in Al Sadd and Old Airport.000. while renting an apartment in the Pearl would require a minimum monthly income of QAR 35.000+ QAR 31. Noteworthy. Al Sadd and Old Airport are ‘affordable’ to 30% of Doha’s Households” Exhibit 9: Rental Affordability Analysis : Affordability in Popular Apartment Districts Pear Qatar Average Rentals 1BR 2BR 3BR 144. “Popular Residential Districts of West Bay.000 Al Sadd Average Rentals 1BR 2BR 3BR 75.000 90.000 – QAR 28.000.000 114.Rental Rates in Primary Apartment Districts As illustrated in Exhibit 9.300 204. According to Colliers’ Rental Affordability Analysis.000 163.000 West Bay Average Rentals 1BR 2BR 3BR 126.000 228. Households with a minimum income of QAR31.600 102.000 – QAR 55. Pearl Qatar.000 and above.000 QAR 35. Rental options for households with a monthly income of QAR28. the Pearl Qatar is ‘affordable’ only to households with monthly incomes of QAR35.000+ .000 per month are not only limited to Al Sadd and Old Airport. These households represent just 12% of Doha’s households.000 includes larger 3 bedroom units in Al Sadd and Old Airport. is that the majority of these apartments are affordable for a limited 30% of Doha’s households.000 186. but are also restricted to one bedroom units within these areas. While West Bay is ‘affordable’ to households with a minimum monthly income of QAR31. households earning between QAR18.000 can afford apartments in West Bay. those earning QAR18.000 – QAR 50.000 Old Airport Average Rentals Household Monthly Income 1BR 2BR 3BR 72.000+ Source: Colliers International 7 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International QAR 18.000 – QAR28. Exhibit 9 highlights rental options across popular apartment locations in Doha.000 108.

000 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International 242.000 1BR Villas 2BR 3BR 146. as part of their remuneration packages. availability of community facilities. a limited 12% of Doha’s population can afford to live in such compounds. such compounds are becoming favoured choices for companies.000 4BR 60. community facilities and the furnishings used. Due to better connectivity to the city center areas.000 . and therefore rentals in compounds in Doha have increased by approximately 10% during 2012 – 2014 (average apartments across Doha on the other hand increased 24% during the same period). Lack of supply in this market has however increased rentals among both high-end compounds as well as more ‘affordable’ compounds. Rentals within compounds vary significantly based on build quality.800 36. including schools.000 55. predominantly to local/semi-government companies. most government/semi government corporations meet accommodation expenses of their employees. although they are generally located 5km – 10km away from the city center. “Rentals in Compounds are Affordable to a limited 12% of Households in Doha” Exhibit 10: Rental Affordability Analysis : Affordability in Doha Compounds Legend Compounds in Doha 5 km 10 km 8 Average Annual Rental Rates (QAR) Apartments 1BR 138. Many of these units are leased for a longer term.000 Source: Colliers International 8 4BR 225. While.Rental Rates in Doha’s Popular Compounds A significant number of Doha’s compounds are rented as employee accommodation. Colliers’ analysis suggests that based on the existing rentals.000 Minimum Average Household Monthly Income (QAR) Apartments Villas 2BR 3BR 33.

000 High sales prices in Viva Baharia is mainly due to the development’s beachfront location.000 16. QAR per m2 YOY Growth Source: Colliers International “Sales prices have increased 4% YOY. 8% 7% 14. The highest increase was witnessed in Viva Baharia .000 6% 10. average sales prices across freehold units in Doha increased by 6% YOY.000 QAR per m2 In 2014.Baharia Lagoon Lusail The Pearl The Pearl Plaza Increasing rentals. 9% 8% 3% 2% 13.250 4.Sales Prices Exhibit 11: Average Sales Prices by Location 18.Pearl Qatar” Exhibit 12: Average Sales Prices Across Doha’s Freehold Market 25.750 2. with Viva Baharia witnessing the highest YOY increase of 8% compared to all freehold developments illustrated in Exhibit 11.775 13.000 15.000 2008 2009 2010 2011 2012 2013 2014 - -25% QAR per m² YOY Growth Source: Colliers International 9 -20% Residential Market and Affordability Levels | November 2014 | Doha | Colliers International YOY Growth QAR per m² 0% YOY Growth Similar to the rental market.000 10% 5% 6% 5% 2% 20.000 -5% -11% -10% 10.000 4% 6.000 16.000 7% 12. water sports and F&B units.000 10.500 5.667 13.000 2% 14.000 -15% -15% -20% 19. sales prices in Doha have witnessed an upward trend since 2012.333 11. family-oriented environment and access to beach clubs. The Pearl Qatar remains a popular investment asset class. and limited freehold supply in Doha’s residential market is likely to improve investor appetite in the short to medium term.000 0 1% 0% Porto Viva West Bay .125 12.000 5% 4% 8. .Fox Hill Arabia .917 12.500 16.

access to well located and service land. zoning. are only likely to be exacerbated in the short to medium term. or they can reflect sales. which has resulted in an unaffordable housing market. Public Private Partnerships between developers and the government can assist to increase the availability of more ‘affordable’ residential communities in Doha. Increasing the Buying Power of Residents. With innovations in low-cost building technology (costeffective construction methods. both within the rental and the sales market. developers in Doha can combine these mechanisms to effectively service the increasing demand for affordable housing. and Public Private Partnerships will increase the availability of housing units that are affordable to the majority of households. healthcare and educational facilities) within affordable housing communities are likely to increase the developers’ overall returns on the project. Having access to housing that is affordable by the majority of households clearly results in both social and economical benefits. and not low-build quality) being applied across the globe. Reduced Cost per Employee Improving Worker and Employer Attraction and Retention Source: Colliers International “Public Private Partnership (PPP) is a potential way for developing Affordable Housing in partnership with Private Developers” Exhibit 14: Primary Benefits of Affordable Housing Economic Benefits Revenues can take the form of fees for permitting. Exhibit 13: Key Advantages of Developing Affordable Housing Increasing the Buying Power of Residents Conclusion As seen globally. zoning. With Qatar’s population witnessing some of the highest growth rates in the world. affordable developer financing options. or fees generated by construction related economic activity.Developing Affordable Communities Successfully The increasing rental rates continue to be a concern for many expatriate households in Doha. Land infrastructure by the government is leveraged against social infrastructure and greater returns to the local economy. the concern for more ‘affordable’ housing solutions. and favourable developer financing options as active incentives for developers to develop affordable housing. and utilities. governments are actively involved in providing developers access to well located and serviced land. It is Colliers’ opinion that offering more government incentive programs. Developer Benefits Incorporating revenue accelerators (retail / F&B. Source: Colliers International 10 Residential Market and Affordability Levels | November 2014 | Doha | Colliers International . given the significant undersupply in the market. and utilities. or property taxes generated by construction related economic activity. income. However. or they can reflect sales. income. economic forces of limited supply and increased demand have been met with higher rentals. Improving Worker and Employer Attraction and Retention. home investment partnership funds. Local developers such as Barwa and Ezdan have attempted to meet the demand for mid-market housing by constructing more ‘affordable’ residential communities. Revenues can take the form of fees for permissions.

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hotel investment sales and consulting.800 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services. While every reasonable effort has been made to ensure its accuracy.com Colliers International | MENA Region Dubai | United Arab Emirates +971 4 453 7400 1. No responsibility is assumed for any inaccuracies. Colliers International delivers a full range of services to real estate users.albert@colliers. owners and investors worldwide.ahmed@colliers.1 billion in annual revenue Ian Albert Regional Director | Middle East +971 4 453 7400 ian.For further information. In MENA Colliers International has provided leading advisory services through its regional offices since 1996. with over 15. The information contained herein has been obtained from sources deemed reliable. colliers. property and asset management. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.com Peter Bibby Director | Qatar Country Manager Colliers International peter.46 billion square feet under management 15. consulting and appraisal services and insightful research. Abu Dhabi. . Riyadh and Jeddah. valuation.bibby@colliers. Colliers International currently has four corporate offices in the region located in Dubai.800 professionals operating out of more than 485 offices in 63 countries.com Copyright © 2013 Colliers International. please contact: 485 offices in 63 countries on 6 continents United States: 146 Canada: 44 Latin America: 25 Asia Pacific: 186 EMEA: 84 $2. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world. we cannot guarantee it. brokerage.com Mansoor Ahmed Director | Development Solutions +971 4 453 7400 | +971 55 899 6091 mansoor. including global corporate solutions.