Housing was the second-largest contributor to Qatar’s 5.4 percent inflation rate in June.
Image courtesy of Gulf News Archives
To meet an expected 1.2 million visitors during the month-long tournament, World Cup host Qatar has tried everything from cruise ships to desert camps and regional shuttle flights. Local landlords have a much simpler solution: raise the rent.
Residents in popular neighborhoods say they are being forced to accept rent increases of up to 40% and two-year contracts. Some residents say they’ve been forced to move after years of tenancy due to rents they can no longer afford.
Many hotels have been forced to evict long-term residents to make way for teams and officials, leaving residents with few options in a country with an 88% expatriate population and low home ownership rates.
After more than seven years of slumping demand, when entire buildings sat vacant as new residential, commercial, and hospitality supply poured into the market, this has helped engineer a turnaround in the property market.
According to ValuStrat data, first-quarter rents increased 3.3%, aided by the recent surge in demand, while average prices on the Pearl – an artificial island neighborhood popular with white-collar expats – increased 19%. Housing was the second-largest contributor to a 5.4 percent June inflation rate in Qatar, where prices are rising faster than in any other Gulf Arab state.
FIFA has reserved thousands of hotel rooms and attached residences for players, staff, and other officials. Local organizers have also reached agreements with property owners to reserve approximately 60,000 apartments for fans. Landlords are eager to reap the benefits. During the tournament, most one-bedroom apartments in the Pearl are advertised at more than $1,000 per night on Airbnb. According to ValuStrat, these apartments are currently renting for an average of 9,500 riyals ($2,580) per month, up from 8,000 riyals in the fourth quarter.
According to a Qatari government official, the country’s real estate rental market “satisfies a wide range of preferences and budgets,” and with “increased demand for accommodation during the World Cup, landlords and tenants are required by law to observe the terms and conditions of their lease agreement.”
A brief hiccup
“This is, in my opinion, a relatively temporary blip caused by the World Cup and its related effects,” Commercial Bank of Qatar CEO Joseph Abraham said last month in a Bloomberg TV interview. “You’ll see that pressure come off rentals after the World Cup – as there will be increased supply as well – so that component of the inflationary index will come down,” he said.
Despite the recent increase, the Qatar Central Bank’s index of real estate prices is 30% lower than in 2015. Aside from the World Cup, Qatar’s economy’s future outside of oil and gas is uncertain.
The government anticipates a decrease in the population of low-income laborers after the major World Cup projects are completed, but it is unclear how many white-collar residents will also leave.
A massive LNG expansion project could attract new talent, but QatarEnergy CEO Saad Sherida Al Kaabi estimated that the number of new people required to support the project would be in the tens of thousands, not hundreds of thousands.