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Last Updated: Aug 20, 2016




Qatar's nationwide real estate price index increased only 4.15% during the year to end-Q2 2016 (1.25% in real terms), according to the Qatar Central Bank (QCB), in contrast to the spectacular 23.16% rise during the same period last year.

During the latest quarter, real estate prices fell by 3.84% (3.84% in real terms).

Should we be surprised?  Qatari real estate has boomed for three glorious years, fuelled by rapid population growth and a construction boom in preparation for the 2022 FIFA World Cup:
  • In 2013, the real estate price index surged 20.6% (16.3% in real terms) from a year earlier.
  • In 2014, the real estate price index soared by 34.7% (31.8% in real terms) from a year earlier.
  • In 2015, real estate prices rose by 14.4% (10.8% in real terms) from a year ago.


Real estate transactions rose 10% by value in 2015, to QAR56.13 billion (US$15.42 billion).

There's a paradox behind Qatar's property downturn. Gross rental yields are outstanding.  Qatar's population is growing amazingly rapidly.  Normally these factors would mean a surging property market.

But what has changed over the past 18 months is the oil price - and therefore expected GDP growth.

Yields are excellent, though rents are now stabilizing
Gross rental yields in Qatar stand at around 10%, according to Alpen Capital, an investment bank. In the past two years, apartment rents have risen between 5% and 10% y-o-y in selected developments, particularly in the mid-range apartment segment in the Al Sadd area.

But now rents have started to stabilize, as tenants look for more affordable rental properties. In fact in some high-end locations, such as in Al Sadd, apartment rents started to fall in the first half of this year.

“Demand for apartments in areas such as Najma, Umm Ghuwailina, and Al Mansoura increased as tenants seek more affordable accommodation,” said DTZ Research. “As a result, rents in Al Sadd, Bin Mahmoud and Al Mirqab have softened over the last three months in order to attract tenants.”

About 59% of all occupied housing units in Qatar are rented, according to QSA. The average expat household in Qatar spends more than a third of its annual income on rent, according to Colliers International.

Prime apartment rents, Q1 2016:
  • One-bedroom apartments rent for around QAR12,000 (US$3,296) per month.
  • Two-bedroom apartments rent for around QAR15,000 (US$4,120) per month.
  • Three-bedroom apartments rent for around QAR18,000 (US$4,944) per month.

Apartment rents, both in the primary and secondary market, are expected to fall in the remainder of 2016, amidst increased housing supply and reduced demand for corporate residential lettings, according to local real estate experts.

Qatar house pricesQatar issues permanent residence visas to foreigners buying freehold properties, under Law No. 17 of 2004. The visa remains valid as long as the foreigner keeps the property in his name.

Foreigners and expatriate residents amount to about three-fourths of the population, according to the Qatar Statistics Authority (QSA). About 82% of the population lives in Doha and Al Rayyan.

Analysis of Qatar Residential Property Market »


RENTAL YIELDS
Last Updated: Jan 01, 1970


Yields in Qatar are excellent at around 12%

Qatar rentals have tripled in the past six years. Yields are now excellent. “A landlord who has just bought a new five bedroom house for QAR1.8 million (US$494,105), a good quality house, is renting it out at QAR18,000 (US$4,941) per month,” says Parry. This rental translates into a annual gross yield of 12%.

Rentals of QAR25,000 – QAR40,000 (US$6,863- US$10,980) are more usual houses in West Bay, an upscale residential district. Then there is West Bay Lagoon, which is even more expensive.

“There is a very limited supply of condominiums at the moment, only 2-3 buildings,” says Parry. “All that will change when the Peal of the Gulf comes on stream in the Q1 of 2008.”


TAXES AND COSTS
Last Updated: May 30, 2016



Qatar houses for saleRental Income: Rental income is considered a business income and taxed at a flat rate of 10%.

Capital Gains: Capital gains derived from business activities are taxed at a flat rate of 10%. Otherwise, capital gains are not taxable.

Inheritance: There is no inheritance tax in Qatar.

Residents: Resident individuals are not subject to tax on their income and capital gains, provided that these are not derived from business activities. Business income and capital gains are taxed at a flat rate of 10%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: May 30, 2016



Transfer fee is levied at 0.25% of the property value. Other costs when buying property are very minimal, such as authentication fees of documents. It takes around 13 days to complete the process of registering a property.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jan 01, 1970


The laws are mildly pro-tenant

b>Rent: Under Law No. 4 of 2006 in effect from February 2006 to February 2008, annual rent increase is limited to 10%. The implementation of the rent cap is widely expected to be extended.

Tenant Security: There are in theory only three reasons the landlord can give to force his tenant to leave: non-payment of rent, moving in of close family, and to demolish the property. However, there are reports that this law is often not observed, and that landlords are using fictitious demolition plans to squeeze their tenants out.

Read Buying Guide  »



ECONOMIC GROWTH
Last Updated: Aug 20, 2016


Economic slowdown, big budget deficit

Qatar gdp inflationQatar is one of the fastest growing economies in the world. The country is the world's biggest exporter of liquefied natural gas (LNG). It has also more than 15% of the world's proven gas reserves. Qatar has one of the highest GDP per capita in the world in 2015, at US$76,576. Its wealth has grown at breakneck speed from 1998 to 2012, particularly since the Iraq War.

In the early 1990s, the country launched LNG projects to tap the massive gas deposits at the 6,000 sq. km offshore North Field. The gas wealth was estimated at around 25 trillion cubic metres, 15% of the world’s total gas deposits.

The country’s economy grew by an average of 21% from 2006 to 2008. And despite the global crisis, there were further spectacular growth rates of 12% in 2009, 19.6% in 2010, and 13.4% in 2011.

Economic growth since slowed sharply - to 4.9% in 2012, mainly due to a self-imposed moratorium on new hydrocarbon projects, to conserve resources. In 2015 the economy grew by 3.3%, after expanding by 4% in 2014, and 4.6% in 2013, according to the International Monetary Fund (IMF).

The economy is projected to grow by 3.4% this year, according to the International Monetary Fund (IMF).

The country’s budget deficit is expected to surge to 7.8% of GDP this year, the first deficit in 15 years, as low oil prices weigh on revenues. The deficit is projected to rise to 7.9% of GDP in 2017 before shrinking to 4.2% in 2018, according to the Ministry of Development Planning and Statistics (MDPS).

This year, Qatar’s external debt is expected to surge to QAR83.4 billion (US$22.9 billion), from QAR67 billion (US$18.4 billion) in 2015.

“The outlook for economic growth remains moderate, despite the slowdown in the hydrocarbon sector,” said the World Bank. “Qatar may sustain real GDP growth averaging 3.6% between 2016 and 2018, driven by growth in non-hydrocarbon sectors.”

In July 2016, overall inflation was 2.8%, from 2.5% in June, 2.6% in May, 3.4% in April, and 3.3% in March 2016, according to Qatar Statistics Authority (QSA).

In Q2 2016, unemployment was 0.2%, the lowest in the Middle East, according to QSA. Qatar’s highest-ever unemployment rate was 3.9%, seen in December 2011.

The country’s population reached 2.42 million in 2015, up by 8.3% from the same period last year, reflecting the large influx of expatriates. Foreigners and expatriate residents account for about three-fourths of the population. 82% of the population lives in Doha and Al Rayyan, according to the QSA.

Qatar will host the 2022 FIFA World Cup. In preparation for this, the country has been locked in a massive infrastructure development which involves spending of more than QAR264 billion (US$100 billion).







  • High yields in Doha
  • 15 years of economic growth
  • Mildly pro-tenant rental market
  • Moderate to high income taxes
RESIDENTIAL PROPERTY FACTS
Price (sq.m): n.a. For a 120 sq. m. property, usually an apartment.
Rental Yield: n.a. For a 120 sq. m. property, usually an apartment.
Rent/month: n.a. For a 120 sq. m. property.
Income Tax: 7.50% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 0.25% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 10.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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