A lack of supply in the residential market due to increasing expatriate inflow has led to an average annual rental increase of 16% in the upmarket segment, a report shows.

In its third quarter report, Asteco Qatar said on average two-bedroom units at The Pearl Qatar development have increased by 9% compared with Q2, 2013 and 16% year-on-year.

A two-bedroom apartment now costs QR14,000 a month or more closely followed by similar sized apartments in West Bay, which now command rents of up to QR12,000 a month.

“Leasing rates have most notably increased in The Pearl Qatar, where availability will continue to be scarce until the completion of a number of new towers, currently under construction,” said Jed Wolfe, managing director, Asteco Qatar.

“Availability of good quality villas is also limited, with rental increases apparent in most locations across Doha,” Asteco Qatar claims.

On average West Bay Lagoon is now the most expensive area to lease a four-bedroom villa at QR27,000 a month, up 16% year-on-year, while Ain Khalid and Al Waab, saw annual increases of 18% and 15% respectively.  

“The expatriate influx has also driven further demand for serviced apartments, where occupancy levels have increased from long-stay guests,” Wolfe said.

Increasing rents in the freehold zones has led to an increase in expatriate tenants looking to purchase and resurgence in investor appetites. Direct and resale prices in the Porto Arabia-Pearl increased 7% and 9% respectively, while direct and resale values for properties in Viva-Bahriya-Pearl were up 6% and 3%.

“According to figures from the Ministry of Justice (MOJ), the number of sales transactions fell from Q3, 2012, however the overall value of transactions increased, indicating an increase in average property values,” said Wolfe.

In the commercial sector, a significant number of property deals have been agreed for office buildings in West Bay, which will lead to a decrease in availability of prime office space in the area, potentially driving rents upwards for the remaining space available.

“The average price per square metre, a year in West Bay is QR185, which is still 5% lower than Q3, 2012, but significantly, it is 9% higher than Q2, 2013,” said Wolfe.

Although evidence should suggest that most of the demand for office space is for smaller sized office suites in West Bay, in light of increasing occupancy levels, many landlords are reluctant to enter into negotiations with potential tenants unless these are considering taking up an entire or at least half a building.

Most of the remaining available office building space is either to shell and core standard, awaiting government interest, or below the standards required by most tenants, especially offices in secondary locations.