Rents for Qatar tenants soar ahead of World Cup

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• Residential rents have risen around 30% but hike could be temporary
• Lasting legacy could be government spending on infrastructure
• Hospitality is receiving a pre-tournament boost

Tenants in Qatar are losing out in the run-up to the FIFA World Cup as rents soar by nearly a third, with landlords able to secure longer-term leases at higher rates due to a lack of supply in the market.

“Residential rents have risen around 30 percent year-on-year,” said Adam Stewart, the recently appointed head of Knight Frank Qatar. “Understandably, the residents of Qatar aren’t quite as happy as the landlords.”

However, post-World Cup, Stewart expects a lot of stock will return to the market, with a probable price correction.

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Asked if the World Cup can leave a legacy for Qatar’s real estate market, he told AGBI the price increases witnessed throughout 2022 are likely to be temporary.

“However, in the longer term, Qatar will be hoping that the publicity garnered from the World Cup will have a positive effect on visitors and resident numbers,” Stewart said.

“Government spending related to the World Cup is estimated to be around $220 billion. Approximately $10bn of this is directly related to the stadiums. The remaining $210bn has been spent on the likes of infrastructure, airports, and the Metro system, in line with Qatar’s 2030 vision to transform the country into a global innovation hub.”

Stewart’s comments come as Qatar’s population surged by 13.2 percent in the past year, as thousands of overseas workers arrived ahead of the World Cup, taking place in November and December.

The country’s population stands at 2.94 million, after 370,000 additional people moved to Qatar in the 12 months to September. 

Stewart, who began his career in the UK before relocating to Qatar in 2014, also pointed to the government’s pledge to spend another $300bn as part of its 2030 Vision. 

“Spending of this magnitude will draw talent to the country; talent that needs homes to live in, offices to work from and hotels in relax in,” he added.

To date, residential property demand in Qatar is predominately domestic, but the government is looking to change this with legislation increasing the number of districts in which expatriates can buy freehold properties. Long-term residency is now available to purchasers spending in excess of $200,000.

Lifetime residency is also available to buyers spending $1 million and this includes access to healthcare and education.

Asked if Qatar can attract more international buyers to rival the likes of Dubai, Stewart said: “Certainly, banks are now taking the lead, with banks such as CBQ offering mortgages for non-residents to invest in Qatar.”

He also downplayed the danger of oversupply in the market in the years post-Qatar 2022.

With Qatar’s residential stock estimated at 308,000 units, he added: “As was witnessed in 2020 and 21, we are again likely to see a flight to quality, with better quality accommodation becoming more affordable.

“Planned government spending post World Cup, as part of the 2030 Vision, will attract businesses and residents which should help to balance the supply/demand ratio.”

But the World Cup is not only impacting the residential real estate market. Stewart said hospitality is also receiving a pre-tournament boost, with both average daily rates (ADRs) and occupancy rates rising.

“This will only intensify as we get closer to the start of the tournament,” he explained.

Significant supply came to the market as part of the World Cup preparations, with the number of keys in Qatar expected to reach about 35,000 by the start of the tournament.  

“With a further 14,000 keys expected by 2025, the future performance of this market sector is highly dependent on Qatar’s ability to market itself as a destination that can compete with cities such as Dubai and Abu Dhabi,” said Stewart.

“The World Cup is a brilliant opportunity to show the world why they should come and visit Qatar.”

Numerous hotels are set to open in the coming months, along with hospitality offerings including the Qetaifan Island North, West Bay North Beach and Lusail Winter Wonderland.

Amid concerns about a potential accommodation crunch, World Cup organisers have leased two cruise ships and will pitch more than 1,000 tents in the desert.

Stewart said there has also been a “real push” for more food and beverage outlets in the country, with the operators keen to benefit from the record footfall expected throughout the fourth quarter of 2022 when the country hosts the World Cup.

Notable additions to the market in 2022 include Place Vendome. With a gross leasable area of 230,000 square metres, it’s the first super-regional mall to open in Qatar since 2018.

Qatari Diar has also been successful in leasing its Commercial Boulevard development in Lusail, which is close to the football stadium and due to open prior to the World Cup.

On Qatar’s office market, Stewart noted that rents remain stable, having fallen almost 50 percent since the market peak in 2015. While there has been an increase in activity this year, most of the demand has been for small suites of less than 200 square metres, he said.