Lusail is first choice for wealthy Qatari buyers

Lusail.com

• ‘Smart city’ rose to prominence in run-up to World Cup 2022 
• 71% of HNWI respondents to Knight Frank survey own property there
• Residential rents and sale prices up 20% year on year in Qatar

Lusail, Qatar’s second-largest city and host for much of the Fifa World Cup last year, has become wealthy buyers’ preferred destination for residential real estate in the Gulf state, a new report shows. 

Lusail Marina and Lusail Waterfront were named as the most popular destinations where Qatar-based high net worth individuals (HNWIs) are planning to buy property this year, according to a survey by real estate consultancy firm Knight Frank.

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The firm’s inaugural Destination Qatar report is based on a survey of 30 Qatar-based HNWIs, each with a net worth of over $500,000 and with a combined net worth of more than $155 million. The survey was carried out in partnership with market research company YouGov. 

The report found that Lusail was already popular with respondents, with almost three quarters (71 percent) saying they already own an initial property in Lusail.

Located around 15 kilometres from Qatar’s capital city Doha, Lusail has risen in prominence in recent years. Its development as Qatar’s first ‘smart city’ began in 2005 but was accelerated in the run-up to last year’s World Cup. 

It now has a pipeline of 25,000 residential units set for completion in the coming years, to join its existing residential offering and array of leisure and recreational facilities, according to Knight Frank. 

“When it comes to target locations for the country’s wealthy, Lusail has emerged as the number one preferred neighbourhood, with average budgets standing at $1.8 million,” Faisal Durrani, Knight Frank head of Middle East research, said.

“Lusail’s proximity to Doha means it is viewed as a city within a city, with all the amenities of Doha effectively supercharged and upgraded, which is undoubtedly boosting its appeal among the nation’s elite as a real estate investment destination.”

The continued development of Lusail “signifies an exciting turning point in Qatar’s real estate landscape”, added Adam Stewart, Knight Frank head of Qatar. 

Qatar’s gross domestic product grew 5 percent last year, in part due to the country’s hosting of the World Cup, which boosted tourism, construction and other areas of economic activity for the Gulf state. 

However, that heightened business momentum is likely to weaken to 2.3 percent in 2023, rating agency S&P predicted last month.

Qatar’s strong fiscal position, together with high oil prices and an uptick in demand for Qatari gas exports, will keep the economy buoyant and growth is expected to accelerate from 2025. 

The residential property sector has been one of the biggest beneficiaries of the World Cup, Knight Frank’s survey found, with 37 percent of respondents naming it as their primary investment target, followed by the office sector for 33 percent and retail for 23 percent. 

Almost 30 percent of respondents said they intend to spend more than $1 million on residential real estate in Qatar this year.

The sector has been boosted by Qatar’s extension of property ownership laws to international investors from March 2019. Population growth has also placed upward pressure on rental and sales values. Some districts in Doha have registered annual rent increases of 25-30 percent in the past 12 months, according to the report. 

Yields are estimated at 6.4 percent for apartments and 4 percent for villas. 

Oversupply of residential real estate is a potential challenge for the market, according to 23 percent of survey respondents. Yet, with 80 percent of residential stock in Qatar falling into the luxury bracket, the country is failing to deliver affordable options – an untapped opportunity for developers and investors, the report added. 

“The remarkable growth in Qatar’s residential sector is testament to the strategic investments made leading up to the World Cup,” Stewart said.

“With infrastructure in place to cope with a substantially increased population, government initiatives in place such as residency through real estate to attract investors, and financial instruments being offered by local banks to fund purchases, Qatar is poised to compete in the international arena.”