Qatar experienced an unprecedented construction and property boom heading into last year's FIFA World Cup. Now comes the cooling off period. Image Credit: Shutterstock

Dubai: Qatar’s residential property market has hit a speed bump as growth stalls and triggering concerns that there is too much of new supply that’s built.

Rents too have dropped across popular districts, with Lusail’s Waterfront and Fox Hills experiencing the ‘highest quarterly depreciation’ of 23 per cent and 18 per cent, respectively, in the average quoted rents for apartments, according to Knight Frank.

“The sharp decline in rents will undoubtedly put landlords under pressure to remain competitive, particularly as our ‘2023 Destination Qatar’ report shows that Qatari high net worth individuals most prefer Lusail for a residential acquisition, with an average budget of $1.8 million,” said Faisal Durrani, Partner, Head of Research, Middle East and North Africa, at Knight Frank.

Some of the cooling off was expected post the FIFA World Cup late last year, with Qatar recording some of the biggest build up across categories leading up to that event. It meant tens of thousands of new homes getting added, and that’s where some of the problems are being faced.

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“The supply-demand imbalance, rising interest rates, and affordability challenges are contributing to a shrinking mortgage market and impacting the volume of home sales, while also undermining residential values,” said Durrani.

“Indeed, the total number of residential sales transactions has fallen by 36 per cent over the last 12-months. Simultaneously, the total value of residential transactions has declined by 24 per cent.”

Qatari developers will be hoping that some of the factors could start turning favourable again, thus stoking growth for home sales or rentals. The economy is on sound footing, with energy prices lending their weight.

"Among the HNWI (high networth individuals) we spoke to, 71 per cent already own a home in Lusail," said Durrani. "Additionally, Lusail Marina and Lusail Waterfront were identified as the two most favoured locations for residential real estate acquisition."