BY SACHIN KUMAR
DOHA: A sharp rise in land prices in Qatar has caught the attention of the International Monetary Fund (IMF). The international agency, in a recently released report, termed the rise in real estate prices in Qatar as dramatic.
“While the total number of real estate transactions has decreased from the 2013 peak, the total value of real estate transactions has dramatically increased, reflecting higher average prices and compositional changes,” IMF noted in its country report on Qatar.
Outer areas have taken the limelight in terms of price growth in real estate. According to IMF, price growth was highest in areas such as Al Wakra and Al Daayen. Development projects in these areas are fuelling the real estate market. “While the Doha market experienced intermittent price hikes, price growth was recently strongest outside of Doha, given development projects and urbanisation,” noted IMF.
“For example, prices in Al Wakra, a previously underdeveloped neighbour to Doha, have notably risen over the past year in light of its proximity to the new Hamad International Airport and the planned Doha Expressway route.
Al Daayen has similarly experienced rapid price growth, due in part to its proximity to Lusail City and various 2022 World Cup projects,” it said.
Rent increases have stabilised in line with easing inflation. “CPI (Consumer Price Index) inflation has eased in recent months, as rent increases stabilised and tradables inflation fell,” said IMF.
According to IMF, prices of villas have gone up more than those of apartments. “Land prices appear to have increased at the fastest pace, followed by villas, where land is typically the most important cost component. Price increases have been slower for apartments and villas with extension,” it added.
As per permit details of January 2015 issued by the Ministry of Development Planning and Statistics, two-thirds (66 percent) of new residential building permits issued were for villas in different municipal areas. The agency expects inflation to come down in Qatar in the short term, but that does not hold true for real estate.
“In the short run, lower international commodity prices, including for food, and a strong US dollar should reduce headline inflation despite the tight rental market. That said, real estate prices — especially land prices — are increasing particularly fast, and valuations appear on the upper end of a range consistent with fundamentals,” said the international organisation.
The Fund advocated a differentiated schedule of real estate transaction fees to check the speculation in real estate sector. “Consideration should be given to introducing a differentiated schedule of real estate transaction fees to deter speculators and taking further measures to increase land supply. “Imposing rent controls could prove counterproductive,” said IMF. THE PENINSULA
