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Dip in Realty Price Index To Benefit Long-Term Investors

Dip in Realty Price Index To Benefit Long-Term Investors

Doha, Qatar: The realty price index witnessed a decline during April 2024, according to Qatar Central Bank’s data. However, this downward trend is set to impact long-term buyers in the market positively, said an expert.

Speaking to The Peninsula, Ahmad Al Khanji (pictured), Chief Executive Officer at hapondo, said: “The fall in the real estate index will benefit buyers who have a long-term view of their investments and see the opportunity of buying at low prices.”

Qatar’s real estate price index stood at 202.43 level in the month, registering the lowest in three years since February 2021.

Market experts note that this will serve as an opportunistic gateway for deals in the market amid compressed property values. 

Compared to Q1 2024, the index dropped from 225.12 in December 2023 to 202.43 in April 2024. There were more than 1,100 transactions recorded in the first month as compared with the same period in 2023, the Ministry of Justice notes.

On the other hand, the real estate trading volume amounted to around QR5.09bn in the first four months while January to April 2023 witnessed a transaction of QR5.36bn, a decline of 5 percent.

If you analyse the cycle and patterns of the real estate index over the recent years, prices usually begin to rise again between mid-year to late-summer. This of course is not always the case. Government policy,  regional events, new supply, investor appetite, and market movements still have important implications,” said Al Khanji.

Emphasising the prime reasons for this dip, the researcher said “If you analyse the real estate price index, the last 4 years have seen a cycle of troughs and peaks in the market. The latest peak was in December at 225 before plunging through the last four months to 202 in April. We also saw this pattern in January-March 2023.” 

He said “Despite this, one should note that there were 7 percent more real estate transactions done during the first trimester of 2024 than in the same trimester in 2023. This suggests sellers might have been more determined to sell their properties and prioritise liquidity.”

However, asking prices in Qatar’s prime locations show resilient rental yields with Doha at the forefront. As per its recent data, hapondo indicates that the median price for a one-bedroom apartment surged from QR1.6m in Q3 2023 to QR1.62m in Q1 2024 at The Pearl.  In the iconic Lusail city, the three-bedroom apartment median price rose from QR2.9m in Q3 2023 to QR3.02m half a year later in Q1 2024. 

Al Khanji elucidated “We still maintain that Qatar’s prime areas, such as Lusail and The  Pearl, remain long-term strategic choices for investors. The Pearl has a stable demand for residential tenants, which tends to be positive for commercial real estate such as shops. The average gross rental yield in The Pearl was 6.3 percent for a one-bedroom, 5.9 percent for a two-bedroom, and 5.3 percent for a three-bedroom in Q1.”

He also mentioned that Lusail City has enhanced its infrastructures with newly built real estate products ideal for investors who want first dibs in an “up-and-coming city” with a growing population. Remarking Lusail as an attractive investment option, he said: “Most notably, we saw stronger rents in Marina in Q1 that pushed yields up.”

He further stated “For the opportunistic buyer, this means greater leverage in negotiating for value, using strategies such as land banking and buying a portfolio of assets. Real estate is cyclical, and waiting for the right opportunity to buy and sell is key.”

“The dip in real estate prices is just one part of the picture, especially when looking at the residential sector. In fact, the average gross rental yield of a one-bedroom apartment in Qatar’s prime areas has increased from 6.6 percent in Q4 to 6.9 percent in Q1, while the two-bedroom category has remained stable at 6.5 percent, showing strong investment potential,” Al Khanji added.