QUARTER REVIEW 2018 Real Estate Market VPI ValuStrat Price Index Residential

The fourth quarter 2018 Valustrat Price Index (VPI)-Residential, displayed an overall 9.3% annual and 1.0% quarterly decline in capital values.

Villa and freehold apartment prices saw marginal QoQ declines of 1.1% and 1.2% respectively. Amongst freehold apartments, witnessed the highest overall decline in values followed by Lagoon and The Pearl.

Villas coped well this quarter as only a few locations experienced price declines. Quarterly capital depreciation of between 2% to 5% was observed in clusters of , Al Waab, Fereej Soudan, Umm Salal Mohammad and Al Kharaitiyat. Gross yields for residential units averaged an overall 4.9%, adjusted by 5.9% for apartments and 4.4% for villas.

ValuStrat Price Index 13 Villa and 3 Apartment Locations in Qatar [Base: Q1 2016=100]

110

100 100 96.3 94.2

90.9 89.8 90 87.2 84.9 82.7 81.3 80 77.7 75.8 75.0

70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2016 2017 2018

Source: ValuStrat

1 | Qatar Real Estate Market 4th Quarter 2018 Review MacroEconomicSnapshot

• The Real Gross Domestic Product (GDP) increased 2.2% YoY (QAR 210.77 billion), driven by growth in the non-hydrocarbon sector by 4.3% YoY during Q3 2018 as per the latest report from Ministry of Development Planning and Statistics (MDPS)

• Government budget for 2019 features increase in revenue by 20%, due to expected hikes in energy prices and boosts in taxation (a 100% levy tax on health-damaging goods)

• Population is estimated at 2.67 million as of Q4 2018

1,836,000 2,045,000 2,235,000 2,421,000 2,597,000 2,641,000 2,674,000 2012 2013 2014 2015 2016 2017 2018

Qatar Population Source: Ministry of Development Planning & Statistics

• Qatar Central Bank increased deposit rate by 25 basis points to 2.5%, following US Federal Fund increment by the same amount

• Qatar Financial Centre (QFC) plans to allocate QAR 7.3 billion in a bid to provide incentives (seed capital, free offices and tax-free holidays) to attract multinational companies to start operating in Qatar

Consumer Price Index vs. Housing Index • Oil export revenue expanded by 30% January 2015 – YTD YoY, whereas imports decreased by 11% YoY

• During the first two months of Q4 2018, the Consumer Price Index (CPI) stood at 108.47 points, a decline of 0.3% YoY and 0.1% QoQ

• Housing and Utility Expenses Index decreased 2.8% YoY and 0.3% QoQ Jul Jul Jul Oct Oct Oct Apr Apr Apr Jan Jan Jan Jun Jun Jun Feb Feb Feb Sep Sep Sep Nov Dec Nov Dec Nov Aug Aug Aug Mar Mar Mar May May May

2016 2017 2018

General Index (2013=100) Housing, Water, Electricity, Gas and Other Fuels

Source: Ministry of Development Planning & Statistics, ValuStrat ResidentialSupply

400 • Total housing stock by end of 2018 was Qatar Residential Supply approximately 290,000 units with the 2015-2019 350 addition of 1,265 villas and apartments (‘000 UNITS) 2015 during Q4 300 250

• Apartment supply consisted of 810 units 275 200 coming from project handovers in Lusail, 150 2016 The Pearl and Umm Salal area 280

• Completion of villa compounds in Umm Salal, , New Salata, Al Gharafa and Al 286 Messila added 450 new properties to existing 2017 stock 286 3.9 • Projected completions for 2019 have been adjusted upwards to 13,700 units due to 150 delayed deliveries from 2018 2018 290 200 13.7 250

300

2019E Existing 350 Expected Supply* 467 400 *May be subject to significant downward adjustment depending on construction delays Source: Ministry of Development Planning & Statistics, MEED Projects, ValuStrat

ResidentialSales

• Median transacted prices for houses Residential Median Transacted Prices decreased by 3.6% QoQ and 10.0% YoY • Transactional volumes for houses declined 3.2% QoQ and increased 1% YoY • Median transacted price for residential units was QAR 2.7 million with the five largest ticket sizes seen in The Pearl, New Al -10.0% -1.0% Last Year Last 6 Months Salata, , Al Sakhama and Umm Salal Ali for developed plots ranging from 1,500 sq m to 7,000 sq m • Majority of transactions took place in (27%) followed by (22%) and Al Daayen (18%) • 60 transactions were recorded for -3.6% residential buildings with a median ticket Last Quarter

size of QAR 6.75 million Source: Ministry of Justice, ValuStrat • As of October 2018, transactional volume in The Pearl and West Bay Lagoon was 526 units with a total value of QAR 1.15 billion

3 | Qatar Real Estate Market 4th Quarter 2018 Review ResidentialRents

• Median asking rents declined 10.8% YoY and Residential Asking Rents 2.2% QoQ • Median monthly asking rents for apartments fell 2.3% quarterly and 10.6% annually. The highest quarterly fall in rentals was seen in , West Bay, and • Due to increased availability in certain areas -10.8% -6.1% Last Year Last 6 Months such as Doha Al Jadeed, Lusail, , Musheireb and Old Aiport, tenants were offered incentives in the form of rent-free periods of up to 3 months (minimum 1-year contract) and waiving utility expenses • Median monthly asking rents for villas fell by 2% QoQ and 12% YoY -2.2% • High-end locations such as West Bay Last Quarter Lagoon and Al Waab experienced highest quarterly falls up to 5% • Downward adjustment in rents in prime Source: ValuStrat locations continue to put pressure on rentals in secondary locations, resulting in a 20% annual decline

Median Monthly Asking Rent (QAR) Median Monthly Asking Rent (QAR) & Quarterly Change (%) - Apartments & Quarterly Change (%) - Villas

5,250 7,500 Al Mansoura 5,750 -2% Al Wakrah 8,000 0% 6,250 11,500

5,500 9,250 Lusail 7,250 -1% Al Muraikh 10,500 -2% 8,500 13,500

5,750 9,250 Al Sadd 7,000 -4% Abu Hamour 12,000 -1% 8,750 14,250

7,250 12,500 Fereej Bin 8,000 -1% Al Waab 13,500 -3% Mahmoud 8,250 14,000

8,500 18,250 West Bay The Pearl 10,750 -2% 19,500 -2% Lagoon 13,000 21,000

One Bedroom Three Bedroom Three Bedroom Five Bedroom Two Bedroom Quarterly Change (%) Four Bedroom Quarterly Change (%)

Source: ValuStrat Source: ValuStrat OfficeSupply

• 2018 began with an estimated 3.89 Qatar Office Supply million sq m Gross Leasable Area 2015-2019 (GLA) (Million sq m GLA)

• Only 26% of the anticipated 960,000 1.2 sq m GLA was completed during the 0.25 year making the total office stock 4.1 4.13 million sq m at the end of 2018 3.89 3.5 3.89 3.0 • 125,000 sq m GLA was added to stock, with completion of office buildings in Energy City (Lusail) and Al Khor as of Q4

• Upcoming projects in 2019, currently under development totalled 1.2 million 2015 2016 2017 2018 2019E sq m GLA, 60% of which located in Lusail (Energy City and Marina Existing Stock Expected Supply District), 30% in Doha Municipality (Old Source: MEED Projects, ValuStrat Salata, , Fereej Abdul Aziz, Al Sadd, New Doha and Mushiereb) and remaining mixed amongst other municipalities OfficePerformance

• Median office asking rents fell 15% YoY Office Median Asking Rent (QAR/sq m/Month) and 2% QoQ and Quarterly Change (%) • Increasing supply and vacancy, has pressurised landlords to reduce rents -3% -6% 0% -2% -3% -2% -2% in offices along C/D Ring Road, which experienced the highest quarterly fall 138 in rents resulting in a median monthly rate of QAR 100 per sq m

• 3% quarterly fall in rents observed in 110 110 West Bay, as median monthly asking 104 100 rents declined to QAR 138 per sq m. 98 Rents ranged from QAR 80 to QAR 220 per sq m depending on the quality of 88 the office and building age

• In addition to falling asking rents, offices along C/D Ring Road, West Bay, West Bay C/D Ring Lusail Citywide Grand Al Sadd Salwa Road Hammad Road Al Sadd and Grand Hamad Avenue Avenue offered incentives of up to 2 months Median Asking Rate (QAR/sq m) Quarterly Change (%) rent-free period Source: ValuStrat

5 | Qatar Real Estate Market 4th Quarter 2018 Review RetailSupply

• Supply increased by 3% YoY during 2018 Retail Malls & Shopping Centres reaching 1.8 million sq m GLA by Q4. (‘000 sq m GLA) Approximately 450,000 sq m GLA (6 shopping malls and City Centre Mall 337 expansion) is projected for completion by end of 2019

• 70,000 sq m GLA of street retail was added 159 during the quarter, including completion of Phase 2 of Madinat Al Mawater and shops at Park

• Al Meera, with 52 existing retail stores, has announced to open 8 stores which will be located at stations 22

• Based on GLA and population figures, shopping centre GLA of Qatar is 675 sq m 16 161 629 981 per 1,000 capita compared to the GCC 30 average of 595 sq m per 1,000 capita Neighbourhood Community Regional Super Regional 3k-10k sq m 10k-30k sq m 30k-90k sq m > 90k sq m

Existing Stock Expected Supply (till 2020)

Source: ValuStrat

RetailPerformance

• Shop Qatar (3rd Edition), implemented by 14 Distribution of GLA of Shopping shopping centres, successfully managed to Centers/Malls across Municipalities increase footfall of participating super regional malls by an average of 25%

• While headline rents remained stable over the quarter for malls ,a fall in occupancy has been 3% evident in older regional shopping centres 14%

• Market favours tenants, landlords continue to offer more lucrative incentives (eg. waiving 40% service charges or turnover rents) to retain existing retailers and attract new ones 39% • Median monthly asking rent for street retail in 4% Doha was QAR 200 per sq m, indicating 5% QoQ fall

Al Khor Al Wakra Umm Salal

Doha Al Rayyan

Source: ValuStrat HotelSupply

• 1,730 rooms were added during 2018, Hotel Room Supply leading to total number of hotel rooms and 2015-2019 apartments of 26,665 units within 127 (‘000 KEYS) establishments 4.4

• Staybridge Suites (Lusail), Centara West Residences and Suites () and La 3.5 Castle Hotel (Musheireb) were launched, adding 495 keys to total supply

• Due to delayed deliveries in 2018, projections for 2019 have been adjusted 29.7 upwards to a total of 6,500 keys across Qatar 26.2

26.2 22.9 20.7 2019E 2018 2017 2015 2016

Hotel & Service Apt Rooms Expected Supply

Source: Qatar Tourism Authority, ValuStrat

HotelPerformance

• 1.6 million visitor arrivals recorded in Qatar as of November 2018, down by 22% when compared to the same period last year • Average occupancy of hotel and hotel apartments was 61%, up 3% compared to January-November 2017 • 1 to 3-Star hotels achieved a 25% YoY rise in occupancy, whereas 4-star hotels experienced a 3% increase in occupancy during eleven months of 2018 • Average Daily Rate (ADR) and Revenue per Available Room (RevPAR) for hotels declined by 14% YoY and 10% YoY respectively. Hotel apartments ADR fell by 12.8% YoY and RevPAR declined by 2.5% YoY

Distribution of Qatar Visitors by Region Nov 17-Nov 18

9% 9% 9% 8% 9% 8% 8% 11% 10% 9% 8% 7% 9% GCC Other Asia inc/Oceania 31% 32% 34% 35% 21% 28% 18% 23% 25% 25% 29% 31% Europe 35% Other Arab Americas Other Africa 50% 45% 43% 40% 44% 45% 40% 39% 39% 37% 38% 45% 39%

3% 3% 3% 2% 2% 3% 3% 3% 4% 4% 2% 2% 2% 9% 7% 8% 8% 8% 7% 7% 6% 6% 6% 6% 6% 8% 16% 12% 9% 10% 11% 10% 11% 11% 9% 11% 10% 14% 13% Oct Jan Apr Nov Nov Sep Aug Dec Mar Feb May Jun Jul

2017 2018

Source: Ministry of Development Planning & Statistics, ValuStrat

7 | Qatar Real Estate Market 4th Quarter 2018 Review IndustrialInvestment/Supply

• Manufacturing output increased marginally Industrial Production Index by 0.3% YoY during October 2018, as per Q1 2016 – YTD latest Industrial Production Index published by MDPS

• Manateq officially inaugurated four warehousing parks in Bu Sulba, Umm Shahraine and Bu Fasila comprising at least 2 million sq m GFA (Gross Floor Area) of space

• An estimated 650,000 GFA warehousing space is projected to be completed in 2019 which will make the total warehousing supply exceed 13 million sq m GFA

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Oct • Manateq has announced release of 250 new 2016 2017 2018 land plots for warehouses and workshops in logistic parks: Aba Saleel, Birkat Al Awamer, Mining and Quarrying Jery Al Samur and Al Wakrah IPI (2013=100) Manufacturing

Source: Ministry of Development Planning & Statistics, ValuStrat IndustrialPerformance

• As per MDPS statistics, during first ten months of 2018 net tonnage of bulk cargo increased by 32% YoY in Qatar Ports with Messaied and Hamad Port receiving the highest traffic

• As per Manateq, 45 million sq m of warehousing and industrial land has been distributed since 2011. They further report that there is a need of 27 million sq m for development of industrial and warehousing facilities

• Average asking rents for dry/ambient warehouses in Qatar fell14.4% YoY and marginally 0.6% QoQ

• For temperature-controlled warehouses intended for food and chemical storage average asking monthly rent is QAR 64 per sqm, reduced by 10% YoY

• Average asking rents for cold storage being leased on per unit basis was QAR 8,000-15,000 per month in Doha , where average unit sizes ranged from 50-80 sq m

Warehouses Asking Rental Rates 65 (QAR/sq m) 50 50 35 20 20 20 12

Sailiya Wukair New Industrial Area Old Industrial Area

Rent - Upper Range Rent - Lower Range Source: ValuStrat 05.11.18 Qatar realty deals worth QR17bn signed in nine months to September: ValuStrat “Real estate transactions worth QR17bn were signed in Qatar during the first nine months of 2018 indicating a 14% rise in volume compared to same period last year, regional consulting firm ValuStrat said in a new review. ValuStrat reported “increased transactional volume and market corrections” across all sectors in Qatar.”

06.11.18 Rising quality and affordability to reinvigorate Qatar’s real estate market "Market corrections continue this quarter as rents and prices continue to fall due to oversupply prevalent20.11.17 across all sectors. It is expected that increasing affordability and quality of delivered properties could reinvigorate the market. Real Estate transactions worth QR 17bn were signed during the first nine months of 2018 indicating a 14 percent rise in volume compared to 2017,” said Pawel Banach MRICS General Manager at ValuStrat Qatar 24.12.18 Qatar real estate sector likely to be affordable, competitive in '19 “According to research and consultancy firm ValuStrat, a “downward trajectory” is expected in all sectors in the real estate market in 2019, but with “slowing decline rates.” Increased supply in apartments was seen in central areas of Doha such as Al Sadd, Fereej Bin Mahmoud, Al Mansoura and Al Muntazah and prime areas such as Lusail and The Pearl, ValuStrat said. “

29.12.18 Qatar to inaugurate 7 hotels, 5 malls in 2019

“ValuStrat expects the opening of seven hotels including Resort, Dusit Doha, Mandarin Hotel, Zulal Wellness Resort, M Gallery Boutique Hotel, Panaroma Residences and Suites; and Plaza Rayhaan. Mid-market hotel segment might continue to show improvement in occupancy in 2019.”

9 | Qatar Real Estate Market 4th Quarter 2018 Review ValuStrat is a firm regulated by RICS

ValuStrat Qatar is part of a leading consulting firm providing Advisory, Valuation, Research, Due Diligence, and Divestment services across a diverse range of industry sectors since 1977. ValuStrat’s office network provides services to over 800 corporate clients including financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport, and FMCG. ValuStrat is a Royal Strategic Partners of Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Financial Affiliate program. Institutions

VPI ValuStrat Price Index

The ValuStrat Price Index for Qatar’s residential sector is constructed to represent the quarterly price change experienced by typical residential units within Qatar. The VPI is a valuation-based weighted price index that uses a data sample representing influential locations across the city and is built by our expert RICS Registered Valuers.

Research Methodology Every effort has been made to ensure the accuracy of this document. New supply data covers all the eight municipalities of Qatar. Only completed and under construction projects are included. The new supply data does not include announced projects, and projects in design phase. The new supply database does not take into account most private building projects. Prices are calculated from actual transactions extracted from the Ministry of Justice data that have been carefully cleansed to exclude duplicates and outliers. Rental data is derived from carefully chosen listings from predetermined areas and districts for commercial and residential properties.

Copyright © ValuStrat LLC 2019 This document is the property of ValuStrat LLC and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat LLC. We welcome your constructive feedback and any corrections that may need to be made to this document. ValuStrat LLC does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.