Review

Outlook

www.valustrat.com ValuStrat Price Index - VPI Qatar Residential Base: Q1 2016 = 100 All prices are quoted in Qatari Riyal unless otherwise stated Sales and Rent performance are measured on quarterly basis while hotel performance are on yearly basis 2020 Review

FIRST QUARTER REVIEW 2020

VPI Residential VPI Residential Capital Values Rental Values 70.8 62.4

-3.4% -5.0% Y-o-Y Y-o-Y

Residential Ready Residential Ready Ticket Size Sales Volume 2.5m 441 QAR Transactions

-10.7% 0% Q-o-Q Q-o-Q

Office Rent 83 per sq m QAR

-3.5% Q-o-Q

Hotel Hotel ADR Occupancy 352 63% QAR

-5.0% -5.0% Y-o-Y Y-o-Y Jan

COVID - 19 PANDEMIC

• The VPI – Residential Capital Values for Qatar stood at 70.8 points, dipping 0.5% since Q4 2019 and 3.4% annually. The average capital value of a residential unit • First confirmed case in Qatar was recorded on 29th February 2020 stood at QAR 7,876 per sq m. More specifically, apartments were QAR 11,435 1W per sq m and villas were QAR 6,105 per sq m • Suspension of inbound flights except for transit and cargo

• The residential rental VPI in Qatar stood at 62.4 points, softening 1% quarterly, • Adoption of distance learning as schools and universities were suspended 5% annually and 14.7% since Q1 2018. The highest annual corrections were experienced in secondary locations for apartments while for villas, declines • Lock-down of (Streets No. 1-32) were observed in relatively prime locations such as , , • Closure of cinemas, theatres, children’s play areas, gyms, money exchange and 2W locations and wedding venues • Gross yields for residential units averaged an overall 5.1% equivalent to 6.1% for apartments and 4.5% for villas • Closure of non-essential retail stores and bank branches in commercial complexes and shopping centres with the exception of food outlets and pharmacies

• Closure of all museums

3W • Public events and gatherings prohibited

PROJECT LAUNCHES • Public health awareness campaigns and intensified food inspections to ensure health compliance • Mall of Qatar announced a plan to expand with 1,000 residential units, an international school campus and a theme park • Imposition of work from home for 80% of employees in the private sector

• Qetaifan Projects signed a memorandum of understanding with ADMARES 4W • Government of Qatar announced a QAR 75 billion economic stimulus package for Construction and Trading to construct and operate 16 floating hotels on the private sector and real estate companies shores of Qetaifan Island North to provide accommodation during the FIFA World Cup 2022 • Qatar Central Bank (QCB) put in place mechanisms to encourage banks to postpone loan installments and obligations of the private sector with a grace • Public Works Authority (Ashghal) launched QAR 4 billion infrastructure project, period of six months comprising 10 new construction contracts, projected to serve 8,400 land plots upon completion Feb

• Ashghal launched the first phase of Ras Bu Abboud Beach Development project and Park Development project to be developed as leisure and tourist destinations RETAIL • Google Cloud and Microsoft Azure proposed data centre projects under Qatar Free Zones Authority (QFZA) • Mall of Qatar, Festival City, Msheireb Properties, Ezdan Mall (Gharrafa, Al 5W Wakrah and ) and Barwa Real Estate announced rent exemption for their commercial tenants for a period of three to six months starting from March 2020

• There was a significant increase in demand for food and grocery products in March 2020 due to panic buying in light of uncertainty regarding social mobility ECONOMY measures

6W • Al Meera opened a store at The Mall, D-Ring Road, spread over 1,800 sq m BUA, • International Monetary Fund (IMF) estimated real Gross Domestic Product (GDP) leading to 55 Al Meera stores in total in Qatar. In addition, Al Meera launched of Qatar to grow by 2.8% annually in 2020 Sainsbury products (leading British supermarket chain) within all outlets

• As per revised estimates of GDP with a base year of 2018 by PSA (Planning & Statistics Authority), real GDP expanded by 0.9% annually during Q1 2020

• Consumer Price Index (CPI) reduced by 0.8% YoY and QoQ. The housing and 7W utility index declined 3.9% YoY and 1.5% QoQ HOTEL • Qatar Central Bank reduced interest rates twice in line with cuts made by the US Federal Reserve • As per Qatar National Tourism Council (QNTC), the total stock by end of 2019 • Qatar annual exports and imports deflated by 14.7% and 3.6% respectively was 27,261 keys (130 hotels and hotel apartments). 24,562 keys are hotel rooms and 2,699 are hotel apartments • Economically active population increased by 1% YoY during Q1 2020 8W • 988 keys were added with the opening of Pullman Hotel in , Imperium Residences in , Dusit D2 Salwa Doha in Muraikh and Al Liwan Suites in and Diyafa Hotel Suites in

• Occupancy of hotel and hotel apartments dropped 5% and 8% YoY respectively in March 2020 RESIDENTIAL Mar • ADR (Average Daily Rate) of hotels and hotel apartments reduced by 5% and 10% annually respectively compared to 2019 • Transaction volume for residential houses decreased by 13% YoY and no changed compared to Q4 2019. Median transacted ticket size of residential houses was QAR 2.5 million. A significant fall in Q1 volumes was attributed to sharp declines in March 2020, as compared to the first two months of the year which had experienced a rise in comparison to 2019

9W • 900 apartments and 500 villas were added, leading to a total residential supply TOURISM of 299,100 units. 60% of the new supply was concentrated in

• 50% decrease in new enquiries for sale and rental properties • Total international guests reached 546,609, down 7% YoY

• In March 2020 with the advent of the pandemic, the government of Qatar imposed a ban on inbound tourists causing the volume of tourists to plunge.

10W Moreover, all recreation facilities and F&B outlets in hotel properties were also mandated to close

• There was a reported rise in residents occupying hotel apartments due to OFFICE the flexibility of short-term leasing contracts they offered

• There was an addition of three mixed-use buildings and two office buildings comprising 60,000 sq m GLA of office space 11W • A drop in new inquiries was reported beginning from March 2020. Main transactions focused upon lease renewals compared to new leasing activity

• Companies in midst of renewing existing office contract or looking for new office spaces preferred flexible short-term contracts

12W SECOND QUARTER REVIEW 2020

VPI Residential VPI Residential Capital Values Rental Values 69.9 61.3

-4.1% -5.2% Y-o-Y Y-o-Y

Residential Ready Residential Ready Ticket Size Sales Volume 2.5m 279 QAR Transactions

0% -36.7% Q-o-Q Q-o-Q

Office Rent 82 per sq m QAR

-1.2% Q-o-Q

Hotel Hotel ADR Occupancy 367 52% QAR

-2.4% -13.0% Y-o-Y Y-o-Y Apr

COVID - 19 PANDEMIC

• The ValuStrat Price Index (VPI) displayed an average residential capital value of 1W QAR 718 per sq ft (QAR 7,731 per sq m) as at Q2 2020, falling by 1.4% QoQ, 1.9% • The Supreme Committee for Crisis Management of Qatar announced on June since Q4 2019 and 4.1% YoY 8th a controlled phased lifting of COVID-19 restrictions

• ValuStrat Price Index for residential rental values softened 1.7% compared to Q1 • Phase 1 of the lifting of restrictions was imposed for the timeline June 15th to 2020, 2.6% compared to Q4 2019 and 5.2% compared to Q2 2019 June 30th which involved removing partial restrictions on mosques, outdoor activity, private healthcare facilities and malls 2W • Gross yields for residential units averaged at an overall 5.1%, equivalent to 6.2% for apartments and 4.6% for villas • Government of Qatar announced mandatory 14-day hotel quarantine for Qatari nationals entering the country, while other nationalities weren’t allowed to enter until August 2020

3W

LAWS & REGULATIONS

RESIDENTIAL • Public Private Partnerships (PPP) Law No. 12 of 2020 was published to regulate 4W the operation of PPPs, which are used to deliver projects in water and power and now expanded to include other sectors • Transaction volumes for residential houses decreased by 26.2% YoY and 36.7% compared to Q1 2020. The median transacted ticket size of residential houses was QAR 2.5 million. Volume fell significantly during April and May 2020, which was then offset by a rise in June May • 1,450 residential units were added, leading to a total residential supply of 300,550 apartments and villas MARKET SENTIMENT • Approximately 90% of the new supply was concentrated in Lusail, and Musheireb Downtown including notable developments of Al Shahed Tower in Al • Developers reported no significant delays in construction schedules of under 5W Dafna and Phase 1B in Mushiereb Downtown development real estate projects

• Companies reported increased caution in expanding operations, which may contribute to a slowdown in growth of expatriate families and demand for offices in the medium term 6W RETAIL

• Between March-May 2020 there was the closure of all retail shops in shopping centres and commercial complexes except for pharmacies and shops that sold 7W food. In June 2020, with the advent of phase 1, the ban on non-essential retail PROJECT LAUNCHES shops was partially lifted

• Barwa Real Estate was selected by the Public Works Authority (Ashghal) to • No shopping centres were opened during H1 2020, whilst 60,000 sqm GLA of develop eight schools through Public Private Partnerships (PPP) unorganised retail space was added

8W • United Development Company (UDC) awarded QAR 1.5 billion contracts for the • Due to loss of revenue, cash flow management became a major challenge with development of Gewan Island on The Pearl, to be completed by 2021 retailers citing rental payment as the main issue. Many landlords aided their retail tenants by providing rent relief in light of this • MEEZA announced opening its fourth data centre in Qatar Science and Technology Park (QSTP) to be completed by mid-2021 Jun

HOTEL & TOURISM

9W ECONOMY • There were no additions during Q2 2020, in line with reported delays in the launch of new hotels during 2020 amidst the uncertainty caused by the • As per revised estimates of GDP with a base year of 2018 by PSA (Planning & pandemic Statistics Authority), real GDP contracted by 6.1% YoY during Q2 2020 • Due to mandated ban on inbound international tourists, Qatar hospitality had to • As per the revised base year of 2018, Consumer Price Index (CPI) reduced by 10W rely on domestic tourism for turnover 3.2% YoY and 2.2% QoQ. The housing and utility index declined 3.9% YoY and 1% QoQ • Hotel apartments were reported to fare better then traditional hotel rooms, as they could rely on long term leasing tenants • Qatar exports and imports decreased by 43.1% YoY and 15.2% YoY respectively • YTD June 2020 tourist arrivals totaled 548,812, down 48% YoY 11W • Due to oil prices falling below Qatar's break even price of $45 per barrel, initially projected budget surplus may not now materialise • YTD June 2020 the highest occupancy was recorded for 3-star hotels of 66%, whilst hotel apartments had an average occupancy of 61% • Based on repatriation reports, 35,000 people were reported to have exited Qatar during H1 2020

12W THIRD QUARTER REVIEW 2020

VPI Residential VPI Residential Capital Values Rental Values 68.3 60.3

-4.8% -5.2% Y-o-Y Y-o-Y

Residential Ready Residential Ready Ticket Size Sales Volume 2.5m 804 QAR Transactions

0% 188% Q-o-Q Q-o-Q

Office Rent 81.5 per sq m QAR

-0.6% Q-o-Q

Hotel ADR Hotel (September YTD) Occupancy 389 52% QAR

-1.5% -10.0% Y-o-Y Y-o-Y Jul

COVID - 19 PANDEMIC

• As of Q3 2020, ValuStrat Price Index indicates that the average residential capital 1W value was QAR 703 per sq ft (QAR 7,565 per sq m), down by 2.2% QoQ, 3.5% over • Phases 2, 3, and 4 of the quarantine easement launched by the Supreme six months and 4.8% YoY Committee for Crisis Management of Qatar occurred during Q3 2020. This encompassed allowing mass gathering, expanding inbound flights, the opening • ValuStrat Price Index for residential rental values declined 1.7% quarterly, 5.2% of metro and bus services, education and health institutes reopened at 100% annually and 12% over two years capacity and all retail outlets allowed to open 2W • Gross yields for residential units averaged at an overall 5.2%, equivalent to 6.3% • Cinema, theaters, gyms, health clubs and swimming pools were allowed to open for apartments and 4.7% for villas at 30% capacity

3W

RESIDENTIAL PROJECT LAUNCHES 4W

• Transaction volumes for residential houses jumped 188% QoQ and 116.7% YoY. • Qatar Free Zones Authority announced the signing of an agreement to establish Similarly, in The Pearl and , transaction volume increased by the first factory that will assemble electric vehicles in Ras Bufontas Free % compared to Q3 2019 with Gaussin Advance Mobility Aug • Median transacted ticket size of a residential house was QAR 2.5 million

• 1,935 residential units were added, leading to a total residential supply of 302,485 apartments and villas. Notable residential projects comprised Abraj Bay in The Pearl and Y Tower in Lusail 5W • Supreme Committee for Delivery & Legacy (SC) announced that they have OFFICE secured 15,000 accommodation facilities to meet demand of expected visitor arrivals during FIFA World Cup 2022 • Six office and three mixed-use buildings were added this quarter in Duhail, Al Sadd, Doha International Airport and Lusail, comprising 280,000 sqm GLA of • UDC launched construction works in Gewan island starting with 15 mixed-use 6W office space buildings and climatised outdoor Crystal Walkway (retail hub) • Due to lifting of restrictions, private and government offices in Qatar were allowed 80% attendance

7W

LAWS & REGULATIONS

RETAIL • The Ministry of Justice has called on real estate brokers and their offices 8W to register to complete licensing and accreditation procedures, in accordance with Law No. 22 of 2017 related to real estate brokerage • J Mall in completed construction adding approximately 30,000 sqm GLA to organised retail space • Ministry of Administrative Development, Labour and Social Affairs (MADLSA) announced expatriates in Qatar can alternate employers subject to a notice Sep • With phase 3 and 4 of covid lock-down easements commencing in August and period without requiring a no-objection certificate (NOC) September 2020, we observed the return of full operating hours in malls and the opening of restaurants 'dine-in' option

9W

ECONOMY HOTEL & TOURISM

• As per revised estimates of GDP with the base year of 2018 by PSA (Planning & 10W Statistics Authority), real GDP contracted by 4.5% YoY and expanded by 5% QoQ • As per ValuStrat research, 320 keys were added with the opening of Aleph Doha during Q3 2020 Residences in West Bay (hotel apartments) and Blue Rose hotel in Rawdhat Al Khail (hotel) • As per the revised base year of 2018, Consumer Price Index (CPI) reduced by 3.5% YoY and 0.2% QoQ. The housing and utility index declined 4.8% YoY and 11W • YTD September 2020 tourist arrivals totaled 558,199, down by 62.6% YoY 1.7% QoQ • 3-star hotels achieved the highest occupancy compared to all other properties • Qatar exports and imports decreased by 35.5% YoY and 16.5% YoY respectively • Using hotels as quarantine facilities for returning residents and rise of

12W ‘staycations’ contributed to an increase in occupancy across all hotel properties FOURTH QUARTER REVIEW 2020

VPI Residential VPI Residential Capital Values Rental Values 67.5 59.9

-5.3% -4.8% Y-o-Y Y-o-Y

Residential Ready Residential Ready Ticket Size Sales Volume 2.6m 697 QAR Transactions

3.2% -13.3% Q-o-Q Q-o-Q

Office Rent 79.5 per sq m QAR

-2.5% Q-o-Q

Hotel ADR Hotel Occupancy (December YTD) (December YTD) 389 54% QAR

-3.0% -11% Y-o-Y Y-o-Y Oct

COVID - 19 PANDEMIC

• As of Q4 2020, as per ValuStrat Price Index (VPI), the average residential capital 1W value was QAR 693 per sq ft (QAR 7,455 per sq m), fell by 1.3% QoQ, 3.4% over • Ministry of Public Health (MOPH) confirmed an agreement with Pfizer and six months and 5.3% YoY Moderna to secure vaccines once ready

• ValuStrat Price Index for residential rental values softened 0.6% quarterly, 2.3% • Supreme Committee for Crisis Management affirmed the continuation of phase over six months, 4.8% annually and 10.6% over two years. The median monthly 4 of covid lock-down easements including the capacities announced asking rent for residential units in Qatar was QAR 8,964, for apartments was 2W QAR 6,120 and for villas was QAR 11,100 • Spread of the virus has been considered to be contained but not reversed. Three phase plan to re-impose restrictions if necessary was approved based upon • Gross yields for residential units averaged at an overall 5.3%, equivalent to 6.4% recommendations of Ministry of Public Health (MOPH) for apartments and 4.7% for villas. The residential price to rent ratio has been estimated at 20 years 3W

HOTEL 4W LAWS & REGULATIONS • Approximately 1,300 keys were added during 2020, as per ValuStrat research. Assuming no closures during the year, the total supply is estimated to exceed • In line with Cabinet Resolution No. 28 of 2020, a committee at Ministry of Justice 28,500 keys (MOJ) launched an electronic page facilitating non-Qatari ownership and Nov usufruct of real estate in Qatar • The supply of serviced apartments (branded and non-branded) was estimated to reach 9,300 rooms • The cabinet resolution No. 28 of 2020 allowed the formation of real estate investment trusts (REITs) that specialise in real estate investment in various • Revenue per Available Room (RevPAR) declined by an average of 20% annually regions. This decision might provide opportunities that were previously for hotel and hotel apartments during 2020 5W unavailable to middle-and low-income citizens to invest in the real estate sector and it will likely encourage more institutional type activity in the Qatar real • Visitor arrivals YTD December 2020 was 581,659, down by 73% YoY estate market as happens in other GCC countries • The Ministry of Administrative Development, Labour and Social Affairs (ADLSA) launched a guidance tool for recruitment and employment for hotel sectors in 6W Qatar

• UDC signed technical services, management and operations agreements with Corinthia Hotels for ‘Corinthia Gewan Island Qatar’ hotel, and its connected golf course and beach club in Gewan Island, in addition to the new Yacht Club at The RESIDENTIAL Pearl Qatar 7W

• Phase 2 of Qetaifan Island North was launched with beach, waterfront and garden villas plots available for sale

• Barwa Real Estate launched construction works for a residential city spanning 8W 1.1 million sqm in to be completed by 2022. Comprising more than 6,700 apartments, and workers accommodation extending to over 700,000 sqm ECONOMY with 16,000 rooms accommodation extending to over 700,000 sqm with 16,000 rooms • IMF predicted the real GDP of Qatar to contract by 4.5% during 2020 • At the end of 2020, the residential stock stood at 303,015 units with the addition Dec of 530 units during the last quarter • As per the revised base year of 2018, Consumer Price Index (CPI) reduced by 2.9% YoY and 0.1% QoQ. The housing and utility index deflated 5.4% YoY and • Despite COVID-19 and slowdown in the growth of expatriate population, the 1.2% QoQ annual fall in rents and capital values of residential units during 2020 was less • Qatar exports and imports decreased by 25.4% YoY and 10.9% YoY respectively compared to YoY decline in 2019 9W • Doha won the bid for hosting 2030 Asian Games

10W OFFICE TRANSPORT • As of Q4 2020, total office stock was estimated at 5.4 million GLA sqm with the addition of 30,000 sqm GLA from completion of an office tower in Lusail Marina 11W • Phase 1 of Lusail Light Rail Transit (LRT) was delivered comprising two single-track lines of 9.7 km and 12.8 km respectively • Despite economic losses sustained by the majority of companies amidst COVID-19 and rising vacancy due to influx of supply, the annual rental decline estimated at 7.5% during Q4 2020 was less compared to 17% YoY fall in Q4 2019

12W Outlook 2021

ECONOMY COVID - 19 PANDEMIC

• Qatar economy is projected to grow by 2.5% during 2021 as per • The government of Qatar announced free vaccination for all residents International Monetary Fund (IMF) with a four-phase program which started in December 2020 and is expected to end by October 2021 • Expected boosts in trade and tourism sectors from ‘Al-Ula Declaration’, which resulted in re-opening borders, resumption of air • Restrictive measures on business, leisure, and education to continue and sea travel and trade of Qatar with Saudi Arabia, the United Arab including mandatory hotel or home quarantine upon returning to Qatar. Emirates, Bahrain and Egypt The measures are subject to periodic review by the government

• Government of Qatar unveiled a budget of QAR 194.7 billion for the fiscal year 2021 with a projected deficit of QAR 34.6 billion (based on assumed oil price of $ 40 per barrel). The budget is expected to support up-coming as well as on-going development projects in various sectors and those related to World Cup 2022, education and healthcare and infrastructure development in the economic, industrial and logistics zones WORLD CUP 2022

• FIFA World Cup Qatar 2022 tickets inclusive of hospitality and optional travel packages are expected to go on sale during the year

• Ashghal infrastructural projects intended to serve World Cup 2022 have been cited to complete as per scheduled time RESIDENTIAL PRICES AND RENTS

• Residential supply for 2021 is estimated at 8,200 units. Approximately 80% of the upcoming supply is concentrated in Lusail, The Pearl and West Bay

• Growth in expatriate population is predicted to rise in the second HOTEL & TOURISM half of 2021, post lifting of social mobility restrictions, resulting in a pick-up in demand which could head towards stabilisation of rents by • Upcoming hospitality establishments: The Plaza Doha, Katara Towers, the end of 2021 Waldorf Astoria, Zulal Wellness Resort, Salwa Beach resort, Jouri Murwab Hotel, Steigenberger Hotel, Banyan Tree Doha, JW Mariott • Growing ownership by foreigners coupled with competitive listings Hotel, Al Baker Novotel and Sofitel, Majlis Grand Mercure Hotel & for residential sales might slow down the rate of decline in capital Apartment and Dream Doha values potentially bottoming out by the end of 2021 • Qatar is expected to receive 7,000 rooms (6,250 keys and 750 apartments) in 2021

• Lifting of quarantine measures expected in H2 2021 might provide a boost to tourism. During H1 2021 mandatory hotel quarantine and domestic tourism may provide support to hospitality industry RETAIL

• The estimated mall supply for 2021 stood at 209,000 sqm GLA

• Upcoming shopping centres: Doha Mall in Al Maamoura, Boulevard Mall in Jeryan Jenaihat and 04 Mall in The Pearl OFFICE SUPPLY AND RENTS • Government of Qatar is encouraging retailers to shift to e-commerce platforms in order to capitalise on the growing trend of rising online transactions • An estimated 880,000 sqm GLA of office space is predicted to be added during 2021 • Rentals in malls and shopping centres will continue to soften due to pressures of online trading, however, demand is predicted to increase • No major fiscal consolidations at private and government levels are during H2 2021 which may lead to softer declines in rents by the end of expected to occur during 2021. In addition, there is an expected 2021 increase in companies working in e-commerce, logistics, finance and technology

• Despite the influx of supply, the projected pick-up in market sentiment and demand might contribute towards slower pace in decline of office rents Meet the Team

ValuStrat’s key strength and advantage is the experience and reputation that its senior management and team bring to the table.

Led by leading industry figures and personalities, our client recognises the importance of addressing projects from both strategic and practical perspectives. We forge together tailored teams ideally suited for each project to successfully deliver on the varied requirements of our diverse range of clients.

Pawel Banach, FRICS Declan King, MRICS Director & General Manager Managing Director & Group Head Real Estate [email protected] [email protected]

Haider Tuaima Anum Hasan Head of Real Estate Research Market Research Manager [email protected] [email protected]

Anthony Fernando, MRICS Marwen Azri Property Valuation Manager Senior Property Valuer [email protected] [email protected] Market Intelligence. VPI Simplified. ValuStrat Price Index

Premium Subscription

ValuStrat Price Index Qatar In-Depth Reports

ValuStrat offers premium subscription reports for clients allowing them to access to in-depth, statistical analysis of what is happening in residential real estate; allowing for more informed decision making and forward planning. The full in-depth 100+ page Qatar report includes citywide analysis of freehold districts, including the ValuStrat Price Index, transaction volumes, service charges, Price to Rent Ratios and Net Yields.

Also accessible via

Subscribe for regular market intelligence

For subscription, please visit www.valustrat.com/vpi-qatar or email at [email protected]

About VPI

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. VPI ValuStrat Price Index

www.valustrat.com