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Real Estate Market 1st Quarter | 2019 Review VPI ValuStrat Price Index

Residential The first quarter 2019 ValuStrat Price Index (VPI)-Residential, displayed an overall 9.9% annual and 2.2% quarterly decline in capital values. Villa and freehold apartment prices saw marginal QoQ declines of 2.5% and 0.8%, respectively. Amongst freehold apartments, Lagoon witnessed the highest overall decline in values followed by Lusail and The Pearl. Villas coped well this quarter with only a few locations experiencing price declines. Quarterly capital depreciation between 6% to 11% was observed in clusters of , / and . The remaining clusters experienced quarterly capital depreciation between 1% and 3%. Gross yields for residential units averaged an overall 5%; 6% for apartments and 4.5% for villas.

VPI - Residential Capital Values 13 Villa and 3 Apartment Locations [Base: Q1 2016=100]

110

100.0 100 96.3 94.2

90.9 89.8 90 87.2 84.9 82.7 81.3 80 77.7 75.8 75.0 73.4

70

60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2016 2017 2018 2019

Source: ValuStrat

1 | Qatar Real Estate Market 1st Quarter 2019 Review Macro-Economic Snapshot

• Real Gross Domestic Product (GDP) increased Qatar Population 0.3% YoY (QAR 207.4 billion), driven by growth in the non-hydrocarbon sector (2.4% YoY in Q4 2018 - latest estimates released by Ministry of 2,760,000 Development Planning and Statistics) 2019-Q1 2,674,000 2018 • International Monetary Fund (IMF) forecasted GDP growth for Qatar to be 2.6% for 2019 2,641,000 2017 • Population is estimated at 2.76 million as of Q1 2,597,000 2019 2016 • Government of Qatar passed a new law which 2,421,000 legalised freehold ownership for various asset 2015 classes (including shops, offices and residential villas in a compound) in 10 locations. A further 2,235,000 16 locations have been identified where real 2014 estate can be held on 99-year leases 2,045,000 • Government also passed a law regulating 2013 investment of up to 100% foreign ownership in all sectors, as well as providing entry support 1,836,000 for new investors 2012

• Oil export revenue and imports contracted by 1.5% and 3.4% YoY respectively, as of February 2019 Source: Ministry of Development Planning & Statistics

• During Q1 2019, the Consumer Price Index (CPI) stood at 107.7 points (base year 2013) indicating a marginal decline Consumer Price Index vs. Housing Index of 1.4% annually and 0.8% January 2016 – YTD quarterly

125 • Housing and Utility Expenses Index decreased 2.1% YoY and 120 increased 0.2% QoQ 115

110

105

100

95 Jul Jul Jul Oct Oct Oct Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Feb Feb Feb Feb Sep Sep Sep Dec Dec Dec Nov Nov Nov Aug Aug Aug Mar Mar Mar Mar May May May

2016 2017 2018 2019

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

Source: Ministry of Development Planning & Statistics Residential Supply

• Total housing stock by end of 2018 was Qatar Residential Supply approximately 290,000 units. During Q1 2019, 2016-2020 nearly 3,000 units were added (’000 UNITS)

• Apartment supply consisted of 2,500 units with notable additions coming from Ezdan 25 Complex (Al Wukair), Viva Bahriya 12 and 13, Porto Arabia Parcel 7B (The Pearl), Al Fardan Gardens 9 (Abu Sidra), Gold Bay Cubes Tower, 2020E Barwa Dara A and Marina Residential Tower 6.5 303 11 (Lusail) 2019E 13.0 290 2018 • Completion of villa compounds in Al Wukair, 290 , Abu Sidra, Al Sakhama, and 2017 added 500 new units to the existing stock 286 2016 280 • An estimated remaining 10,000 units are

projected to be completed by end of 2019. This Existing includes upcoming 3,200 units in Lusail, 3,200 Expected Supply* units in The Pearl and 3,500 units in central areas of such as Mushiereb, , *May be subject to significant downward adjustment Source: Ministry of Development Planning and Statistics, MEED Projects, ValuStrat , and

Residential Sales

• Median transacted prices for houses Residential Median Transacted Prices decreased by 7.4% quarterly and 11.7% annually -16.7% -11.7% Last 2 Years Last Year • Transaction volume for houses saw a 20.5% annual increase, however, declined 3.3% when compared to the last quarter of 2018

• Majority of transactions took place in (28%) followed by Doha (22%) and Al Daayen (19%) -10.7% -7.4% • The median transacted price for residential Last 6 Months Last Quarter houses was QAR 2.5 million. The five largest ticket sizes were seen in The Pearl, and for dwellings ranging from 1,300 sq m to 2,700 sq m

• 58 transactions were recorded for residential Source: Ministry of Justice, ValuStrat buildings, Al Sadd, Fereej Abdul Aziz, , Lusail and Fereej Bin Dirham saw the highest transacted values

3 | Qatar Real Estate Market 1st Quarter 2019 Review Residential Rents

• Residential median asking rents declined Residential Median Asking Rents 10.3% YoY and 2% QoQ -20.8% -10.3% • The median asking rent for apartments fell Last 2 Years Last Year 2.1% quarterly and 10.8% annually

• Secondary apartment locations such as Al Wakrah, Old Airport, and Al Mansoura experienced the steepest annual fall in rents of up to 15%

• Median monthly asking rents for villas fell by -4.2% -2.0% 1.3% QoQ and 7% YoY Last 6 Months Last Quarter

• Villas in , , Ain Khaled, Abu Hamour, Al Khor and Umm Salal Mohammad experienced annual declines in rents of up to 10%

Source: ValuStrat • Rent free periods of up to 3 months were common in Lusail, Al Wakrah and Doha in the areas of Al Sadd, The Pearl, Mushiereb, New Doha, Najma, Old Airport, Fereej Bin Mahmoud and Al Mansoura

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

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

9,250 5,500 Al Muraikh 10,500 0% Lusail 7,250 0% 13,500 8,500

9,250 5,500 Abu Hamour 12,000 -2% Al Sadd 6,750 -4% 13,750 8,500

12,500 7,000 Fereej Bin Al Waab 13,500 0% 7,500 -5% Mahmoud 14,000 8,000

18,250 8,500 West bay 19,500 0% The Pearl 10,500 -2% Lagoon 20,000 12,750

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

Source: ValuStrat Source: ValuStrat Office Supply

• As of Q1 2019, the total estimated Gross Qatar Office Supply Leasable Area (GLA) of Qatar’s office supply 2016-2020 stood at 4.34 million sq m (Million sq m GLA)

• Eight office buildings were added this quarter 0.6 with two in Lusail (Energy City and Marina) 1.0 5.1 and one each in Al Hilal, , 4.1 Old Ghanim, Al Sadd and Ain Khaled, 3.9 4.1 comprising 200,000 sq m GLA 3.5

• Upcoming projects till 2020 (currently under development) totalled 1.4 million sq m GLA, 55% of which are in Lusail (Energy City and Marina District), 35% in Doha Municipality (Musheireb Downtown, New Doha, Al Dafna, Mirqab Al Jadeed, Najma, and Al Sadd) and the remaining located within other 2016 2017 2018 2019E 2020E municipalities Existing Stock Expected Supply Source: MEED Projects, ValuStrat

Office Performance

• Median office asking rents fell 11.2% YoY and Office Median Asking Rent (QAR/sq m/Month) 6.3% QoQ and Quarterly Change (%) • Fall in rents in prime locations has

pressurised secondary locations such Al Sadd -6% 4% -5% -6% -10% -8% -3% (QAR 90 per sq m) and Grand Hamad Avenue (QAR 90 per sq m) which experienced the highest quarterly declines • Falling rents in relatively older office buildings in West Bay reduced the overall median asking rent in the area to QAR 130 per sq m with occupancy at 70% • Majority of office demand has been generated by existing companies looking for reduced rents and better incentives • Rent free periods of up to 5 months (differing contract periods) and inclusion of utilities were common place 130 106 105 98 90 90 85 • Offices offered for sale in Lusail at West C/D Ring Lusail Citywide Grand Hamad Al Sadd Salwa 18,840 per sq m, The Pearl at QAR Bay Road Avenue Road 19,375 per sq m and in West Bay at QAR 19,100 per sq m Median Asking Rate (QAR/sq m) Quarterly Change (%) Source: ValuStrat

5 | Qatar Real Estate Market 1st Quarter 2019 Review Retail Supply

• The year began with an estimated 1.8 million Retail Malls and Shopping Centres sq m GLA from a collection of 32 malls and (‘000 sq m GLA) shopping centres 337 • Lulu hypermarket opened their 8th department store in Bin Dirham Plaza (B Ring Road)

• Al Meera announced the expansion of the 159 group's retail space from 97,000 sq m to 100,000 sq m in 2019 22 • 185,000 sq m GLA from 4 shopping centres 16 are in the pipeline for 2019

• Based on GLA and population figures, shopping centre GLA of Qatar stood at 650 30 161 629 981 sq m per 1,000 capita compared to the GCC average of 615 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)

Retail Completed Retail Under Construction Source: ValuStrat

Retail Performance

• As per United Development Company (UDC), Distribution of GLA of Shopping Centres/Malls there has been an increase in occupancy in across Municipalities The Pearl resulting in 368 outlets being leased in Q1 2019 compared to 323 shops in Q1 2017 3% 14%

• While average occupancy across malls is estimated at 80%, performance of older and newly completed shopping malls might come under pressure due to upcoming supply

40% • Median monthly asking rents for street retail 39% outside Doha was QAR 180 per sq m with landlords offering rent-free periods of 1-5 months in some areas (minimum two-year contract) 4% • The median monthly asking rent for street retail within Doha was QAR 200 per sq m, this Al Khor Al Rayyan Al Wakra remained unchanged compared to last quarter Doha Umm Salal Source: ValuStrat Hotel Supply

• 2018 ended with 26,665 keys within Hotel Room Supply 127 different establishments 2016-2019 (’000 KEYS) • Mandarin Oriental Doha (249 keys), 3.5 Dana Al Sadd (165 rooms), VIP hotel (193 keys) and Dusit Doha 7.0 (357 rooms) were unveiled adding a total of 964 keys

• Approximately 9,540 hotel rooms are in the pipeline till 2020 of which 33.7 55% are of 5-star category 26.7 24.9 26.7 22.9

2016 2017 2018 2019E 2020E

Hotel & Serviced Apt Rooms Expected Supply

Source: Qatar Tourism Authority, ValuStrat

Hotel Performance

• Total international hotel guests in full year 2018 declined 19% YoY to 1.8 million • 376,000 visitor arrivals recorded in Qatar as of February 2019, up by 8% compared to the same period last year • European tourists remained the top source market for Qatar followed by Asian countries • Till February 2019, average occupancy increased by 7% annually to 67%, while hotel apartments occupancy grew 3% YoY to 76% • 4-5-star hotels experienced 7% increase in occupancy during first two months of 2019 • Average Daily Rate (ADR) for hotels declined by 6.4% YoY, whereas Revenue per Available Room (RevPAR) increased 4.2% YoY. Hotel apartments ADR fell by 5.6% YoY and RevPAR declined by 2.8% YoY

Distribution of Qatar Visitors by Region Jan 2018-Feb 2019

9% 8% 9% 8% 8% 11% 10% 9% 8% 7% 9% 10% 9% 8%

34% 35% 35% 21%21% 23% 38% 28% 18% 25% 25% 29% 31% 34% 35%

GCC 43% 40% 44% 45% 40% 35% 37% 38% 39% 45% 45% 34% Other Arab 50% 35% Other Africa

3% 2% 2% Other Asia inc/Oceania 4% 3% 2% 3% 2% 2% 2% 3% 8% 8% 3% 1% Europe 3% 7% 8% 7% 6% 6% 6% 6% 8% 9% 7% 8% 7% 9% 10% 10% 13% Americas 11% 11% 9% 11% 10% 14% 13% 16% 12% 11%

Source: Ministry of Dec Mar Jun Jan Jan Nov Oct Feb May Feb Jul Aug Sep Apr Development Planning & Statistics, ValuStrat 2018 2019

7 | Qatar Real Estate Market 1st Quarter 2019 Review Industrial Investment/Supply

• Driven by reduced supply in rubber and Industrial Production Index refined petroleum products, manufacturing Q1 2016 – YTD output decreased marginally by 1.2% YoY

during January 2019, as per latest Industrial 118 Production Index published by MDPS 116 114 • Two new Free Zones located in Umm Al Houl 112 and Ras Bufontas are expected to start 110 receiving investors in 2019 with special focus 108 given to logistics, spare parts, 106 104 pharmaceuticals and petrochemicals 102 100 • An estimated warehousing space of 650,000 98 sq m GLA is projected to be completed by Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan 2020 2016 2017 2018 2019

• Storage space exceeded 12 million sq m GLA IPI (2013=100) Manufacturing Mining and Quarrying with 40% concentrated in Old Source: Ministry of Development Planning & Statistics, ValuStrat

Industrial Performance

• As per MDPS, net tonnage of bulk cargo more • In temperature-controlled warehouses than doubled in Qatar Ports to approximately intended for food and chemical storage, 24.8 million tons as of February 2019, with average asking rents fell 3% QoQ and 12% YoY Ras Laffan and Hamad Port receiving the highest traffic. Hamad Port is poised for • Average asking rents for cold storage being further growth with the addition of a second leased per unit ranged from QAR 8,000-14,000 container terminal by 2020 per month in Doha Industrial Area, where average unit sizes scaled from 50-80 sq m. • Average asking rents for dry/ambient Moreover, incentives in the form of rent-free/ warehouses in Qatar were QAR 36 per sq m fit-out periods and inclusion of utilities were per month, reduced by 2% QoQ and 12% YoY commonly observed

Warehouses Asking Rental Rates (QAR/sq m per month)

65 50 50 35 20 20 12 15

Sailiya Wukair New Industrial Area Old Industrial Area

Rent High Rent Low

Source: ValuStrat

Al Mina Valustrat In Media

19th March, 2019 15th January, 2019 Property ownership law a big boost for Qatar’s residential market to see 13,700 real estate sector units supply in ’19: report ValuStrat general manager (Qatar) Pawel Banach said, “The recent reform to change freehold ownership law “Qatar’s real estate sector during the final quarter of will contribute to a positive transformation of the real 2018 witnessed a continuation of the tough trading estate sector which will now embrace its cultural conditions experienced in Q3, however, the rate of diversity through new initiatives designed to encourage decline continues to slow down. In 2019, we expect the investments and positively change business market to continue to show resilience backed by perspectives to ultimately result in overall economic additional foreign investment opportunities introduced growth,” Pawel Banach, General Manager of ValuStrat by the government, robust public spending on Qatar told The Peninsula. construction and improvements in the non-hydrocarbon sector.”

29th December, 2018 15th January, 2019 Qatar to inaugurate 7 hotels, 5 malls in Rents for retail space at malls remain 2019 stable in Q4, 2018 “Rents in Central areas of Doha are predictable to become constant, leading consulting and advisory Leading real estate advisory firm ValuStrat noted in its company ValuStrat Qatar noted in its 2019 Outlook. The latest review report that the organised retail stock future hotels are Resort, Dusit Doha, remained at 1.8 million square metres (sq m) of gross Mandarin Hotel, Zulal Wellness Resort, M Gallery leasable area (GLA) by the end of 2018. However, the Boutique Hotel, Panaroma Residences and Suites; and rents are expected to face downward pressure as Plaza Rayhaan. Mid-market hotel segment might nearly 450,000 sq m GLA retail space is projected to be continue to show improvement in occupancy in 2019.” added during 2019.

9 | Qatar Real Estate Market 1st Quarter 2019 Review About 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 Strategic over 1,000 corporate clients including financial institutions, local corporates, Partners of 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 Institution of Financial Institutions 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 Affiliate program.

VPI Also accessible via 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.