Qatar
Review 2015
PROPERTY Residential
Office
Property supplement Trends, opportunities and challenges in Qatar’s real estate and fit-outs market.
Retail
Hospitality
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The Pearl-Qatar is one of the major ongoing mixeduse projects incorporating significant elements of high-end residential. (Image Corbis)
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Qatar’s real estate: Keeping the momentum going The Edge | 3
qatar property review | real estate
Against the backdrop of strong performance in the first quarter of 2015, the country’s real estate sector started the year on a positive footing and is expected to maintain its growth trajectory going throughout the year. The Edge’s associate editor Syed Ameen Kader explores the growth prospects of the sector with insights from leading real estate analysts.
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acked by strong economic performance, Qatar’s real estate sector is expected to maintain its growth momentum throughout 2015 and beyond. According to latest market reports, the property market has performed strongly over the last 12 months as both rental and sales figures registered a growth in relation to land. Moving forward, market observers say, there is nothing to suggest that this trend will not continue in 2015 and beyond. “The market performed strongly for investors over 2014 on the back of strong demand, primarily being driven by economic growth and the creation of jobs, which in turn leads to inward migration and a rising population,” says Mark Proudley, associate director, head of consulting and research, DTZ. With economy’s growth levels of 6.5 percent last year, Qatar’s nonhydrocarbon sector registered a double-digit rise of 11.9 percent. That also coincided with an estimated fall of 1.3 percent in hydrocarbon sector due to falling oil prices. However, the weakened oil price did not deter the government from proposing a hefty QAR218 billion budget in the fiscal budget for 201415. The government has already stated that the country’s development projects will go on, with allocated expenditure of QAR65.6 billion for the National Development Strategy 2011-16. All these measures have had an impact on the country’s population, which, according to the Qatar Statistics Authority (QSA), reached 2.34 million in March 2015, representing an annual increase of 9.5 percent. The growth rate of population will remain high in the coming years as more people flock into the country in the run-up to the 2022 World Cup. This will have significant impact on the real estate sector besides others such as hospitality, trade and, of course, transport. The 2022 World Cup and the Qatar National Vision 2030 are giving a huge impetus to Qatar’s construction sector, which will continue to employ more people in the coming years. The positive effects are also being felt in the real estate sector as it sees increased demand for houses and offices. Nick Witty, director, Real Estate Advisory, Deloitte, says, “Securing the status of host nation for a number of major global and regional sporting events has clearly had an effect on both the real estate market and the economy in general. This has not only created a ‘feel-good’ factor but also added to the impetus of ongoing infrastructure and development as well as attracting international companies who have established a presence in Qatar.”
Residential sector
Though all the sectors are expected to see growth, residential in particular will drive the real estate industry as the country’s population increases manifold in the coming years. According to Matthew Green, head of research and consultancy, United Arab Emirates at CBRE Middle East, the residential market will outperform other sectors over the next few years, with a comparatively small development pipeline in comparison to other sectors, and with stronger growth fundamentals amid a rapidly expanding population. “This has been reflected by a 14 percent rise in residential rentals during 2014, versus 2013 rates, a trend that looks to be continuing into 2015, despite the emergence of more challenging conditions amidst the current low oil pricing,” says Green. While over the last few years, in response to increasing demand, the market has witnessed more development of low- to middle-income housing by both private and quasi-government developers, conversely, the high-end residential market has been largely supply led. According to DTZ’s Q1 2015 market report, the demand was stronger in the family accommodation segment, particularly in four- and five-bedroom villas, where occupancy rates throughout Doha are currently high. At the premium end of the residential market, DTZ estimates, current levels of prime apartment stock has now reached approximately 14,000 units across The Pearl-Qatar and West Bay. Four more residential towers at The Pearl-Qatar are expected to be complete by Q2 2015, increasing the supply by more than Prime Apartment Supply by District, No. of apartments
20,000 15,000 10,000 5000 0
Source: DTZ Research
Levels of Office Stock & Availability, 000 sq m
Source: DTZ Research
Keys by Rating Q1 2015
Villaggio Mall and City Centre Mall account for 55 percent of the total retail space currently available in Doha. (Image Corbis)
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Source: DTZ Research
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Prime Apartment Supply by District, No. of apartments
Source: DTZ Research
New apartment towers under construction at The Pearl-Qatar. (Image Corbis)
Levels of Office Stock & Availability, 000 sq m
1800 1500 1200 900 600
700 apartments in the market. In rental segment, residential sector maintained its growth trajectory with first quarter registering rental growth rate between five and 10 percent in certain locations. In the premium apartment segment, rental demand remains strong with low vacancy levels and high absorption rates evident for recently released buildings in The Pearl-Qatar. In general, the past 12 months have seen a gradual uplift in the average monthly rental rates.
Commercial sector
300 -
Source: DTZ Research
There is a proposed 17,000 square Keys byMall Rating Q1 2015 metres extension to Villaggio that will substantially increase the total retail space in the city. (Image Corbis)
Source: DTZ Research
There is currently approximately 1.7 million square metres (sqm) of Grade A office space in Doha with most demand coming for units of up to 250 sqm, and serviced offices capable of accommodating two to four people. According to the market estimates, a further 2.175 million sqm will be delivered to the market by the end of 2018. Assuming a medium growth demand scenario, Witty of Deloitte says, it is estimated that the total takeup of this additional space would take until 2023, with demand likely to come mainly from the public administration, defence, construction and administrative support services sectors. “Thus, if all the proposed pipeline projects are completed by 2018, there is likely to be oversupply potentially for up to five years, during which time the more functional, better managed buildings with the highest car parking ratios are likely to attract discernable occupiers,” he says. The recent fall in oil prices has had an impact on the office leasing market, which recorded a slow start to the year. Since government and hydrocarbon are the two major sectors that drive the office rental market in the country, the current oil price scenario will likely force many Qatari institutions to revise their budgets and hold on to some of their new office requirements. CBRE’s Green says that while there is also a sustained corporate demand from international firms, typical space requirements are less than 1000 sqm. “There is also a continued drive for affordability, hence many new requirements are for accommodation in areas like C and D Ring Road, wherein rents are far more affordable,” he says, adding that since spending cuts are seemingly likely amid weaker economic conditions, there will be a waning influence for the public sector during 2015, which could have an impact on vacancy rates.
Hospitality sector
Hospitality is another major sector that will see maximum growth after the residential market. Last year was a good period for Qatar’s hospitality sector, which, according to the Qatar Tourism Authority (QTA), recorded a total of 2,826,257 tourist visas issued in 2014 – an increase of eight percent over 2013. This had a positive impact on the hotel occupancy rates, which
The Edge | 5
Source: DTZ Research
qatar property review | real estate
increased to 73 percent over 2014 from 65 percent recorded over 2013. Nick Smith, partner of EC Harris, Qatar – an Arcadis company – says, “We believe there will be a large impact on the real estate market, particularly in the hospitality sector. Increasing numbers of visitors will place bigger demands on the hospitality sector fuelling further growth in this area. Inevitably, this should also have an impact on other related sectors as visitors spend money in Qatar.” With Qatar announced as the host to some of the major sporting events in the world, the government has put in place the Qatar National Tourism Sector Strategy Plan: 2030. The country is expected to host close to seven million tourists by 2030. Keeping that numbers in mind, the strategy plan has outlined public and private investment of USD45 billion (QAR164 billion) on projects linked to the tourism sector. In terms of new supply, the first quarter of 2015 saw the opening of three new hotels, which include the Kempinski Marsa Malaz, located in The-Pearl Qatar; the Doha Warwick Hotel on Al Rayyan Road, and the Melia Hotel in West Bay. With these new hotels coming up, the country’s total hotel and serviced apartment numbers stand at 111, offering around 17,400 keys, of which 86 percent are in the four- or five-star category. Proudley of DTZ says, “Limited new supply coupled with increased demand has generated higher occupancy levels in hotels over this period. However, there is a significant pipeline of supply under construction, which if completed on schedule, will double the number of hotel rooms available in Qatar before the end of 2018.” QTA has committed to provide 60,000 rooms by 2022 to meet the requirements of the 2022 World Cup. There are already approvals in place for another 124 hotel establishments in Qatar, which, when realised, will increase the level of supply to approximately 35,000 keys.
Retail sector
With Qatar having the world’s highest per capita and disposable income, its retail sector looks promising, something also reflected in the growing demand that the country has for retail space from both local and international retailers. “The retail segment is one of the key markets and is experiencing a dramatic increase in the supply of retail space, particularly in the form of large out-of-town malls. Despite this, some of the new malls under construction have achieved impressive performance in relation to pre-lets,” says Smith of EC Harris. Consequently, he adds, there could be a potential polarisation in the market, where the new high quality products coming on stream could achieve strong occupancies and rental values while some of the older malls could see the opposite effect occurring unless they are in strategic locations. The first quarter of 2015 saw Gulf Mall in Al Gharrafa opening its doors, adding approximately 100,000 sqm of gross leasable space to the organised retail market. DTZ reports point out that Gulf Mall is the first major mall to open in Doha in almost two years, and is now the third largest mall in the market after Villaggio Mall and City Centre. Qatar’s overall supply currently stands at approximately 690,000 sqm across 14 shopping malls. DTZ estimates that more than 1.2 million sqm of retail space in 12 new malls is currently at various stages of design or construction and may be opened by 2019.
Challenges
Although Qatar’s real estate offers abundance of opportunities, there are some challenges for the sector to overcome. One of the major challenges
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Keys by Rating Q1 2015
Source: DTZ Research
is the escalating price of land, something that has resulted in an increase in construction cost. The industry experts say that investors will be inevitably cautious around the regional market, predominantly due to the oil price projections. Notwithstanding this, overseas investors have historically b een cautious of Qatar. Smith says one of the biggest challenges facing the real estate sector will be the inflation challenge as we near the 2022 World Cup. “I expect that most investors will be keen to mitigate their exposure by forward planning around their supply chain and starting their projects sooner rather than later,” he says, adding that investors will need to choose their targets very diligently during these years ahead with a clear route of entry and exit with a robust risk plan. As with most Middle Eastern property markets, full transparency is not always there in the sector. However, that trend has started to change as evidenced by the implementation of the Qatar Real Estate Development Law in October 2014. Smith of EC Harris says that it will also be interesting to see how the new law affects the real estate business. “Regulation is much needed to increase transparency in the market, and encourage inward investment from regional and international developers. However, the administration processes will be completely new, and initially may be prone to misinterpretation, confusion and delay at extra expense,” he says. Smith suggests that the new regulations would be more effective if they are combined with a comprehensive review of the land registry framework and the introduction of a web-based system to facilitate the rules.
“The market performed strongly for investors over 2014 on the back of strong demand, primarily being driven by economic growth and the creation of jobs,” says Mark Proudley, associate director, head of consulting and research, DTZ.
The Pearl-Qatar has a number of entertainment facilities including Novo Imax cinema complex.
qatar property review | interiors
Qatar’s interiors: Putting the ‘fit’ into fit-outs
At Doha’s five-star W Hotel, the approach of “openness and respect in regards to the Arabic culture and history” was adopted during the fit-out stage. (Image TravelingOtter/ Flickr)
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interiors | qatar property review
As Doha’s skyline continues to come into the limelight with its ongoing transformation, little remains discussed about the interiors of Qatar’s iconic façades. Lee Winter explores the country’s interiors and fit-outs market, set to see a boost as new developments continue to unfold ahead of the 2022 World Cup.
“The unique fact [with Qatar] is that the country is not just building, but there is strict adherence to industrial standards with major emphasis on quality and durability” - Mike Holt, CEO, Dribuild Solutions Middle East.
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n Qatar’s capital, old traditions must jostle to find their place against a backdrop of rapid modernisation. The reliance upon the pearl hunting industry – so long the lifeblood of the country – was superseded by the discovery of oil and natural gas, leading to a bristling new industry and a striking new image. Oysters and pearls replaced by metallic stalagmites that surged upwards from sea-level, creating a jagged juxtaposition against the once serene skyline. These convoluted, shimmering shafts of steel and glass are oft-discussed, but less so are the immaculate and plush interiors that furnish them. Sauntering through the West Bay area and admiring the shards that thrust skywards is a regular occurrence for most, but short of bowling through the heavyweight doors and perusing each and every office and orifice that one encounters – causing several security scares as you go – one doesn’t get the chance to appreciate the inspired details and delectable furnishings that lie behind the fulgent façades. Bearing in mind the requirement for as many as 70,000 hotel rooms, eight new stadiums (recently proposed), 52 skyscrapers and USD35 billion (QAR127 billion) to be spent on rail facilities, the local market is preparing for immense growth in the coming years - all of which adds up to a lot of interiors that need designing. The size of the interiors and fit-outs market was estimated to be around USD1.36 billion (QAR4.9 billion) as of November 2013 and this is likely to have grown a colossal 15 percent to USD1.57 billion (QAR5.7 billion) during 2014. Qatar utilises its wealth for economic and social transformation by injecting USD130 billion (QAR473 billion) into industries such as tourism, education, technology, sports, healthcare and real estate projects; triggering a boom in the interior design industry, as each sector literally scours the globe for the latest international furniture and interior design trends. Miles Redd, one of the world’s pre-eminent designers and a laureate of the exclusive AD100 group, is famous for saying, “Life in the 21st century means taking the best of history and making it work for you.” Such is the desire for Qatar’s ever-evolving interior landscape to fuse the traditional beauty of Arabic architecture and heritage designs with the modernity of 21st Century living, this mantra could almost exclusively be applied to the desert metropolis. A perfect example of this lies within the National Museum of Islamic Art. Completed in 2008 (not exactly a newcomer to the ever-expanding Doha backdrop) it manages to house the amalgamation of tradition and modernism perfectly. Designed by the Chinese-American architect I. M. Pei – known for the clarity of his geometric design as well as his mastery of light and materials – he seemingly discovered a meritorious collaborator in Jean-Michel Wilmotte for the museum’s interior fit-out. The galleries are designed as ‘black boxes’ that exclude natural light, made to allow visitors to appreciate objects of utilitarian origin, whilst the showcases (created by Wilmotte & Associés SA) fade and float in the air so as best to enhance the works. Just a stone’s throw away (albeit, a very light stone), at the five-star W Hotel, the approach of “openness and respect in regards to the Arabic culture and history” was adopted during the fit-out. That’s according to Keith Hobbs, founder of United Designers of London, who went on to say, “We wanted to honour the beautiful elements of Arab art and tradition, but approach it with a global modernity and coolness.” Another trend that appears to be increasingly popular is the incorporation of the building’s envelope to influence the appearance, and even the facilitation of space, within the interior. Two of the most iconic buildings in West Bay, the Burj Doha and Tornado Tower, display features on the outside that tremendously impact the look, energy and even usability that can be found on the inside. Tornado Tower impressively integrates the lighting control for both the interior and exterior, whilst the extravagant construction consists of a rhombic steel structure with floor-to-ceiling glazing and a column-free interior; a design that provides for maximum usable interior space. Burj Doha, however, takes the influence of the exterior one step further, whilst also incorporating the aforementioned marriage of tradition and modernism. Here, we can see the delicate, lace-like façade that recalls mashrabiya screens creating a mesmerising and ever-changing interior, as the sun rotates around the tower, shifting the latticed shadows throughout the day and lengthening the patterns as it slowly dissipates behind the horizon. As well as some of these unique features dotted around the city, one mainstay trend that one would expect to find throughout is the breath-taking quality that is perpetually embraced. Sleek interiors, handmade Italian furniture, bespoke glass-panelling, lavish accessories and state-of-the-art technologies; a description that could be applied to any number of the city’s skyscrapers, be it the soaring Aspire Tower, the burgeoning Qatar Petroleum District or even Al Bidda Tower, also known as the Tower of Football.
In 2014, Qatar’s Sheraton Doha Resort and Convention Hotel went through a complete overhaul, including the renovation of interiors. Under a contract with Khayyat Contracting and Trading (KCT), the hotel went through structural repairs and renovated its furnishing for all rooms and facilities. (Image KCT)
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Located in West Bay, Doha Burj has a lace-like façade that helps create an ever-changing interior through different times of the day, as the sun rotates around the tower, shifting the latticed shadows throughout the day and lengthening the patterns as it slowly dissipates behind the horizon.
Which brings us nicely (or annoyingly, depending on your standpoint) to the World Cup in 2022, as encompassed within the Al Bidda Tower is the headquarters of The Supreme Committee – the powerful government body tasked with organising and delivering the 2022 World Cup. We will sidestep the controversy that presently surrounds it (we have a word-limit to consider) and delve right in to the interior aspects that will be associated. Qatar’s 2022 World Cup is said to have an ecofriendly focus with sustainable practices being used throughout the various projects and this is also true of the interiors. “Across the region, we are increasingly seeing that new buildings, whether they are designed for office, hotel or residential use, are more attractive to the market if they have green credentials,” explains Angela Schaschen, organiser of Domotex Middle East. She adds that there is a lot of interest in products that balance sustainability with profitability as “the Qatar World Cup 2022 will present some interesting flooring requirements: the event will require everything from sports flooring to carpeting for hotels, and with the focus on green solutions, there is significant business potential in this sector.” This consciousness adheres perfectly to the grand design set forth in Qatar’s National Vision 2030: a vision with one eye trained firmly on a future where natural resources are obsolete, imposing a necessity to invest hydrocarbon wealth wisely by spearheading cultural investment, diversifying economy and developing an advanced society with a high standard of living; focusing upon human, social, economic and environmental development. With so many factors and parameters to consider, it is little wonder that the executives tasked with delivering these objectives could use a little help. And this is where the expanding schedule of conferences and seminars becomes increasingly significant. Aiming to get like-minded business people together for future collaborations, September will welcome Future Interiors Qatar; a convention focusing on innovative interiors and a meeting place where discussions upon current design trends, sustainability, materials management, cost related issues, future scenarios and intelligent buildings will all be key themes. Help is also on the way in the form of appropriated expertise from the four corners of the globe, and Qatar celebrated quite the coup when it announced in 2013 that it had been chosen as the first international franchise of awardwinning British interior designer, Katharine Pooley, who won the industryrenowned accolade for the “Best Interior Designer” in 2012, and was also recently ranked as one of The Times’ Top 30 Interior Designers. With Doha’s emerging position as a vibrant, global hub, the demand for European-style home decor has flourished, and as a result created the ideal opening for the wellestablished brand. In addition to this acquisition, along with the aforementioned United Designers of London and Wilmotte & Associés SA, which are actively operating within the interiors market, Qatar also has familiar associations with major players such as GHD, KPS, BBR Design and Wilson Associates – the latter of which recently won the region’s “Interior Design of the Year: Hospitality award” for its
Having completed two years in Qatar, Swedish furniture chain Ikea has been increasingly popular for residential and office furnishings in the local market.
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Pictured is an interior furnishing by The One – a luxury brand in Qatar’s furniture market.
Two of the most iconic buildings in West Bay, the Burj Doha and Tornado Tower, display features on the outside that tremendously impact the look, energy and even usability that can be found on the inside.
Retail interior done by Belle Harvey Interiors – a privately owned company providing interior design and interior construction fit, also providing services in Qatar.
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Pictured here is the interior of Atkins’ office, done by Belle Harvey Interiors.
culturally driven St Regis project. With the number of companies identifying as “Interior Design” expected to grow from 116 to 159 between 2013 and 2015, coupled with the expectation of continued sales growth at roughly 18.5 percent, there is a genuine fear that oversaturation may lead to a noticeable drop in quality standards in the sector. Mike Holt, CEO of Dribuild Solutions Middle East (a construction and interior design consortium), sought to assuage these concerns, however, when the topic was broached: “The unique fact [with
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Qatar] is that the country is not just building, but there is strict adherence to industrial standards with major emphasis on quality and durability” he said, adding “anyone wishing to compete in the market must be up to the standard… if you deliver quality you will always be patronised.” And it is this patronage of high-quality, carefully considered and expertly executed designs that will ensure this Middle Eastern Monte Carlo will continue to surpass expectations in the build-up to, and the delivery of, the 2022 World Cup, through to the National Vision 2030 and beyond.
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