Qatar’s Economy Thrived Following Successful Hosting of FIFA World Cup

BY Realty Plus

According to ValuStrat, an international consulting firm the performance of all sectors of Qatar excelled in 2022 following the success in hosting the FIFA World Cup which had a positive impact on demand. Launching the review 2022, outlook 2023 Qatar real estate market noted that the real estate market of Qatar saw a gainful year in 2022 despite a global slowdown. Moreover, the rising demand for Qatar’s LNG and hosting one of the world’s most significant international sporting events (FIFA World Cup 2022) played a vital role in economic growth.  The forecast for 2023 is to see pervasive price corrections accounting for market supply/demand gaps, the report noted. 

There was a significant surge in supply in the residential market with the addition of at least 13,000 units, which majorly concentrated in Al Wukair, Lusail and The Pearl. The largest project launched was a master plan named Madinatna, in Al Wukair, to be developed by Barwa Real Estate, comprising 6,780 apartments and 20,000 sq m of retail space. Excess supply was outstripped by growth in demand arising from ‘Eskan leases’ and a temporary increase in population. As a result, residential rents increased an estimated 15 percent annually. While home rents saw a substantial increase, residential sales stabilised; the ValuStrat Price Index recorded marginal declines during the first half of 2022, the report stated. 

The retail market saw significant growth in terms of supply. This includes opening a super-regional mall in Lusail, Place Vendome and other malls in The Pearl, Msheireb and Lusail. Additionally, we saw handing over of new street shops, notably on Lusail Boulevard, West Bay Beach, Qetaifan Island North, and Al Maha Island. As a result, an increase in demand for retail was corroborated by the opening of new brands and expansion of existing brands in malls and street retail in Qatar. However, by Q3 2022, there was downward pressure on rents, with supply surpassing the demand.  

Pawel Banach, MRICS – ValuStrat Qatar General Manager, commented, “2022 was transformative for Qatar with a considerable influx of supply across all sectors. In H2 2022, we saw the opening of no less than 40 hospitality projects and the addition of more than 10,000 residential units. The market conditions should have put downward pressure on rents. However, due to the hosting of FIFA World Cup 2022, there was upward movement in prices and rents across all sector.” Approximately 240,000 sq m of office space was added during 2022, including 82,000 sq m of Lusail Commercial Boulevard. Despite the influx of new supply and significant existing oversupply, rents remained stable during the year. 

ValuStrat noted the opening of more than 46 hotels last year comprising at least 9,000 keys. An estimated 62 percent belonged to the 5-star category. Lusail and West Bay comprised 40 percent of the total hotel rooms. The number of visitors amounted to 1.9 million by the end of November 2022, as per Planning & Statistics Authority. 

FIFA estimated a cumulative attendance of 3.4 million spectators, including 1.2m international visitors equalling 96 percent total occupancy for the tournament. Additionally, there was a rise in ADRs as well; as of November, YTD 2022, the average ADR (Average Daily Rate) was QR577, 38 percent higher YoY. 

The oversupply in the office sector is estimated to exceed 2 million sq m GLA, including the 700,000 sq m GLA in the pipeline for 2023. The significant gap in demand and supply is expected to put downward pressure on rents of office spaces, especially in Lusail, where most of the pipeline supply is concentrated. 

The hospitality sector is expected to see an addition of the following notable establishments: Corniche Park Towers, Doha Live, Four-Season Luxury Residence and Burj Damac Seaviews. However, the significant jump in supply in Q4 2022 and pipeline supply for 2023 is projected to dampen performance in the year as the volume of tourists is not predicted to catch up in proportion but grow gradually.

Tags : Qatar sectors performance demand impact global slowdown Pawel Banach MRICS ValuStrat Qatar General Manager